Stock trading & mutual funds investment are very different ways to generate profits in the
financial market. Deciding which would be better is a challenging task. However, to make this
decision a little easy, you must go through the following three factors:
Let’s have a look at the top three determinants of stocks and mutual funds
Trading is an investment option in which the trader holds the stocks for a short duration (a week or a day). On the contrary, in mutual funds, the investor buys and keeps the funds for the long term. (Years or even decades)
In stock trading, the traders watch the performance and price fluctuations of stocks. Traders are more likely to sell the stocks when the price rises. Whereas, in mutual funds, the profit is generated by amalgamating dividends and interest over the years by keeping quality funds.
Both stock trading and mutual funds involve risk factors that could hamper your finances. However, there are enormous risks and profits in stock trading as the price might fluctuate in a concise duration.
On the other side, generating returns through mutual funds is a time-taking process. It involves lower risks, and in the short run, it will give you low profits. However, it might generate greater profits if persevered for a longer duration.
The information mentioned above has given a basic idea of the two investment options. Trading or investment, the choice entirely depends on your strengths and weaknesses, such as your income, risk-taking capabilities, market knowledge, and monetary goals.
The attached infographic cites the critical highlights of stocks and mutual funds, including their benefits and drawbacks. Moreover, it also shows the projected impact of COVID-19 on different industries.