Avoid individual stocks if you don't want to do your own research.

Hello,

As a mutual fund distributor, I often get asked by my clients why they should invest in mutual funds instead of individual stocks. After all, stocks can offer higher returns, right?

Well, not necessarily. Investing in individual stocks can be risky, time-consuming and costly, especially if you don’t have the resources and discipline to do your own research and analysis.

• You may end up buying overvalued or poor-quality stocks.

• You may miss out on important information that can affect the stock.

• You may fall prey to emotions such as greed, fear, or bias that may cloud your judgment.

• You may only buy 10-12 stocks and if those stocks do not perform, then the entire portfolio return is impacted.

• Some of the stocks that have disappointed investors in the past are Suzlon, which was once a leading wind turbine maker but faced severe financial troubles. The stock has fallen from a high of Rs 459 in 2008 to Rs 18 in 2023, a decline of 96%. Vodafone Idea, which was formed by the merger of Vodafone India and Idea Cellular in 2018, but faced intense competition, regulatory hurdles and huge dues. The stock has fallen from a high of Rs 89 in 2018 to Rs 7 in 2023, a decline of 92%.

If you could appoint a professionally qualified portfolio manager who would identify companies that would grow over 3-5 years?

That’s what mutual fund does, they select 50-60 growing companies, you invest in them and you will create wealth. It has been proven that they have delivered huge returns over the past three decades.

• HDFC Top 100 Fund, managed by Prashant Jain since 2003, has given an annualized return of 14.84% in the last 10 years.

• Nippon Growth Fund, managed by Sunil Singhania from 2004 to 2017, has given an annualized return of 18%. It has grown 200 times in 3 decades.

Mutual funds offer:

• Convenience - can be invested sitting at home

• Flexibility - can be invested in any amount

• Any time money - can be withdrawn anytime.

• Lower risk - In 7 year plus period, you will not make a loss.

• Profit - you will get a return between 13-16% p.a.

These are just some of the schemes to show you the potential. You can simply invest in mutual funds and relax! I am sure you have much better things to do and enjoy than watching your investments.

Many of you have invested through me and I appreciate it and I hope you have had a good journey so far. Can you introduce me to someone in your network so that we could work with them too on their investment and wealth creation?

I hope this email has helped you understand why investing in mutual funds is better than investing in individual stocks IF you don't want to do your own research. If you have any questions or doubts, please feel free to contact me anytime.

Happy investing!

I am available for discussion at +91-9773687483 / [email protected].

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