Finance Conductor

Shares Vs Mutual Funds

What do shares mean?


Shares are discrete units of capital that demonstrate a company’s value and are typically traded on the stock market. Equities or stocks are other names for shares. When businesses need more money, they sell their shares on the stock market. This is called an “Initial Public Offering” or “IPO.”

After an initial public offering (IPO), the company is put on the stock market and is available to all investors. When the business does well, and the company grows, the value of its shares goes up. So, if an investor keeps shares for a long time, selling them will make them a good return.

What are Mutual Funds?

Mutual funds are groups of stocks and bonds that are managed by a company called an Asset Management Company (AMC). They get money from many clients and use it to buy stocks or bonds from certain companies. The investors get the money that has been made from these investors. A person who wants to put money into a mutual fund can do so through SIP or a lump sum.

Mutual funds are like a box that holds many shares from several companies.

Mutual Funds

Shares Vs Mutual Funds ?

Shares and Mutual funds are the most common ways to invest in the financial market. When you buy shares, you are purchasing directly in the stock market. When you buy Mutual Funds, a professional fund manager believes in equity or debt funds for you. Both long-term and short-term purchases have their pros and cons.

Every investor should know this straight comparison between shares and mutual funds:

What it costs to invest:

When you buy in mutual funds, you must pay different fees, such as a load fee, an expense ratio, and more. On the other hand, if someone wants to invest in the stock market, they have to pay fees to start a brokerage account. This includes fees for starting the account and fees for maintaining the account each year. Also, there are a lot of costs, like stamp tax, brokerage fees, and more.

So, if an investor wants to see how shares vary from mutual funds, they will find that investing in stocks is cheaper than investing in mutual funds. Mutual funds have many costs, such as salaries, management fees, and operating costs. In shares, on the other hand, the only thing that will hurt an investment is the brokerage fee.

Possible Return:

Investing in the stock market is good because it has high gain potential. Investing directly in the stock market is how several well-known and wealthy people got rich. One big problem with buying stocks is the risk, which has caused many people to lose important money. Even though it’s possible to make a lot of money by investing in stocks, the risk is also bigger.

On the other hand, there is a good chance of making money because best mutual funds give all their investors good and steady returns. Even though the returns aren’t as high as stocks, they are still good enough for normal people to secure their financial future and make a lot of money.

How Easy It Is to Invest:

An investor must open an account and go through all the trouble to spend because they need the help of a recognised stockbroker to open a brokerage account. Also, they need to open a trade account and a Demat account, which can take up to a week.

When engaging in mutual funds, a person can start investing in as little as 10 minutes. They can also begin trading without opening a brokerage account. Instead, they can quickly sign up on one of several well-known platforms for mutual funds and start investing in them.


The stock market is more personal, so investors must keep an eye on it. But no one will help them here, so they must do it alone. That’s why it seems hard to keep track of stocks by yourself. In mutual funds, they don’t have to keep an eye on their money because experienced managers will take care of it and make their own decisions.

Many people want to invest in mutual funds because they don’t have to watch them as much. But an owner should also check on their funds often to see how they are doing.

Tax Saving:

Under section 80c of the Income Tax Act, investors who have put money into an Equity linked quality plan through a mutual fund can get a tax break of up to 1.5 lakhs annually. When people buy in mutual funds, they don’t have to pay taxes when the fund sells stocks from their portfolio as long as they still own the fund.

For shares, an investor has to sell straight to the share market. It means that they have to pay a tax whether they are buying or selling. Investing in stocks doesn’t give you any tax breaks.


Whether you should buy mutual funds or shares depends on how much you know about the market and your time. Mutual funds are a great way to spend if you are a beginner and want your money to grow steadily. But buying shares directly is a better option if you know a lot about the stock market and have enough time.

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