Investing in stock trading or mutual funds can be intimidating for beginners, as there are varied investment strategies for every fund. Mutual funds investment differs from stock trading because of several factors, such as trade fees, lock-in periods, monitoring, tax-benefits, etc.
Stock trading involves buying and selling of a company’s shares with numerous price fluctuations.
When to trade, which shares to buy, and until how long to hold, everything has to be done by the shareowner.
It requires frequent stock monitoring and thorough market research.
On the contrary, mutual funds involve fund managers, who do all the needful on your behalf.
All it requires from you is to invest in a mutual fund, and the fund managers handle its buying/selling, performance monitoring, and market research.
The below-described infographic shows the significant differences between stock trading and mutual funds, their benefits, drawbacks, and the major highlights of both. It also depicts the worldwide sales data for open-end funds by region and the percentage of these open-end funds assets.
It seems evident from above that forty percent of worldwide regulated open-end fund assets were held in equity funds at the end of Q1 2020, whereas the bond funds were at 23 percent, and the balanced funds were at 12 percent. Sixteen percent of the worldwide total was held in the money market funds. In the Q1 2020, America held 52 percent of global assets, Europe held 34 percent, and 14 percent was shared between the Asia-Pacific regions and Africa.