Here are the critical differences between stock and mutual funds. Investing based on eleven crucial factors you learn more with nifty trading academy.
1. Cost of investing | nifty trading academy
While investing in mutual funds, you’ve got to pay different charges like an expense ratio, load fee (entry load, exit load), etc. For the highest mutual funds, the expense ratio are often as high as 2.5-3%.On the opposite hand, if you invest within the stock exchange, you’ve got to open your account for nifty trading academy(which includes opening account charges), and you’ve got to pay some annual maintenance charges too.
Nevertheless, if you compare the fees involved available and open-end fund investing, you’ll find that the prices while investing in stocks are still lower. this is often because managing a open-end fund consists of tons of expenses like management fee, the salary of the managers/employees, administration charges, operational charges, etc. However, for investing in stocks- the foremost significant burden is merely the brokerage.
2. Volatility in investment
Direct investing in stocks has more volatility in comparison to open-end fund investing. this is often because once you invest in shares- you generally purchase 10-15 stocks.nifty trading academy
On the opposite hand, the open-end fund consists of a diversified portfolio with investment in several securities like stocks, bonds, fixed deposits, etc. Even the equity-based mutual funds invest in a minimum of 50-100 stocks. thanks to the broad diversification, the volatility within the mutual funds may be a lot less compared thereto of shares.
3. Tax saving
If you invest in ELSS (Equity linked saving scheme) under mutual funds, you’ll enjoy a tax write-off up to Rs 1.5 lakhs during a year under the section 80c of the tax act nifty trading academy.
On the opposite hand, once you sell stock while investing directly within the stock exchange , you’ve got to pay a tax, regardless of what’s the scenario. There are not any tax benefits while investing within the stock exchange . you’ve got to pay a tax of 15% on short-term capital gains and a tax of 10% (above a profit of Rs 1 lakh) on the long-term capital gains.