Mutual Fund
Stocks
Comparitively low risk, small invetor can invest.
Comparitively high risk , not suitable for small investors investing smaller sums.
Relies on fund manager.
Relies on own skill.
No need of Demat account.
Need of Demat account.
No control on picking and holding of stocks
More control on stock investment and thus on investment.
Have the option to be well diversified.
Funds ger concentrated on a few stocks/sectors.
Affordable investment.
Expensive investment.
Tax Saving Benefit
No tax exemption
Mutual Fund
Stocks
Comparitively low risk, small invetor can invest.
Comparitively high risk , not suitable for small investors investing smaller sums.
Relies on fund manager.
Relies on own skill.
No need of Demat account.
Need of Demat account.
No control on picking and holding of stocks
More control on stock investment and thus on investment.
Have the option to be well diversified.
Funds ger concentrated on a few stocks/sectors.
Affordable investment.
Expensive investment.
Tax Saving Benefit
No tax exemption
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Mutual Funds | ETF |
Purchaed through MF company or dealer at daily NAV | Purchased on a stock exchange of prevailing market prices. |
Can not buy or sell directly, instrad have to go through distributor. | Can buy sell directly through broker. |
Dividends may be automatically reinvested | Dividents generally distributed to brokerage account |
Management exense ratio is high | Managegement expense ratio is low. |
No need of Demat account | Need demat account. |
Mutual Fund | Hedge fund |
Predictable , stable strategies, stated n prospectus. | Very flexible , funds can act opportunistically and make a wide range of investments |
Often have lock up periods, require advance redemption notices. | Limited use of shorting, leverage, options. |
Work withing a risk controlled and compliance framework set up by the regulator. | Can invest in any asset class stocks, bonds , commodities, real estate, private partnerships. Or toxic debts like packaged sub-prime mortgages. |
Focus on relative returns , returns should be higher than benchmark. | Focus on absolute returns. |
Mutual Fund | FD |
An investment to grow your money | An investment for capital protection |
Variable returns based on market fluctuation and type of mutual funds. | FD generate fixed returns based on type of FD and period of holding |
Mutual funds are subject to market risks. | Don’t carry risk and provide safety to capital. |
Can beat inflation. | Don’t beat inflation. |
Can get high returns in long term. | Normal returns upto 7-8% pa. |
STCG and LTCG are taxble based on period of holding. LTCG on equity funds is tax free. | Interest earned on FD is fully taxable as per income tax slab rates. |
Mutual Fund | ULIPs |
Only investment scope. | Insurance and Insurance cover |
Only ELSS give you such tax deductions. | As per Section 80C of the income Tax Act, whatever money you invest is deducted from your total taxable income. |
Except with ELSS , can withdraw funds within a year, however 1% of fund value (exit load) id deducted | Limited liquidity due to minimum lock in period of 5 years. |
Fund management charges are high around 2.5% | Fund management charges arelower, around 1.35% |
Some funds provide add on of term insurance. Example ICICI freedom plus plan. | Do not have any combination of insurance and mutual fund in one single plan. |
By : ROOPALI VAISH
Note: This blog is only for educational purpose .You should be aware of the risk involved in stock market investing . Mani research is not responsible for any type of loss in financial market. Consult your financial advisor before taking any fresh position