Most of the people tend to get confused between the stock and mutual funds when it comes to making an investment to achieve their financial goals. Some of them even think that these are same things, but there is a big difference between the two. If you are also getting confused and not able to arrive at a right decision, then there is no need to get stressed as the following difference between the stock and mutual funds will clear all your doubts: 

Before looking at the differences, we must first understand the meaning of two terms:

 

• Stock Market Investment: It means investing in the shares of different companies. Here, you are putting your money into those companies that are listed on the stock exchange.

   

• Mutual Fund Investment: Here, the money of the investors is pooled together to invest in various securities such as the fixed deposits (Fds), bonds, stocks, etc.

 Now that you have understood the difference between making an investment in the stock market and mutual funds, let us not waste any time and dig out the prominent differences between the two:

Investing Cost

For investing in the mutual funds, there are various charges that an individual has to be paid, which are:

• Expense ratio

• Entry load fee

• Exit load fee

On the other hand, the charges that you have to pay for making a stock market investment are:

• Brokerage charges

• Stamp duty fee

• Demat account maintenance charges

 

Returns

 The returns from the stock market are not very consistent. Some days, you may get higher returns and on other days lower. Whereas, the mutual funds are known to provide the consistent returns. It is to be noted that the returns from the mutual funds may not be on the higher side, but it may be enough to let you build an excellent financial wealth easily.

 

Tax

This is one of the most prominent differences between the stock market and mutual funds. The equity linked saving scheme (ELSS) of the mutual provide a tax deduction under the section 80c. On the other hand, you do not enjoy any kind of the tax deduction if you are investing in the stock market.

 

Conclusion

 These are some of the prominent points of differences between the stocks and mutual funds. It is altogether your choice regarding the investment option you want to choose. However, it is important that you must be informed or educated and for this purpose, you must carry out a good research work. If possible, you can also secure the services of the best financial advisors who can provide you some best tips to make the smarter investment and get better returns.