I have been investing in stocks and funds since 2005-06. My progress is higher in funds and less in shares. Should I redeem my stock investments and invest in mutual funds instead?
-Ramesh
Mutual funds give you returns after charging some annual expenses that usually range between 1-2 per cent. Despite these charges, you are able to earn more from your funds because of the value added by professional fund management. Equities are complex and stocks that you buy come in a bewildering array of sectors, industries, size, financial structure, promoter track record, competitive scenarios and a lot more. When you invest in a fund from a good fund house, there is a full-fledged research department to keep tabs on all this.
We advise you to invest in shares only when you have the time and understanding. Everything that you need to know about a company to invest in it can be easily understood by a normal person. If you invest in shares because someone suggested you to do so, you should redeem immediately and invest in a mutual fund. On the other hand, if you have a strategy in place, then you should continue with that.
This article was originally published on November 11, 2013.
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