Stock market trading offers beginning investors a couple of ways to make money through investment. They have the option to invest on mutual funds or stocks? But the question will be: Which is the better option? Robert Peter Janitzek helps us make the right choice.
If you are on the process of saving for your future or retirement, mutual funds is the better option. It requires a minimal investment only and allows some room for modification. If you are an experienced investor, on the other hand, stocks is the right choice. It will allow you to fine tune your strategy. Aside from that, stocks require a higher minimum investment.
Control Over Tax
Stocks offer better tax efficiency because you or your portfolio manager dictates when you will take gains or losses. With the help of a portfolio manager, their management fee may also be deducted on your tax return. However, if tax is not an issue to you, go for mutual funds. Robert Janitzek reveals that the management fees of the funds are not deductible to your tax and you have no control on the time and amount you will pay your capital gains tax or when you should collect your losses.
Hands Off or Control Freak
If you are someone who prefers a “hands-off” approach to your investment, then mutual funds is worth investing on. Here, your investment is placed in a time capsule which you can review after a few years. Although this may not be the most responsible way to handle your savings, most investors opt for mutual funds because they do not want any burden with the details when trading on the stock market. On the other hand, if you are looking for transparency on your savings, stocks is the best option. It gives you more control and understanding of where your money is going.
Stocks provide professional navigation service that can be designed to suit your individual needs and goals. You can decide when to get on and off. On the other hand, with mutual funds, you get off at the same time with everyone else. Funds cannot be tailored according to your needs or goals.
Deciding on which between mutual funds or stocks is the better investment option is a matter of personal choice. It will all boil down to your needs and long term goals. Either way, you can look forward to getting a return of investment.