Mutual Fund/Unit Trust vs Direct Equity Investment?

When looking at these investment options, there no real right or wrong answer. Each option has pros and cons, you’ll have to decide which options will suit you best.

With a Direct Equity Investment you’ll need a lot of time, knowledge, discipline, capital and the ability to detach yourself emotionally from your investment. If you have all these arrows in your quiver and you can time the market, the returns will definitely be superior compared to a Mutual Fund Manager.

When looking at Units Trust, here you’ll get the time, knowledge and discipline of a fund manager. Who should be an expert in this area. Unit Trust also gives you more exposure to a broad range of stocks for not a lot of money. You can build a portfolio with adding ad hoc payments or a monthly debit order over time, without having to pay brokerage fee on every transaction.

Research has shown that very few investors can honestly claim that they’ve been successful at buying low and selling high. The market is very unpredictable and nobody really knows how the market will actually perform. Successful investors rather look for cheap stocks with the prospect of increasing their value over time.

Having said that, a lot of time should be spent on understanding why the stock is cheap and to determine whether the stock has the ability to improve its value over time.

With all this being said, it is clear that it is a bit more difficult and time consuming to go the Direct Equity Investment route and you’ll also need more capital to make this type of investment worth your while….


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