| It is simply instinctive to get attracted toward | | | | growth? Or those that could face a downswing in |
| equity. The success stories - few true and many | | | | the immediate future? |
| false - of people having become millionaires | | | | In short, are you more knowledgeable than an |
| overnight, are bound to allure anyone. But the | | | | investment company? |
| fact is that Stock Market isn't easy money; Stock | | | | In 99% cases, the answer would be 'Nope'. |
| market is not everyone's cup of tea. | | | | So why do common retail investors enter the |
| It is our hard-earned savings, which is at stake. | | | | hard terrain of securities industry, when you have |
| So let's be very concrete about it. | | | | the chance to allow the exert people to do the |
| Do you have adequate capital? | | | | task for you? |
| It is sheer common sense that a diversified | | | | Do you have adequate time & resources? |
| portfolio with 18-20 stocks is less risky than a | | | | Let's presume that you have big bucks to invest |
| small portfolio with only 3-4 stocks. | | | | and also a really sound understanding of the |
| However, for a retail investor, capital is normally | | | | equity markets. But do you have the third |
| limited. With this small money supply it won't be | | | | important criteria, "Time & Resources"? |
| likely for him to adequately diversify his/her | | | | There are numerous listed companies. Some of |
| portfolio. In such a condition, Mutual Funds extend | | | | them are booming, some were booming and |
| an alternative to be a part of well-diversified | | | | some will be booming. You need to purchase |
| portfolio even with small capital like $100. | | | | stocks that will be flourishing; you need to exit |
| Naturally, a small portfolio can give super natural | | | | those whose flourishing phase is about to cease; |
| returns but on the other hand the risk is also | | | | and you need to hold on to those who are still in |
| very high. This high-risk high-reward scheme | | | | the success phase. The timing is very decisive for |
| wouldn't be appropriate for absolute majority of | | | | making fortune in stock markets. |
| retail investors. It just suits a couple of select | | | | Now this list keeps varying quite frequently and it |
| expert investors who have lots of money to put | | | | calls for constant research to keep oneself |
| into market. | | | | updated. So, there won't be many retail investors |
| Also, with moderate capital it's hard to buy pricey | | | | who can afford to devote time to study |
| shares like Google, Infosys etc. This drives us to | | | | thousands of annual reports and tracking the |
| buy low price stocks. Broadly speaking high-priced | | | | performance of companies. Moreover, yearly |
| stocks will be good shares and low-priced stocks | | | | reports are not all that is needed to research a |
| might not be that good shares. Hence, with limited | | | | company. How many of us can travel to |
| capital you could end up with a inferior portfolio. | | | | company premises, contact their management |
| Given the fact that moderate capital could mean | | | | and talk over their plans, earning expectations, |
| small and inferior portfolio, Mutual Funds perhaps | | | | etc.? Can you talk personally to the industry |
| are more preferable path for those who cannot | | | | experts? Even if you can do all of this, can it be |
| bring in enough money for investing | | | | done on an ongoing basis - day after day every |
| Do you have adequate knowledge & | | | | year? |
| expertise? | | | | So who is best person to do a sound research - |
| Ok, let's be really honest and frank here. | | | | a Mutual Fund with its' experienced research |
| · Do you have more expertise about | | | | squad or you, who are as too occupied with our |
| companies, economy, market trends, etc. than a | | | | own businesses/job? |
| qualified and knowledgeable professional | | | | Unlike all this, opting for Mutual Funds is a |
| investment company? | | | | comparatively much easier task. Also, it does not |
| · Can you interpret the balance sheet and | | | | ask for close monitoring. Hence it becomes the |
| Annual Reports as easily as an investment | | | | finest option for retail investors to relish the yields |
| company and make right conclusions? | | | | of stock market, without being forced to commit |
| · Can you identify the future sectors of | | | | lots of time and effort. |