Hello Readers!

Well, we already know about the various options of investments available in the market, like Fixed Deposits, Post Office, PPF (Public Provident Fund), Mutual funds, Stock Market and more. Of all these possible options for investment, mutual funds investment and stock market investment is the most suggested investment by experts.

People do get confused, what to choose between, mutual fund and stock market for their investment plan. Today through our blog we are going to discuss, the major differences between Mutual Fund and Stock Market, which will help you to decide the best option for your investment plan.  


Mutual Fund is a kind of investment vehicle, where multiple investors, whether individual or community or any institution invests their money in a collective manner which is used to buy securities such as bonds, stocks, and other assets. This whole financial Structure is managed by professional and certified Mutual Fund companies (Asset Management Companies).


Stock Market is a kind of investment, where you spend money to buy a stock of the company, which means you are owning a share of the respective company. In the stock market, investors earn returns in two ways:

  1. Stocks that offer dividends will pay you something every quarter or year.
  2. When you sell the stocks. The difference between purchasing price and selling price, minus fees, is the money that you earn as profit, on your investment.


Mutual Funds and Stock Market are both considered a good investment option for one's wealth generation, but these two investment strategies, differ from each other in many aspects like risk, returns, investment requirement and many more. Let us discuss some aspects of the difference between both.


1. Stock Market: The stock market is considered a bit risky than mutual fund investment. In the Stock market, trading is done continuously, and the prices change throughout the day. The benefit of this is, when the market crashes, you can exit or get out of it, anytime during the trading session.

2. Mutual Funds: Mutual funds, are considered a bit less risky than stock markets. In mutual fund investment, in order to reduce the risk, a lot of stocks are pooled in a stock fund or bond fund. This helps to balance the losses, by the businesses that haven’t performed well, by other businesses that perform well. Also, a diversified mutual fund portfolio reduces the risk of loss, too much extent.


1. Stock Market: Being riskier than mutual funds, the returns generated from the stock market investment, are higher than mutual fund returns.

2. Mutual Funds: Mutual funds offer good returns based on a rate of return up to 10-12%, but they offer less when compared to Stock Markets. Returns in Mutual fund Investment is partly affected by market fluctuations.

Professional Management of Money

1. Stock Market: In stock market investment, all the work related to your investment, like analyzing performance of different stocks, picking up one stock to invest, choosing the time to invest, analyzing and reviewing your investment, everything is carried by the individual, hence to invest in the stock market, you should have a perfect and proper knowledge of market.

2. Mutual funds: In mutual fund investment, it is not necessary that the investor should be graduate in market knowledge, rather in mutual fund investment, there is always a fund manager, available to guide you with your investment so that you can obtain the best from your investment.

De-mat Account 

1. Stock market: For investing in the stock market, it is necessary for the investor to hold a de-mat account. If the investor has no de-mat account, then before buying the stocks, they have to purchase a de-mat account.

2. Mutual funds: Mutual fund investment can be carried with a de-mat account or can be carried without a de-mat account. Basically, for investing in mutual funds, you do not need to have a de-mat account, rather you can use your savings bank account to carry your investment.

The cost of Investing

1. Stock Market: In stock market, fee is charged by the brokers, at the time you sell or buy a stock, fees can vary depending on the services you receive like if you are smart enough to select your own stocks, you will pay less, but if you seek help or advice from brokers to select your stocks to invest, then you will pay more.

2. Mutual Funds: In mutual fund investment, a kind of operational and management fee, known as Total Expense Ratio is charged by the AMC, to the investor, at the time when you buy the fund.


1. Stock Market: In Stock Market, investment is done in individual stocks, which hinders the investor to achieve a diversified portfolio.

2. Mutual funds: In a mutual fund, investment is done in a variety of asset classes to diversify the mutual fund portfolio, so that it can reduce the risk of losing too much extent, during the bear market condition.

Tax-Saving Benefits

1. Stock Market: In stock markets, the investor is liable to pay a 15% tax on their short-term capital gains if they sell their stocks within one year.

2. Mutual Funds: Returns earned through mutual funds are taxable, but there is a trend of taxation in mutual funds based on the fund you have invested and your investment tenure. Also, Equity Linked Savings Schemes (ELSS), a kind of equity mutual funds that offer tax benefits, where investment up to ₹1.5 lakh is eligible for tax deduction under Section 80(C) of the Income Tax Act.


Well, when it comes to choosing one investment option, between two, it is always advised to the investor, decide it after analyzing your objective, your investment tenure, and your risk capacity.

In between mutual funds and the stock market, I would advise, if your objective of the investment is to generate high returns and you can tolerate the impacts of market fluctuations, then it's better to invest in stock market, but do remember, invest in stock market, only when you are master in market knowledge. If you are a novice to the investment sector and know very little about the market, better to invest in mutual funds.

As of now you are aware with the concepts of mutual funds and stock markets, and their features, do analyze your investment objective and risk profile, analysis will help you to choose the best option among these two for your investment, once you are done with your analysis, plan your investment, and build a corpus for your financial goals.

Most importantly, always consult a financial planner or advisor, before starting your investments. They will help you select the best fund, for your investments as per your requirement.

You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).