Direct vs Indirect Investment

Hello Friends, as we had discussed about stocks to invest directly in primary market. I have get some queries that Direct vs Indirect Investment which one is better in between.

In our day to day life most of the people have no time to track stock market daily basis due to time and their job issues and many people have not aware about the stock market how to invest and where to invest. In Stock Market people can easily loose their hard earned money.

Stock Market is nothing but World’s biggest ever Casino where each and every people come to double their money and most of them loose their money. according to my prediction only 15% people could generate profit out of 100% and this things happen due to lack of knowledge and timing of investment.

So Today I’m going to discuss about Direct & Indirect Investment method.

Direct-Indirect-Investment

Let’s Check What is Direct Investment

People who have deep knowledge about market and companies and doing some little research they can easily invest. In Research the main thing to watch is

#Company-Balance-Sheet

#Product-Portfolio

#Future-of-Product

#Margin

#Dividend Yield

#ROE.

above are the key factors to watchout.

If you have money and ready to invest in equity Please create a basket of mixed sectors like #FMCG, #Pharma, #IT, #Finance, #Consumer Goods etc. if 2 or 3 sectors are not performing then remaining will hold your portfolio positive side.

above things can happen only when you have certain amount of money to put directly in stocks in various sectors.

if you have limited money like monthly you can put 2000 to 3000 then should not go through Direct Investment. You should prefer Indirect Investment.

Indirect Investment is nothing but Mutual funds.

In Mutual Funds there is a basket of plenty stocks from various sectors like Finance, FMCG, IT, Consumer Goods, Power, Metal, Infra etc. if anyone wants to make systematically investment with small amount then SIP is the best way in Mutual Funds. Funds managed by top fund houses.

Let’s take an example of Direct vs Indirect Investment

There are two people Raj and Ravi. Raj prefers direct investment while Ravi prefers Indirect.

Both have same amount of Rs. 5000/- per month.

Raj buys 3 shares Reliance, Dr. Reddy’s Lab & Larsen & Toubro each. every month he buys these stocks

after 1 years Raj has invested 60000/- in three sectors Energy, Pharma and Capital goods & Infra.

while Ravi prefers SIP via Mutual Funds where top performing sectors are there like FMCG, Pharma, Infra, Finance etc.

while in that year Pharma & Capital Goods sector was a laggard and energy sector deed well so Raj generated negative return -4.75%.

While Ravi clocks return about 12% because Ravi’s SIP has covered all the sectors including laggard.

Conclusion is always prefer Mixed Basket in which all top performing stocks across the sectors need to be there so the risk will be less.

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