Indian equities have become an attractive investment option for NRIs over the years. Globally, the Indian economy is considered to be the fastest-growing economy with a GDP growth rate of 6.3%. If you haven’t already invested, now is the right time for you to start your investments in India.
Indian equities are among the best investment options today because of the growth potential they have to offer. Primarily, you can invest in Indian equities via direct stock investment or equity mutual funds. NRIs and OCIs have both options available to them but are often confused what's better.
The choice between stocks and equity mutual funds depends on your capability to invest, track and manage your assets, investment goals, and risk tolerance levels. In this article, we compare the two options and help you make the right decision if you are not sure what's better for you.
Investing in stocks and managing a stock portfolio demands many things. Knowledge, time, effort and little bit of luck. Moreover, investing in individual stocks could be quite risky too.
Trending large cap stocks many not move for years. Mid caps can become small caps instead of becoming large caps. And high potential small caps can go out of business wiping out your capital before you know it.
Simply put, investing in stocks is not only demanding but the likelihood of success is low. Mutual funds offer an excellent alternative to invest in Indian stocks through investment experts.
Mutual funds are professionally managed and invest in a basket of securities. As a mutual fund investor, you need not worry about stock picking, investing or tracking them.
Let's deep dive into the 6 reasons why you should prefer mutual funds over stocks:
Mutual funds invest in equities, debt instruments and other assets. Depending on the type of assets they invest in, mutual funds can be categorised as equity, debt, and hybrid. Investing in equity mutual funds for the long term will help average out the effects of market volatility and generate high returns.
When investing in a single stock, you must be careful, as the markets can sway the share price in any direction. Often, investing in individual stocks can be a hit or a miss. Though the returns can be multi-fold, the risk component is also very high.
Equity mutual funds invest in a basket of stocks. The fund manager carefully picks the stocks that align with the fund’s investment objective. Such a diversified portfolio help reduce the risk of investing in equity markets.
If you are investing in individual stocks, you are exposed to a higher investment risk if you own a concentrated portfolio. But diversification is built into mutual funds.
Professional fund managers manage mutual fund investments. Fund managers and their team of experts track the investments closely on your behalf and rebalance the portfolio to stay ahead of the market movements.
When investing in stocks, you must rebalance your holdings and manage them yourself. It can become challenging to do so for prolonged durations. And since investing is a long-term game, it is always best to have professionals manage your investments.
You can invest in mutual funds with as little as $10. You can opt for a Systematic Investment Plan (SIP) to invest regularly or a lumpsum amount. On the other hand, investing in stocks will require a higher capital.
Investing in a mutual fund will give you access to the entire portfolio of stocks that the fund invests in. Thus reducing the cost of acquiring each stock individually. For buying individual stocks, you need to pay the transaction fee for each transaction that you do.
Buying and selling stocks will require knowledge of financial markets. You must know how to pick the right stocks, when to invest in them, and when to sell them. It can be challenging for NRIs to be active during the Indian market hours (due to the time difference) and make timely decisions.
You can invest in mutual funds anytime from the comfort of your house without worrying about market hours. Since a fund manager manages the underlying stocks, you need not worry about their buying and selling processes. The heavy lifting is taken care of by the fund managers.
NRIs can invest in mutual funds without having to open a demat account. Investing in mutual funds can be done online through platforms like Inri. The entire process of investing is easy and can be done easily. All you need is an NRE or NRO bank account, and you must be KYC-compliant to start investing in mutual funds.
Over the years, the process of investing for NRIs has eased out. NRI can invest in mutual funds online very easily. NRIs can invest in mutual funds in India as follows:
The choice between Indian stocks and equity mutual funds depends on risk tolerance and investment goals.
Equity mutual funds provide diversified portfolios, managed professionally, reducing risk and offering a cost-effective, low-effort investment option. For NRIs, mutual funds present an easier and more accessible route to invest in India, especially considering time differences and ease of management.
iNRI is an online platform that enables NRIs to invest in Indian mutual funds. To make your investment journey easy and hassle-free, the platform offers a wide range of carefully curated themes like Top Active Funds, Hybrid - Equity and Debt Mix, etc. Speak to our experts to get simplified investment advice.