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Investing in the right way is a long-term game. The very first principle of investing is the assessment of an investor’s risk appetite. You need to assess how much you can afford to lose on a single investment without affecting your liquidity and daily expenses. Second is returns – you should accumulate the returns till the time you do not need the capital and, the returns should be withdrawable when you need them for a financial goal.

Shares vs. Mutual Funds

1- Hands-off approach In this fight for risk and returns, share investing and mutual funds are the front runners. Financial experts suggest a newbie investor to start with diversified mutual funds in the form of an SIP to be able to withstand economic changes and leave the worry of investing to an expert fund manager of the mutual fund company.

Stocks on the other hand demand attention and “rebalancing” from time to time to nurture and grow your portfolio. This is because there is no other “manager” apart from you. You need to equip yourself with the knowledge of economic changes and approximate timelines of major events to ensure you do not invest in a losing stock and are able to cut your losses quickly enough.

2- Time consuming Stock picking and self-portfolio management is time consuming which might not be possible in a daily grind and also requires you to be aware of economics and financial scenarios of stocks.

Mutual funds require your attention only during the investing time and you can let them grow with the hassles of reporting left to the fund house.

3- Risk Direct stock investing is definitely riskier than investing in a mutual fund as the risk onus is completely on you. A mutual fund has the collective onus of investment and risk distributed between all the fund investors or unit holders. Thus, you can be assured of little losses when the market crashes.

Issues with Mutual Funds

However, many investors still tend to be wary of mutual fund investing owing to high expenses of fund houses and lower than expected returns. This happens because stock picking by fund managers might not be up to the mark. Also, some fund houses tend to over-diversify between sectors and stocks which leads to poor performance. In effect, you as an investor are left with no say in the investments your money is put in.

Pick a Dependable Stock like Bajaj Finance

If you want to avoid these issues with mutual fund investing, go for stock picking of companies in sun-rise sectors which are up and cherry-pick the top performers. Bajaj Finance fits these criteria very easily as it is one of the top-performing stocks in the financial services industry. With its diversified businesses across lending, insurance, investments, and securities trading, it has established itself in the hyper-competitive retail lending arena.

With multiple opportunities to cross-sell, the stock is poised for high growth in the coming years.

Past Performance of Bajaj Finance Share Price

Source: Moneycontrol.com

Bajaj Finance share price grew from Rs. 2,955.55 on Jan 25, 2019, to Rs. 4,194.50 on Jan 24, 2020, giving a CAGR of 41.9%.

This is a whopping return, unlike any other investment. Even specific mutual funds which are supposed to be well-diversified to take advantage of market movements usually do not present such returns.

The share seems to be a stock market favourite giving a 4% increase on NSE on the day when its Q3 FY20 results were declared, i.e., on January 29, 2020.

Thus, it is no surprise that BAJFINANCE(NSE) stock is one of the favourites of nearly all brokerage houses, giving it BUY ratings across a time horizon. The strong fundamentals of the company with opportunities to grow with an impetus on cross-selling, it is on its way to becoming a bellwether company.

While mutual funds will always be there, picking up a stock like Bajaj Finance will enhance your portfolio multiple times and you can be the decision maker of all investments in the stock and the future heights it will achieve.

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