Whether to Invest in the Stock Market Through Investment Funds or Directly

You can invest on the stock exchange directly when you yourself decide when, how much, and how you invest. For that, you need to have experience in trading on the stock exchange, to have the necessary information on market turnovers, to have a short-term and long-term strategy, the necessary accounts and trading tools, and most importantly – the means to invest.

You can also invest on the stock exchange through investment funds, which is much more comfortable.

Invest in the Stock Market or Not?


This has become a rhetorical question these days. Investing in the stock market is the best way to fertilize your capital and finally make your capital work for you. However, investing in the stock market directly is something that requires a lot of knowledge and an approach with extreme caution and only after extensive preparations.

If you do not have the necessary knowledge to be able to invest on the stock exchange independently, the best option is through investment funds. Anyone who engages in trading on the stock exchange, and does not have the necessary knowledge, is doomed to lose and will lose all his invested money. About 80 % of stock trading is performed by insufficiently professional traders. That is why it is always possible to make money on the stock market.

Direct Investment on Stock Exchanges

Direct investment on the stock exchange means that the investor independently hires a broker to whom he gives instructions for buying or selling elements with which he wants to trade on the stock exchange. The investor is provided with many opportunities, from trading stocks, raw materials, derivatives (financial), currencies, cryptocurrencies… In this sea of offers, the investor needs to decide what he wants to trade with because each of these products has different tactics, different parameters, rules of trading…

In addition to this, it is necessary to decide the dynamics of trading. This refers to the dynamics with which monitoring of changes in the stock market should be done – from changes at the level of seconds to changes at the level of days, weeks, or months. The faster the dynamics, the greater the knowledge and self-control required.

Direct Investment Costs


Investing in the stock market is not cheap. In addition to the funds that you are ready to put in investments, it is necessary to take into account the investment costs, which are not small at all. They are different in relation to the amount of planned investment, trading dynamics, conditions under which you start investing…

The most common costs that we need to count on are the costs of opening a trading account, broker costs, stock exchange costs, purchase costs, selling costs, tax costs, withdrawal costs… All these costs can take away the profit you make through trading, and it is extremely difficult to make a net profit. Direct investment is NOT recommended for “small” investors who plan to invest less than € 500,000.

Investing in the Stock Market Through Investment Funds Is the Best Way

Investing in the stock market through investment funds is truly the most comfortable way to invest.The investment fund as a collective investment institution is designed to help “small” investors to participate in world markets under conditions that are the same as for “large” investors. Funds of investment fund members are collected and invested under previously agreed conditions (investment fund prospectus). The costs are calculated as if invested by one investor and are divided among the members of the investment fund. This reduces investment costs and most of the funds are invested.

Advantages of Investing Through Investment Funds


Investing in stock exchanges through investment funds has many advantages over direct investing. Let’s name a few:

  • reducing investment costs
  • provided professional investment management by portfolio managers
  • monitoring market movements by consulting firms
  • the possibility of investing in several types of products
  • portfolio diversification by industries, currencies, geographical diversification
  • the ability to choose the risks you want to accept
  • constant control of your investment
  • maximum liquidity of funds
  • cost-benefit transparency…

Reducing Investment Risk

The risk of investing in the stock market is always present. We cannot avoid it but we can define and mitigate it.
Defining risk means determining exactly how much risk you are willing to accept, and thus how much profit you expect from our investment. Risk mitigation is achieved through diversification and investment. It is known that the risk increases as you plan your investment from bonds, through stocks, derivatives, to currencies and cryptocurrencies. Also, the risk is higher if you have invested in a smaller number of products.

If you want low risk, you will invest in a money market fund, which invests only in bills, bonds, bank deposits, and the like. If you are willing to accept a higher risk, you will look for a balanced fund, which invests part of the money in bonds and part in shares. For investors who accept even greater risk, the fund of choice is an equity fund. For investors who want a high level of risk, the right choice is hedge funds, Forex, and cryptocurrencies. For instance, sports betting and gambling via hedge funds is in expansion in the last few years. Experts wager with their client’s money at online bookmakers or casinos (the best ones are rated at using the same principles as mutual funds, except they bet on sports and games of chance instead of investing in traditional financial instruments.

Invest on the Stock Market Through Investment Funds

The best choice for investing for you is definitely investment funds. By choosing the right investment fund for you, you achieve the ideal risk-return ratio that suits your temperament.

The choice is not difficult to make if you have a professional by your side, so hire one…

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