Share market vs mutual fund: Which should you invest in 2022?

If you want to start investing. But you are confused about where you invest your money share market vs mutual fund? so I am guided step-by-step through this Blog. so let’s get started

In earlier times people used to invest their savings mostly in property and gold, but the time has changed now and digital assets are introduced. There are various assets and positions where people can invest their money to build a strong portfolio and obtain Wealth. Share market and Mutual funds are two of them. The share market is the collection of stocks of different companies and corporations.

They both are similar in a few terms; mutual funds often contain stocks but the way of investing is quite different. Here in this article, we are going to discuss mutual funds and the share market, including their pros, cons, and differences.

What is the share market?

Share Market, Mutual Fund
Image Source – Zeenews

The share market is the place where investors can invest or trade their savings in publicly listed stocks. The trade can be done only during specific hours of the day. In India, the share market is off during weekends and national holidays. A share market is a place where one can build wealth or lose all his savings. The share market is also known as the long-run market where it is beneficial to hold on to long-term investments.

In India, there are usually two major stock exchanges i.e. (BSE)  Bombay stock exchange and the (NSE) National stock exchange. All the trades in the share market will get on through the stock exchanges. The shared art can be profitable in the long run whereas it can be volatile in a short period and one can lose money. Those who understand the trend of the share market will almost double their money. The share market has both pros and cons, here are they:


  • Less trading expenses: The charges of trading in the share market is less than any other assets. Most of the stocks come with minimal trading costs whereas a few brokerages do not charge a single penny for trading in individual stocks.
  • Book huge profit: Investors can gain good wealth while investing in stocks, a trade made with good research and market analysis will undoubtedly give massive profit. Sometimes the profit could be converted into a loss, but do not worry! The market must be stable on the green graph again.
  • Simple to trade: The share market is easy to trade and place an order. Nowadays various brokerage apps make it easy to invest in stock with a single click. You can even trade using your smartphone.


  • Time-consuming: The trade gives profit only when it is performed after well research and analysis which takes both time and skills. Especially for the newbie, it is a lot more difficult to understand the latest trends in the share market.
  • loss: The share market is not stable at all. All the stock exchanges across the globe are connected. If any financial crisis occurs, the market will crash suddenly and the investor will lose his assets.
  • Tension: Those who hold their investments in the share market always have stress and anxiety about the market. This can cause several health issues and circumstances.

What are mutual funds?

Mutual Fund
Image Source – Rank MF

Mutual funds are the group of various stocks, bonds, money market instruments, and other assets, managed by professional managers. Mutual funds are invested by millions of investors and their funds are allocated by the manager to produce profit and gains for the investors. Every investor is interlinked with each other and participates proportionally in the profit and loss of the fund.

The profit is determined by the total market capitalization of the fund. More investors investing their money in the mutual fund means more profit for the existing investors. The graph keeps moving upwards. But if the investors withdraw their capital all the investors face a loss equivalent to the money withdrawn. Mutual funds have several advantages and disadvantages as well, here are they:


  • Low cost: There are various mutual funds that charge low cost because they are passively managed index funds. The investor is not required to pay the large expense ratio. Even a few brokerages deliver their funds with no trading and processing fees.
  • Less stressful: Mutual funds are less risky and stressful as compared to the share market. The investors can keep their capital for a long period and wait for a passive income or gain.
  • Diversified: Mutual funds are the collection of multiple assets, so it is already diversified. There is no need to buy or invest in multiple assets to diversify your portfolio. This practice is performed by the investors investing in the share market.


  • High cost: Some mutual funds care for up to 1% of your annual investment. But some charge a minimal expense ratio.
  • Tax: If the mutual funds seem to be a green graph and gain profit, you are subjected to pay the tax for the gain, even if you have not sold your assets.
  • Risky: If you have invested in an actively managed mutual fund, there are high Chaves of market uncertainties. Passively managed mutual funds are good in this situation.

Share market vs mutual fund (Difference)

Below are the major differences between mutual funds and the share market:

 ParametersMutual fundsShare market
DiversificationInvestors get a diversified portfolio even in one-time investments.Investors can only invest in a particular share at a time.
ReturnsOnly 8% average returns.Average returns of 15-16% in long-term investment.
GrowthProvide good returns only for long-term investment.Can provide good gains in less time.
ObjectiveGrowth of the individual investorsGrowth strategy of corporations and companies.
ChargesMultiple charges like early redemption charges, management charges, etc.Processing fees and brokerage charges
RiskLow riskHigh risk
Investment typeFixed investment (SIP)No foxes investment, based on market fluctuations.
ControlYou have no control over investments.You are responsible for choosing a stock.

Types of mutual fund

Mutual funds are classified into different types based on their characteristics and benefits, here are they:

  1. Equity fund
  2. Debt fund
  3. Money market fund
  4. Index fund
  5. Growth fund
  6. Liquid fund
  7. Tax saving fund
  8. Hybrid fund


You can invest in a single stock at a time whereas mutual funds open a gateway to invest in hundreds or even thousands of stocks, bonds, or other assets. They both will help you to meet your goals and boost up wealth.

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