A Study on Evaluation of Mutual Funds and Stock Investments: A Comparative Analysis

Shikha Dua; Saksham Gupta

Abstract

Investment plays a vital role in achieving long-term financial security and wealth creation. It enables individuals to grow their savings, beat inflation, and meet future financial goals through disciplined planning and informed choices. This study explores the comparative merits and limitations of mutual funds and direct stock investments, two widely used investment avenues among retail investors. With the increasing participation of young and digitally empowered investors, the research focuses on 130 students possessing beginner to intermediate-level knowledge of financial markets. The study aims to identify which investment option aligns better with different investor profiles, based on risk tolerance, financial goals, and market understanding. Using a descriptive research design and primary data collection through surveys, the study investigates key dimensions such as risk and return perceptions, investor control, investment costs, liquidity, time commitment, and market knowledge. The findings reveal that mutual funds are generally favored for their lower risk, diversification benefits, and professional management attributes that appeal to conservative and less-experienced investors. In contrast, direct stock investments are preferred by those seeking higher returns and greater control, albeit at the cost of increased risk and the need for active management. The study offers practical insights for retail investors, financial advisors, and policymakers, emphasizing the need for informed decision-making and financial education to navigate the complexities of modern investing.