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The Benefits of Investing via Funds vs Direct Investing




When it comes to investing, there are two main options available to individuals: direct investing and investing via funds. On the one hand, direct investing involves purchasing stocks, bonds, real estate, or other assets by oneself. On the other hand, investing via funds involves pooling money with other investors to purchase a portfolio of assets, which is managed by a professional fund manager. While both methods have their advantages and disadvantages, investing via funds has several benefits that make it the ideal choice for many investors.  


Diversification 

One of the biggest benefits of investing via funds is diversification. By pooling money with other investors, you are able to spread your investment across a wide range of assets, whilst reducing your exposure to risk and improving your chances of achieving steady returns. On the contrary, in direct investing, it is more difficult to achieve diversification, as you would need to purchase a larger amount of individual assets in order to attempt to achieve a similar level of diversification. This can also be costly and time-consuming for direct investments. 


Professional Management 

Another advantage of fund investing is professional management. Fund managers are highly trained and experienced specialists who are responsible for making investment decisions on behalf of the investors of the fund. Managers have access to a wealth of information, resources, research and analysis, keeping them up-to-date with the market and its needs. Moreover, trusting your investment to a professional ensures licenced and high-quality results, due to the regulations that are established by authorities. This is in contrast to direct investing, where the responsibility of making investment decisions falls solely on the individual investor, with all the uncertainty that may come with them. 


Lower Costs 

Investing via funds can also be a more cost-effective option compared to direct investing. Due to fund managers pooling money from multiple investors, they are able to make investments at a lower cost than an individual would be able to. This translates into lower fees and expenses for the individual investor, which can have a significant impact on their overall returns. 


Access to Expertise 

Investing via funds also gives individuals access to expertise that they may not have access to otherwise. Fund managers have a deep understanding of the markets and the various assets they invest in. They are able to provide valuable insights and advice to investors, as required by their needs and goals.  


Less Time and Effort 

Finally, investing via funds requires less time and effort out of the investors, compared to direct investing. With direct investing, you are responsible for researching and analyzing individual assets, making investment decisions, and managing your portfolio. With investing via funds, the fund manager takes care of all of these tasks for you and frees your hand so you can sit and watch your investments flourish. 


Investing via funds, as we have already stated, has several key advantages over direct investing. Diversification, professional management, lower costs, access to expertise, and less time and effort for investors are the main things you can benefit from. For many investors, investing via funds is the best option since professional management offers high-quality expertise, at a lower cost and with a lower risk.  


Contact BAO to benefit from funds investing yourself and be part of the latest market trends.


February 21st 2023

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