Short-term Investor vs Long-term Investor : It is often floated as a wise saying that Time in markets is more important than timing the market. This is true. But somehow this saying has also morphed into a belief that Time in a particular stock is very important and holding stock for longer duration is the best way to get great returns. This is not necessarily true. What is important is that one needs to stay invested in the markets for a long time for compounding to work but not necessarily in the same stock and there is a big difference between the two. A long term investor will always stay invested in markets for a long term but may stay in a specific stock for a short term and keep on changing stocks. A long term investor may also stay in a specific stock for a very long term and not change stocks frequently. The reasons for buying a stock, staying with the stock or exiting the stock are plenty that can be discussed in another post. But the thing of paramount importance for any investor should be the rate of return that one is getting from that stock over a period of time as against the duration that the stock is being held.

Stocks vs Mutual Funds : Enough has been said and explained on Pros and Cons of Stocks and Mutual Funds both online and offline. So we will not dwell into those details. Another approach that one can take to answer this question is by considering the Rate of return on the time invested. For example : If you are spending 3 hours a day actively following markets, tracking your holdings, studying business and making a return of 18% annually vs you investing in a Mutual fund that gives you 13% return annually. An investor must think on the lines that spending 3 hours a day for all year is worth it for earning 5% extra returns each year. There is no universal answer here that is the right one or wrong one. For someone who has scarcity of time to spend with family or follow another passion or work on another revenue generating venture with better returns, sacrificing extra 5% returns would not matter much. For some, it may be completely opposite. Hence, it’s your personal situation, interest and choice that determine the answer to this dilemma rather than anything else.

Seeking professional help vs Do it Yourself : The same thing goes for the dilemma of seeking professional help or doing it yourself for stock market investing. Usual observation suggests that one is to expect a better rate of return on investment when seeking professional help against doing it yourself. While investment returns are an important factor to decide the answer, equally important is also to consider the factor of Rate of return on time invested while doing it yourself. A professional (Investment advisor or PMS or Research Analyst) does not necessarily have any extra talent or a knowledge or availability of information that a retail investor cannot have specially in today’s Digital era. There is nothing special that a professional is doing that a retail investor cannot do to earn the same rate of returns. However, the Rate of return on time invested for a professional is certainly always going to be higher than an individual investor due to the sheer amount of total money that he or she manages which enables the professional to still spend those extra hours per day to do that. Hence, it’s just like the case of Stocks vs Mutual Funds, your personal situation, interest and choice that determine the answer to this dilemma rather than anything else. Basing your decision on these factors is surely bound to set you on a path to succeed more often.