Stacks vs. Direct Stocks: Things to Consider.
Investment in stocks makes the major faction among all traditional wealth creation instruments like real estate, bonds, insurance, essential services, etc. It looks lucrative and easy money from afar, but it doesn't come without its share of risks.
Without adequate experience and authority in stock trading, you might be setting yourself up for sudden losses. One way to mitigate the net loss is by investing in diversified portfolios. So that the loss incurred in one stock can be offset by the gain made in another.
Prebuilt stacks provide immunity from market volatility caused by geopolitical changes. Stacks are a selection of global stocks curated by investment experts that minimize losses and assure a steady return.
Let's compare the good old stocks with the expert-built portfolios (stacks):
True global diversification
Stacks make a case for true diversification by offering research-backed stocks from companies in different global markets. As an Investor, you don’t need to worry about the niche details of the country’s native stock market. You can also diversify into multiple asset classes within prebuilt stacks.
Global diversification in direct stocks means investing in stocks from different companies across the globe. For that, one must be aware of the country’s political disposition and socio-economic climate. Hence, true global diversification is hard to achieve in direct stocks unless one has domain expertise.
Reduced risk
Prebuilt stacks are ideal for someone who wants to play it safe while receiving stable returns from the market. As the portfolio is diversified, the risk reduces proportionately. The stacks are built such that different stocks are taken from uncorrelated markets, which mitigates the collective collapse of all stocks in the bucket.
Direct stock investing involves high risk and equally high returns. It is a double-edged sword that cut its wielder. As an investor, you need to be willing to make bets without insurance against losses.
Ease of convenience
With stacks, you can invest in baskets of up to 8 asset classes with a single click - instantly diversifying your portfolio. You save crucial time by not needing to perform independent market research for each individual stock. Instead, that time can be utilized in selecting stocks from different predefined themes like real estate, sustainable energy, etc.
On the other side, direct stocks need substantial market research before investing. One needs to be on top of everyday events to devise plans for selling and buying stocks. Furthermore, getting into stocks from different countries is harder as each stock needs an exclusive market study.
Consistent and superior returns
The average stock market return for the last ten years (2010 - 2020) has been 9.2 percent. An investment enthusiast looking to trade in stock securities should be cognizant of the historical average returns.
On the contrary, our all-weather War & Peace stack has shown returns of 20.72 percent over the last three years and even outperformed S&P’s returns at 16.49 percent. All the while maintaining a Sharpe ratio between 1x and 1.5x with expert-led calculated investments in technology, essential services, etc.
Fast liquidity
Once direct stocks are sold back, it takes T+1 to T+3 days for the money to be received in the investor's bank account. However, the earnings from the security can be used instantly for a subsequent trade.
While in stacks, money can be credited within T+3 days after liquidating your investment with zero exit load and no lock-in restrictions, as good as in the case of direct stocks.
Wealth creation has never been more hassle-free before. Leverage the expertly curated and globally diversified portfolios across economies to build wealth that upholds in times of crises and calamity. Invest with us through risk-averse and market-tested portfolios that are optimized for returns.
References -
● https://time.com/nextadvisor/investing/mutual-funds-vs-individual-stocks/
● https://www.investopedia.com/ask/answers/05/062305.asp
● https://www.bankbazaar.com/mutual-fund/mutual-funds-vs-shares.html