If you’re only buying stocks, you’re missing the bigger picture

Think stock picking is the only way to build wealth in equities? Think again. This article debunks that myth and introduces smart, more accessible options like ETFs and mutual funds, helping you diversify and grow without the stress of picking individual stocks.

Published on 8 January 2026

4 min read

Stock picking is not the only way to capture gains in rising equity markets. Taking into account your risk profile, investment objectives and time horizon, you can also consider investment vehicles such as mutual funds, and exchange-traded funds (ETFs). These alternatives represent a “basket of securities” and can enhance diversification, which can mean consistent and better returns over the long term.

Understanding Stock, Mutual Funds, and ETF

	Stock	Mutual fund	ETF
Definition	A share in the ownership of a company.	A pooled investment vehicle investing in a portfolio of securities.	A fund that tracks an index, sector or asset class but trades on an exchange.
Management style	Individual.	Managed by a professional fund manager. Can be actively managed by a fund manager selecting securities or passively managed.	Managed by a professional fund manager. Typically, passively managed, though some ETFs are active.
Trading	Traded throughout the day on stock exchanges at market prices.	Bought/sold at the end of the trading day at the Net Asset Value (NAV).	Traded throughout the day on stock exchanges at market prices, which generally reflect the movement in the underlying index the ETF is aiming to replicate.
Cost (expense ratio)	Based on brokerage fee and other transaction costs, such as Securities Transaction Tax (STT) and stamp duty.	Higher for actively managed funds; lower for passive funds.	Management fees are typically low due to passive management. Brokerage and other costs apply, such as STT and stamp duty.

Key benefits of investing in Mutual funds instead of equity stocks

Diversification stabilises returns over the long term: Market growth often benefits broad sectors or indices. Diversified funds capture this upside across multiple companies, reducing the risk of missing out due to a single stock’s underperformance. Investing in a single stock, on the other hand, can potentially expose you to company-specific developments such as poor earnings, management issues or industry downturns. Even during market growth, a single stock can underperform due to unique factors.
Low volatility: During market growth, funds participate in the upward trend without the extreme volatility of individual stocks, offering a smoother overall ride for investors.
Cost efficiency: Low fees in index funds and ETFs mean you keep more market gains, especially when this is rising broadly. In contrast, buying individual stocks can incur trading fees (unless you’re using a commission-free platform) and building a diversified portfolio requires purchasing multiple stocks, which increases costs.
Access to professional management: Mutual Funds enable you to benefit from market growth without needing to predict which specific stocks will outperform, simplifying the investment process. Furthermore, they’re managed by investment professionals who can assess market movements objectively, backed by data and experience. Selecting individual stocks also requires significant research, time and experience to identify outperformers. Even in a growing market, not all stocks rise equally and choosing poorly can lead to missed opportunities.

Bottom line: If you’re only buying stocks, you’re missing the bigger picture

Focusing only on individual stocks can narrow your investment outcomes. While stock picking may deliver short-term wins, it often overlooks the fundamentals that drive long-term success diversification, structured risk management and alignment with your investment objectives.

Individual stocks expose investors to company-specific risks and high volatility, and managing them effectively requires time, deep research and ongoing monitoring. A more resilient approach is to build a well-diversified portfolio that reflects your investment objectives, risk tolerance and time horizon, rather than relying on a handful of ideas.

Investors often need assistance building a balanced portfolio tailored to their investment objectives. Working with a SEBI Registered Investment adviser can help turn investment objectives into a personalised strategy that manages risk, reduces uncertainty, and stays focused on long-term priorities.

Disclaimer: This article is for educational purposes only.