Should you invest in stocks or Mutual Funds to become really rich?


I was recently having a lively discussion with my friends about investing and getting rich.

Some of them believed that (Equity) Mutual Funds can help one earn 14-15% returns in the long term, whereas if you really want to get rich, you need 30-40% per year like returns and for that you should invest directly in stocks.

Being in the investing profession, I had a slightly different view point.

I do believe that just by investing in Mutual Funds you are not going to become crazy rich. It is good enough to help you achieve your financial goals and at some point become financially independent which in itself is a great thing but if you want to become really really rich, just investing in Mutual Funds is not going to make it happen.

But investing in stocks is also not going to do it. Conceptually, there is hardly any difference since Mutual Funds invest in stocks only (~40-50 good ones). It is wildly optimistic to think that you can earn 30-40% from the same stock market that your Mutual Fund manager, who has probably devoted his life to it, makes only 14-15% in. In fact, common sense would suggest that you are much likely to do worse.

If you want to be really really rich, you have to become really really good at what you do.

Your best chance of making a ton of money is via your own profession and not by saving and investing.

People who have become multi-millionaires or billionaires by investing are people who made investing their profession and devoted their lives to it.

You can potentially make 30-40% from the stock markets but for that you have to become crazy good at picking stocks (better than your Mutual Fund manager) and for that you need to make it your life's pursuit, essentially making that your primary occupation.

Or you could stick to what you are already good at and like doing and continuously become better at it.

That's where the biggest opportunity for getting rich lies for all of us - in our own work.

Go do that course or attend that networking event (or join a promising startup early :D) that will help you level up in your career.

Invest in yourself.