As an investor in equities, you have two choices. You can either opt for directly investing in equities or you can opt for investing in equities via the mutual fund route. Equities as an asset class have not only emerged as a wealth creating asset class over the long term but they are also extremely tax efficient. As a stock market investor you have two approaches to equities. You can opt to directly open an equity trading account with a broker and buy equities into your demat account. Here you can select the stocks you want to buy and also take decisions on churning your portfolio.

The second method is to invest indirectly through equity mutual funds. Here you allocate a certain corpus to the equity mutual fund and the fund manager decides what stocks to buy and what stocks to sell. Of course, this is a transparent process and you can see the portfolio of your fund each month in the fact sheets published by the fund. While equities have a stock price, the mutual fund will have an NAV (net asset value). Both equities and equities have emerged as solid wealth creating asset classes over the long term. For tax purposes, an equity share and an equity mutual fund are given similar treatment. But there are some very subtle differences between the tax treatments of direct equities versus equity mutual funds and you need to take the final call based on your own level of expertise in stock picking and your capacity to spending substantial time and energy in tracking stocks.