There are different ways of making an investment in the stock market. Let’s just say they are broadly categorized into two ways- actively managed funds and passively managed funds.

Indexing investing: This is a passively managed investment strategy, that attempts to generate similar returns as a broad market index. Under this type of investing, the performance of a specific index is replicated, generally an equity or fixed income index, by purchasing funds that closely track the underlying index.

Active Investing: Under this type of investment, active investors purchase securities and continuously monitor their activity to earn a profit. Usually, active investors seek short-term profits and are continuously involved.

Individual Stock Picking: Under individual stock-picking investors generally keep a strict eye on some selected shares and monitor their market conditions, however sometimes even the closely monitored shares investment would not give desired return and would amount to a huge loss. So, basically to pick stocks individually one has to be an expert because you can’t always play on luck, you need strategy too.

To summarize:

Therefore, investment in any form depends upon one’s own requirement and the risk they are willing to handle, profits they want to target. Every investment has it’s own disadvantages too.