Ways to Invest: A Neutral Comparison

This page explains four common ways people invest in Indian listed securities: who makes the decisions, what each one does, and what each one typically costs. It is for education. It does not recommend any option, product or service, and it does not predict returns. Information as of 31 October 2026.

At a glance

  • Investing on your own: you decide and place the trades. Costs are mainly statutory charges, plus any brokerage and demat fees.
  • Mutual funds: a fund manager runs a pooled fund. The cost is the fund’s expense ratio, built into the unit price.
  • Portfolio Management Services (PMS): a manager runs a portfolio for you. The minimum investment is usually in the tens of lakhs of rupees, and fees can include a share of profits.
  • Research analyst services: you receive research and decide for yourself. The fee is fixed and not linked to your returns.

On this page:

The four options side by side

Roles and rules in four ways of investing
Feature Investing on your own (direct shares) Mutual funds Portfolio Management Services (PMS) Research analyst (RA) services
What it is You buy and sell shares through a stockbroker and hold them in your own demat account. You buy units of a pooled fund run by an asset management company (AMC). A SEBI-registered portfolio manager manages a portfolio of securities for you. A SEBI-registered research analyst publishes research and recommendations. You decide whether to act on them.
Who decides what to buy or sell You. The fund manager, within the scheme’s stated objective. The portfolio manager (discretionary), or you approve each trade (non-discretionary), or you carry out their advice (advisory). You. The analyst provides research only.
Who places the trades You. The fund. The portfolio manager, except in the advisory type, where you do. You, through your own broker.
Who holds the securities You, in your demat account. The fund, held through a custodian. You own units. You, with a custodian keeping each client’s assets separate from the manager’s. You, in your own demat account. The analyst never holds your money or securities.
Regulation SEBI regulates brokers and exchanges. SEBI (Mutual Funds) Regulations. SEBI (Portfolio Managers) Regulations, 2020. SEBI (Research Analysts) Regulations, 2014.
Minimum to start No set minimum. You can buy a single share. Often small. Many schemes accept systematic investment plans (SIPs) of a few hundred or a few thousand rupees. Usually in the tens of lakhs of rupees. SEBI’s rules and each provider set it, so check the provider’s documents. Set by each analyst. There is no regulatory minimum amount.
Main costs Brokerage (if any), statutory charges, depository charges, demat account fees. An annual expense ratio built into the fund’s value, and sometimes an exit load. A fixed fee, a performance fee, or both, plus custodian, brokerage and other costs. A subscription fee paid to the analyst. For individuals and HUFs, SEBI limits total research fees to ₹1,51,000 per family a year.
Profit sharing allowed Not applicable. No. The cost is the expense ratio. Yes. Some PMS providers charge a performance fee on profits. No. Research analysts cannot charge fees linked to your returns.

Costs, benefits and risks in more detail

The same questions are answered for each option below, so the answers can be read side by side. The lists of sub-types, benefits, limitations and risks are summaries, not complete lists. Each cost example uses an amount of ₹50 lakh, so that the figures use one common base. The figures are examples, not typical or expected costs, and they do not rank the options. The right choice depends on your goals, the amount, your time and your comfort with risk.

Investing on your own
Costs of investing on your own
Question Answer
Sub-types Delivery-based investing in shares (buying and holding); intraday trading (buying and selling within a day); futures and options (derivatives); other securities such as bonds and ETFs bought through a broker.
How you pay Brokerage (some brokers charge none on delivery trades), government taxes and levies, and demat account charges.
When it is charged Each time you buy or sell, plus any yearly account fees.
Linked to returns? No.
Example on ₹50 lakh One round of buying and then selling ₹50 lakh of shares costs about ₹11,200 on one broker’s published schedule with zero brokerage (about 0.22%). The total grows with the number of trades.
Other costs Tax on gains, and any platform, research or advice fees you choose to pay.
Where to find the exact terms Your broker’s charge schedule.
Benefits You control every decision and choose exactly what to hold. You own the securities directly. There is no manager or subscription fee, and costs can be low if you trade rarely.
Limitations You do all the research, decisions and monitoring yourself, which takes time and knowledge. A few holdings can mean a concentrated portfolio. No one reviews your decisions.
Main risks Market risk: values can fall and you can lose part or all of what you invest. Concentration risk if you hold few shares. Behavioural risk, such as decisions driven by fear or excitement. Derivatives and borrowing can cause losses larger than the amount first put in.

Mutual funds
Costs of investing in mutual funds
Question Answer
Sub-types Equity funds (for example large-cap, mid-cap, small-cap and flexi-cap); index funds and ETFs; debt funds; hybrid funds that mix shares and debt; tax-saving ELSS funds, which have a lock-in period.
How you pay An expense ratio built into the unit price (NAV). Direct plans have a lower expense ratio than regular plans.
When it is charged Daily, as a small share of the fund’s assets. Some schemes also charge an exit load on early redemption.
Linked to returns? No.
Example on ₹50 lakh At an example expense ratio of 0.5% a year, about ₹25,000. At 1.5%, about ₹75,000. These ratios are examples. Actual ratios vary by scheme and plan.
Other costs Exit load, transaction taxes and duties, and any platform or adviser fees.
Where to find the exact terms The scheme’s offer documents and factsheet.
Benefits Professional management. Spread across many securities in one investment. Small amounts and regular monthly investments (SIPs) are possible. Funds are regulated and publish their holdings, a daily NAV and a risk label.
Limitations The expense ratio is charged whatever the return. You cannot choose the individual holdings. Some schemes have an exit load or lock-in. Returns depend on the scheme you pick.
Main risks Market risk: the NAV can fall. Debt funds add interest-rate and credit risk. Fund manager and style risk, as an active fund may do worse than its benchmark. Liquidity risk in some schemes.

Portfolio management services (PMS)
Costs of a portfolio management service
Question Answer
Sub-types Discretionary (the manager decides and trades for you); non-discretionary (you approve each decision); advisory (the manager advises and you carry out the trades). Providers also differ by strategy, such as multi-cap or small-and-mid-cap.
How you pay A fixed fee, a performance fee, or both, as set out in your agreement. SEBI does not allow upfront fees.
When it is charged As the agreement states. SEBI’s own worked example calculates fees yearly.
Linked to returns? Fixed fees: no. Performance fees: yes. They usually apply only to returns above a hurdle rate and a high-water mark (the highest value on which a fee was previously charged).
Example on ₹50 lakh Fixed fee of 2%: ₹1,00,000, whatever the return. With a 15% return before fees and a 10% hurdle: a combined fee of 1.5% fixed plus 10% of the return above the hurdle is ₹1,00,000, and a performance-only fee of 20% of the return above the hurdle is ₹50,000. With a 0% return: the combined fee costs ₹75,000 and the performance-only fee costs ₹0. These percentages are examples.
Other costs Brokerage, custodian and audit charges, GST, and an exit load if the agreement provides for one.
Where to find the exact terms The provider’s disclosure document and your client agreement.
Benefits A professional manager runs or advises on a portfolio held in your name, so you can see each holding. The portfolio can be built around a stated strategy. Fee structures are offered to suit different preferences.
Limitations The minimum investment is usually in the tens of lakhs of rupees. Fees can be higher than other options, and performance fees can add to them. Portfolios are often concentrated in fewer stocks.
Main risks Market risk: the portfolio value can fall. Concentration risk from holding fewer stocks. Manager risk, as results depend on the provider’s decisions. Fixed fees apply even when returns are low or negative, while performance fees apply only when the conditions in your agreement are met. No returns can be guaranteed.

Research analyst services
Costs of research analyst services
Question Answer
Sub-types Research reports; specific recommendations such as buy, hold or sell views with reasons; model portfolios; and ideas on derivatives, which carry higher risk.
How you pay A fixed subscription fee. SEBI does not allow fees linked to returns.
When it is charged Usually at the start of the subscription period. Fees can be collected up to a year in advance, if you agree. For individuals and HUFs, total fees are limited to ₹1,51,000 per family per year.
Linked to returns? No.
Example on ₹50 lakh An example fee of ₹10,000 a year is 0.2% of ₹50 lakh. The same fee is 2% of ₹5 lakh. It does not change with returns.
Other costs Charges and taxes paid to your broker when you act on the research. The research analyst does not hold your money or place trades for you.
Where to find the exact terms The analyst’s fee terms and client agreement.
Benefits Research with a recorded reason for each view. You keep control and own the securities in your own account. The fee is fixed and known in advance. The analyst does not hold your money or securities.
Limitations You must act on the research, place the trades and monitor the holdings. The fee is paid whatever your results. The quality and style of research differ between analysts. Nobody acts for you.
Main risks Market risk on the trades you make. Timing risk, since prices can change before you act. Reliance risk if you follow research without understanding it. Derivatives ideas can lose more than the amount first put in. No returns can be guaranteed.

Which securities and products each option can reach

This section shows, for each option, the kinds of securities and products it can reach. It separates investment-oriented securities, which are usually held over time, from trading-oriented instruments, which are bought and sold over shorter periods. What a person can buy also depends on their broker or provider, their eligibility and the rules in force on the day. Rules change, so confirm with SEBI, RBI and your provider before acting. Listing a product here is not a recommendation to buy it.

Investment-oriented securities
Investment-oriented securities and how each option reaches them
Security Investing on your own Mutual funds PMS Research analyst services
Listed equity shares Buy directly through a broker. Held by equity and hybrid schemes. Usually the core holding. Research can cover them.
IPOs and rights issues Apply directly. Schemes may subscribe. Depends on the mandate and the provider’s documents. Research can cover them.
Equity ETFs and index ETFs Buy on the exchange like a share. Index funds and ETFs are themselves mutual fund schemes. Other schemes may hold them. Depends on the mandate. Research can cover them.
Debt ETFs, government securities, treasury bills and state development loans Buy through a broker or the RBI Retail Direct platform. Held by debt and hybrid schemes. Depends on the mandate. Check with the analyst.
Listed corporate bonds and NCDs Buy through a broker or a SEBI-registered online bond platform. Held by debt and hybrid schemes. Depends on the mandate. Check with the analyst.
Gold and silver ETFs Buy on the exchange. Gold and silver funds exist, and other schemes may hold them. Depends on the mandate. Check with the analyst.
REITs and InvITs (listed) Buy on the exchange. Some schemes hold them. Depends on the mandate. Research can cover them.
Unlisted shares and debt Possible privately, outside the protections of exchange trading. Limited, as the scheme’s rules allow. Limited for discretionary services, with conditions. Check with the analyst.
Overseas shares, ETFs and funds Individuals can send up to USD 250,000 a year abroad under RBI’s Liberalised Remittance Scheme, or use GIFT City routes. Through international funds and fund-of-funds, subject to overseas investment limits that can pause new investments. Depends on the provider and the rules in force. Coverage differs by analyst.

Trading-oriented instruments
Trading-oriented instruments and how each option reaches them
Security Investing on your own Mutual funds PMS Research analyst services
Intraday trading in shares Trade directly through a broker. Not a feature of mutual funds. ETFs trade on the exchange. Not a usual feature. Research can cover it.
Stock futures and options Trade directly in the futures and options segment on eligible shares, under exchange margin and lot-size rules. Used by some schemes within SEBI’s limits, such as hedging and arbitrage. Depends on the mandate and the provider’s documents. Research can cover them. Derivatives carry higher risk.
Index futures and index options Trade directly through a broker. Used by some schemes within SEBI’s limits. Depends on the mandate. Research can cover them.
Currency derivatives (for example USD-INR, EUR-INR, GBP-INR, JPY-INR) Trade directly on exchanges, under RBI and exchange rules and position limits. Not a usual feature. Depends on the mandate. Check with the analyst.
Commodity futures and options (for example gold, silver, crude oil) Trade directly through a broker registered for commodities. Some agricultural contracts have restrictions. Gold and silver funds exist. Depends on the mandate. Check with the analyst.
Interest rate futures Trade directly through a broker. Some schemes may use them within SEBI’s limits. Depends on the mandate. Check with the analyst.

Taxes

For listed shares and equity-oriented mutual funds, the same capital gains rules apply whether you invest directly or through a fund. For the financial year 2026-27, the rules reported were: gains on holdings of more than 12 months are taxed at 12.5% on gains above ₹1.25 lakh in the year, and gains on holdings of 12 months or less are taxed at 20%. With PMS, the securities are held in your name and the gains are generally taxed in your hands. The tax treatment of fees can differ between the options. Please consult a tax adviser.

Things to think about when comparing

  • Who decides. Some options leave every decision to you, and others hand the decisions to a manager.
  • What you pay, and when. Some costs are charged on your money every year, some only when you trade, and some are fixed fees.
  • What you hold. Check whether you own shares, fund units, or a research subscription with no assets attached.
  • Your time and knowledge. Investing on your own, or acting on research, needs your time and a basic understanding of markets.
  • Documents. Read the scheme documents, the PMS disclosure document, or the analyst’s terms and conditions before you commit.
  • Risk. All investing in securities carries risk, including loss of capital. No option guarantees returns.

Check who you are dealing with

You can verify a provider’s registration on SEBI’s website, using SEBI’s search for registered intermediaries (opens in a new tab), which links to the list for each type of provider. Research analysts, portfolio managers and investment advisers each have their own registration number format. Investment advisers are registered separately from research analysts. They give personalised advice based on a client’s risk profile, which research analysts do not. Be careful with anyone who guarantees returns or asks you to send money to a personal account.

Where to check registration and where to complain

Where to check registration and where to complain, for each option
Option Who to look up Where to check registration Who to contact first with a problem
Investing on your own Your stock broker and depository participant. SEBI’s lists of stock brokers (equity segment) (opens in a new tab), depository participants registered with CDSL (opens in a new tab) and depository participants registered with NSDL (opens in a new tab). Stock exchanges also list their members. Stock exchanges also list their members. The broker’s or depository participant’s grievance officer.
Mutual funds The fund house (AMC), and any distributor or adviser you use. SEBI’s list of registered mutual funds (opens in a new tab). The fund house’s investor service team.
PMS The portfolio manager. SEBI’s list of registered portfolio managers (opens in a new tab). The portfolio manager’s compliance or grievance officer.
Research analyst services The research analyst. SEBI’s list of registered research analysts (opens in a new tab). The research analyst’s grievance contact.

If the provider does not resolve your complaint, you can file it on SEBI’s SCORES portal or raise a dispute on SEBI’s Smart ODR portal. SEBI’s Smart ODR page says to take the complaint up with the provider first. Keep copies of your agreement, payment receipts and messages.

Sources and further reading

About this page

This page is published by M R Sai Praveen, a SEBI-registered research analyst who provides research services under the brand name Shubhaang. Research analyst services are among the options described above, and M R Sai Praveen earns subscription fees from them. Registration details, the Investor Charter and complaint information are in the footer of this website.

This page is for education only. It is not investment advice, an offer or a solicitation.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI and enlistment with BSE do not guarantee the performance of the research analyst or assure any returns to investors. Past performance does not guarantee future results.