Mutual funds vs stocks
Mutual funds vs stocks, In this article, we are going to discuss what is the difference between Stock and Mutual funds.
The stock market is also known as the Share market. When any company needs funds then they raise money from the stock market. Companies raise money either by taking a loan from a bank or from the Stock market. When any company raises money from the stock market then they provide shares to the public and provides partnership in their company. Therefore, by doing that public gets ownership in the company on the other hand companies get money in the exchange of shares. Share price rises based on the profit of the company.
Now let’s see about Mutual funds. A mutual fund is a company that collects money from the public. They have mutual fund managers who will invest the money according to their goals and objectives. The fund manager will distribute the profit among the investors who have invested their money in mutual funds. In mutual funds, the investors have to pay a charge for their investment. These fees will be included in the expense ratio of mutual funds. You have to pay the fees yearly.
So, in the Stock market, you can pay a partnership in the company into which you have invested your money, on the other hand, the mutual fund is a fund in which there is no concept of partnership and all, just invest and get profit.
In Stock, you have to research reports as well as market information and based on that you have to make a decision. While in Mutual Funds you don’t need to take care of this all things because the fund manager will take decisions of your investments.
In Stock, you have to actively manage your account. While in Mutual funds they will provide you all updations on a regular time period.
Mutual funds are safe because companies have strict rules and regulations as well as strict guidelines and they are very concerned about the investment of people. While in the Stock market this might be a risky thing.
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Mutual Funds and Stock both have their pros and cons on their side. So just think smartly and then take a good decision.