How Shares or stocks are different from Mutual Fund?

Shares or stocks and mutual funds are two different investment options with distinct features and benefits.

Shares or stocks represent ownership in a company. When an investor buys shares or stocks in a company, they become part owners of that company and have a proportional claim to its assets and earnings. The value of the shares or stocks fluctuates based on the performance of the company and the demand for the shares or stocks in the market. Investing in shares or stocks can provide high returns but is also subject to high risk and requires a significant amount of knowledge and research.

On the other hand, mutual funds are investment vehicles that pool money from a large number of investors and invest it in a diversified portfolio of stocks, bonds, or other securities. The returns earned from the investments are distributed among the investors in proportion to their investment. Mutual funds offer investors an opportunity to invest in a diversified portfolio of securities with the potential to earn higher returns than traditional savings accounts or fixed deposits. Mutual funds are managed by professional fund managers who have expertise in selecting and managing the portfolio of securities. Investing in mutual funds carries lower risk compared to investing in individual stocks or shares.

In summary, the key difference between shares or stocks and mutual funds is that shares or stocks represent ownership in a company and carry higher risk, while mutual funds are investment vehicles that pool money from investors and offer a diversified portfolio of securities managed by professionals with lower risk. Investing in shares or stocks requires significant knowledge and research, while investing in mutual funds provides investors with a convenient and low-risk way to invest in the stock market.