What Is The Difference Between Shares And Mutual Funds?
A share is a unit of ownership of a company that is issued by the company to raise finance to enable it to extend its scope or fund other growth related initiatives. A shareholder is a part owner of the company who can influence decisions related to new business ventures and the like and also receives a share of the profits generated known as dividends. Mutual funds on the other hand are investment opportunities offered by a finance institution which may be in the form of shares, bonds and other forms of securities that are then reinvested in other ventures with the institution taking care of the entire transactions. The essential difference between the two is that a share has the advantage of the holder discerning market trends with respect to the specific company while in a mutual fund the investor often cannot determine the exact channels of return on investment which is the domain of the portfolio manager in charge of the mutual fund.
A share is a unit of ownership of a company that is issued by the company to raise finance to enable it to extend its scope or fund other growth related initiatives. A shareholder is a part owner of the company who can influence decisions related to new business ventures and the like and also receives a share of the profits generated known as dividends. Mutual funds on the other hand are investment opportunities offered by a finance institution which may be in the form of shares, bonds and other forms of securities that are then reinvested in other ventures with the institution taking care of the entire transactions. The essential difference between the two is that a share has the advantage of the holder discerning market trends with respect to the specific company while in a mutual fund the investor often cannot determine the exact channels of return on investment which is the domain of the portfolio manager in charge of the mutual fund. However unlike shares where often the individua
The answer above was very good and detailed but may be a bit difficult for a beginner. Here is a similar answer, but more simply explained: If you buy a share, you are a co-owner of a company. You have a small part of it. If the company gets more valuable, your share will usually get more valuable. If the company makes profits, like any owner, you should get share of that profit, called a dividend. But as a beginner, how do you know what is the best company to buy shares of? Most of the shares I have bought have not done very well 🙁 Mutual funds are a collection of shares and other investments which are made by a professional investor. The investor buys hundreds of shares and other investments. You can participate and own a fraction of those investments. If the funds investments do well, you do well. The investor gets paid from fees, usually about 0.5 – 2% of the money invested. So, the advantage of the mutual fund is: * You are not buying 1 or 2 shares, your fund has hundreds or even
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