Shares vs Mutual funds

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Feb 20, 2023

Shares and mutual funds are both types of investment products, but they differ in several important ways.

Shares, also known as stocks or equities, represent ownership in a corporation. When you purchase shares of a company, you become a part-owner of that company and are entitled to a portion of the company’s profits and assets. The value of your investment in shares can go up or down based on the performance of the company and the stock market. Investing in shares can offer the potential for higher returns, but it also involves a higher level of risk.

Mutual funds, on the other hand, are investment products that pool money from multiple investors to purchase a diversified portfolio of assets, such as stocks, bonds, or real estate. When you invest in a mutual fund, you are buying a share of the entire portfolio, rather than individual stocks. The portfolio is managed by a professional fund manager, who makes investment decisions on behalf of the fund’s investors. Mutual funds offer a way to invest in a diversified portfolio with a relatively small amount of money and can provide a more balanced level of risk and reward than investing in individual shares.

In summary, shares represent ownership in a single company, while mutual funds represent ownership in a diversified portfolio of assets. Both types of investments can offer the potential for returns, but they involve different levels of risk and reward.