Investing Stock Or Mutual Funds
Before you invest your money, you need to understand your investment. Should you invest in stock or mutual fund? You should understand the difference between stocks and mutual funds.
Stocks are pieces of corporate pie. When you buy stocks, or shares, you own a slice of the company. For example, if you buy the shares of P&G, you own a slice of P&G.
A mutual funds is a collection of stocks, bonds or other securities owned by a group of investors and managed by a professional investment company. In this case if you buy a particular mutual fund like S&P 500 Index Fund, you are owning a collection of 500 companies in this fund.
Having understand the difference between stocks and mutual funds, you should analyse your ability to tolerate risks when investing. If you risk threshold is low, maybe mutual funds might be more suitable for you. If you understand your investment so well like Warren Buffett, he can buy a particular stock like Coca Cola in terms of billions.
Understanding the difference between them will help in your investment decision.
By Sean Toh
