Stocks Vs Mutual Funds

[Rogers]

One of the first big investing questions is how you begin investing in stocks. You need to know the pros and cons of each. Don't forget a mutual fund can be active OR passive; most people miss this difference. With an active mutual fund, a fund manager chooses stocks for the fund.

With a passive mutual fund, the fund simply holds the stocks in a particular index, such as the s&p500. While individual investors don't have access to the research team that a mutual fund would have, she is able to get in and out of stocks quickly and easily. These are 2 of the main differences in investing with mutual funds vs stocks.

 

[Catherine Acorda-Mapalo]

When you buy a stock, you are owning a share of the corporation. You make money in two ways. Stocks that offer dividends will pay you something every quarter or year. That provides an annual stream of taxable income.
You also make money from stocks when you sell them. Your profit is the difference between the selling price and your purchase price, minus fees. Stocks trade continuously, and the prices change throughout the day. If the market crashes, you can get out anytime during the trading session.
Mutual funds pool a lot of stocks in a stock fund or bonds in a bond fund. You own a share of the mutual fund. The price of each mutual fund share is called its net asset value. That's the total value of all the securities it owns divided by the number of the mutual fund's shares. Mutual fund shares are traded continuously, but their prices adjust at the end of each business day. That's not good if the market is crashing.

 

[Jasmine]

Stocks investment and mutual funds investment, both are passive income methods. The only difference is your return on stock investment is not guaranteed, you might make money, or may not make money, you might make a lot of money, or you might lose a substantial portion of your investment. However, when you invest in mutual funds, your return on investment is guaranteed, no matter what happens to the market, you will surely receive return on your investment.