In stock investment, you are going to purchase a share of a particular company. But for the Mutual funds are binding o many company’s stocks into a single investment. This cannot mean that you can only use and trade your shares but you can also gain the part from mutual funds.
• Stock Investment:
You own a share of a company when you are buying stocks. For this, you can money in two ways. The first one is dividend payment, it means the profit pat that divides to shareholders on annual basic. It’s the income of the stock you own throughout the time period.
The second one is to make money to stocks to sell them. And the profit you gain must be the difference between the selling and the purchasing price. The profit comes from the sale stock is capital gain. The trade of stocks is steadily and prices up and down throughout the day.
• Mutual funds:
In mutual funds actually all investors come together with their money and buy a lot of stocks, bonds, and other funds. If you own mutual funds it means that you have the proportional share in these stocks and depends upon the price of mutual fund share aka net assets value. Net asset value is the total of all the mutual fund’s own dividends to its numbers of shareholders.
Mutual funds are controlled by the fund manager, who controls it, when and what to buy and what to sell with all the investor money. Management is of two types, Active management or passive management.
The active manager used active funds to outperform in the market. While Passive manager used the passive funds to simply took and index and replace it with the fund’s holdings.