- NEW!
by wtschenck on October 23rd, 2009
Companies issue stock to raise money (capital). When you own a share of stock, you own a proportionate share of the company that issued it. If that company does well, the value of that stock generally rises with the value of the company. If the company does poorly, the stock value will suffer. If a company goes out of business, stocks may become worthless.
Mutual Fund Companies issue Mutual Funds that are comprised of ownership equivalents in many companies. If one or more of the companies does badly, it doesn't make a huge difference in a well-managed, diversified mutual fund. The fund manager can make changes to the line-up of companies represented in the mutual fund. It's kind of like soup - there are many ingredients. If some peas go bad, get new peas. The soup's still good!
No Mutual Fund has ever gone bankrupt! You can't say that of Stocks. Either may gain or lose value, however. Remember Enron. Bad stock to hold, eventually. But many Mutual Funds held some Enron. Throw out the Enron, get something new!
Get a referral from a friend or trusted advisor to find a financial advisor you can work with.
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You're reading What is the difference between stocks and Mutual funds. Which one should we be investing in to make money stocks or Mutual funds.Does any one have any insight as to what to put money into that will not lose value
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