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Mutual Funds Stocks

What is the actual difference between Stocks and Stock Mutual Funds?

Searching for the difference between Stocks and stock mutual funds? Well then just for your information, stock investing is not that complicated as it seems. Stock market investing for most people means choosing among Stocks and Stock Mutual funds (i.e., two basic types of investment)

1. Exchange-traded Funds (ETF’s) – ETF’s or also known as stock mutual funds give you the power to purchase a small portion of multiple stocks in a single transaction. ETFs are a type of Mutual funds only that tracks an index. All funds replicate an index y buying shares of the company in it. So when you invest your money in that index makes you owning a portion of the shares of those companies in it too. Stock mutual funds sometimes also known as equity mutual funds.

2. Individual Stocks – If you want to deal with individual stocks then you can buy shares of a specific company you wish to hold shares of only if that company is listed. Investing in individual shares is a way of dipping toes into stock exchanging waters. Building a diversified portfolio consisting of no of stocks is possible only with a significant amount of investment.

The upside of equity mutual funds is its inherent diversification. It also helps in lessening the risk factors associated with it.

So for those looking for investment for retirement purposes – investing in mutual funds is the optimal choice.

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