Mutual funds are a collection of several stocks and bonds taken care of by fund managers in Asset Management Company (AMC).
They collect money from several investors and invest in selective company’s stocks or bonds. The returns accumulated from these investors are given to the investors. An investor can either opt for SIP or in lump sum mode to invest in mutual funds.
Mutual funds like a basket that contains a large number of shares from several companies.
There are two different types of mutual funds?
Mutual funds also invest in several money market instruments that include treasury bills and participatory notes.
These funds are also used as a purpose to invest in real estate, gold and other commodities. In simple words, mutual funds invest your money in various categories of an asset class to generate returns.
Shares are small units of a company’s capital that represent their value and are usually traded on the stock market. Shares are also called equities or stocks.
Mutual funds are a collection of several stocks and bonds taken care of by fund managers. They collect money from several investors and invest in selective company’s stocks or bonds. The returns accumulated from these investors are given to the investors.
The major difference between shares and mutual funds is that in shares an investor has to open a demat account, pay brokerage and other broking taxes and monitor the portfolio regularly. While in mutual funds an investor has to only need to buy Units of any particular schemes at NAV price and no additional broking taxes or charges. The NAV price is adjusted as per the expense ratio and the funds are managed by experienced fund managers that deliver returns.