THE BUY SIGN

STOCKS

A share represents a fractional ownership in a company. As a shareholder, you can make money by selling the stock at a profit, or when you receive dividend

When you buy a single stock, you are betting on the success of that particular company. So, you will make a profit if the company does well and lose money if it doesn’t

There is a trading fee as well as cost to maintain the digital holding of the stock in a Demat account. Additionally, when you sell a share, you pay capital gains on the price appreciation

You can buy or sell a share anytime during a trading day before the end of closing hours

You need to do extensive research when investing in stocks and need to understand each company’s operation and performance

MUTUAL FUNDS

A unit of a mutual fund is a basket of different investments. The investments could be stocks, debt instruments or commodities depending on the fund’s stated objective

Mutual funds are diversified, so they are inherently less risky than individual stocks, but they can still lose money. Their gains and losses generally tend to be smaller than that of stocks

You pay a fee to the fund management company known as expense ratio. This is in a fixed range and depends on the assets managed by the fund. Like stocks, here, too, you may have to pay capital gains tax when you sell units in the fund at a gain

You can buy or sell units in a mutual fund only at the end of each trading day

Relatively less research and you can choose a fund based on your investment needs and its past performance