Difference between stocks and mutual funds?

Question

What is the difference between stocksand mutual funds? Any web pages that explain this clearly?

Answer 1

A stock is a company.  For example, you can own stock in General Electric.  If you buy 100 shares you own a small part of GE.  When you buy a mutual fund, you are buying shares of many many different companies.  The mutual fund will take your money., pool it with other people's money and buy shares in several different companies.

Answer 2

Nothing to explain. A stock is 1 company. A mutual fund consists of a portfolio of stocks.

Answer 3

a mutual fund is indeed a mix of stocks. One share in the mutual fund is like buying a lot of little shares in each stock in the fund.

mutual funds are generally considered to be lower risk than individual stocks because they are "diversified" -they don't put all their eggs in one basket.

a mutual fund has a manager, a guy (or girl) who picks the stocks. you pay for his work with a fee. The fee is called the expense ratio. but most fund managers are no better at picking  stocks than if you randomly picked them. Sounds crazy but it is true in the long run. that's why responsible investors (like a state pension fund) invest in "index funds", which don't have a manager. Index funds simply follow a rule that they want to match the average of stock market buy buying some of everything. Average may not sound great, but over the long run in the stock market, average is really good, and very low risk.

So if you are investing in the stock market (or bond market) always make the core of your investments index funds, and don't invest with a company that does not offer them. I would suggest Vanguard.com