5 Replies to “what is the different between share market and mutual fund?”

  1. Shares: When companies look for money for their business, they can get it in two ways – either they borrow from a bank and pay interest (“debt”) or they ask people like you and me to invest and give us shares (“equity”). A share is a part of a business.
    Why does the share price go up? The answer is: Perceived value. I may think the company is worth 1 crore, but someone else might think it’s worth 2 crores. When my shares reach my valuation I sell, but someone else will think it’s a good deal and buy.

    Mutual funds: When a lot of shares are available on stock exchanges, you and me don’t know which companies to invest in. But let us say a guy named Sandip Subherwal knows, and keeps track of the market daily. So we give him our money and he buys and sells stocks for us. This is a mutual fund – it’s our money (mutual), and Sandip is a Fund Manager. There is a structure to this in India, so a fund manager is part of an “asset management company (AMC)”. To protect Sandip from running away with our money, SEBI has some rules in place, and there are “trustees” for every fund. With this structure the AMC issues “units” to us for the money we have invested, and tells us how much our units are worth daily (NAV). We can then choose to exit by selling our units back to the AMC (“redemption”).

  2. in simple way in share market you choose which company share you want to buy but in
    mutual funds fund manager and AMC decides and tell you when you invest in that scheme so this is main difference.

  3. There is fundamental difference in these two markets.
    Stock Market is a market where the shares of listed companies are traded (sold and bought) with help of intermediaries. In this case by buying shares of any company you directly become part of share holders or owners of that company/ companies. Any change in the prices of the stocks of that company directly have impact on your investment and change in the value of your investment is identical to the change in the prices of stock/ stocks in terms of percentage. Risk in this market is very high.

    Mutual Fund is a financial instrument that provide investment opportunities to investors to investment in a group of investment classes just by investing in any fund. the change in price of various participating assets classes does not have same %age impact on worth of the investment. It depends on the proportion of the asset class part of the fund. The risk in Mutual Funds is lower than stock market.

  4. for a invester

    share is a stock of a company and you are literally buying a partnership of a particular company.

    and mutual fund is a kind of a gumbo of different stocks (usually 20 +) made by a company or a bank. so you are buying partership in several companies but at a much smaller scale.

    in addition share can be more rewarding at the same time more risky

    mutual fund mostly are less rewarding but at the same time less risky (as chances of 20 + getting bankrupt is less than getting one company bankrupt)

  5. share market is direct investment in equity but mutual fund is indirect investment in equity both investment is same but way is difference.

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