What Are Shares?
Shares represent ownership in a single company. When you buy shares, you become a part-owner of that company.
Example: If you buy 10 shares of Infosys, you own a small piece of Infosys.
What Are Mutual Funds?
Mutual Funds are pools of money collected from many investors to invest in multiple shares, bonds, or assets. A professional fund manager handles your money.
Example: If you invest in a mutual fund like SBI Bluechip Fund, it invests in many companies like HDFC, Infosys, and Reliance — all in one go.
Key Differences Between Shares and Mutual Funds
| Feature | Shares | Mutual Funds |
|---|---|---|
| What You Buy | Ownership in one company | Investment in many companies/assets |
| Control | You choose and manage stocks | Fund manager handles everything |
| Risk | Higher — depends on one stock | Lower — spread across many investments |
| Returns | Can be high but volatile | More stable but slightly lower |
| Ease of Use | Needs knowledge and time | Beginner-friendly and convenient |
| Cost | Brokerage charges on buy/sell | Small fund management fees (1–2%) |
| Ideal For | Active investors | Beginners and passive investors |
Simple Analogy:
- Buying Shares: Like picking your own team in fantasy cricket.
- Buying Mutual Funds: Like trusting a coach to pick and manage your team.
When to Choose What?
Choose Shares if:
- You understand the stock market
- You want full control
- You can handle risk and track companies
Choose Mutual Funds if:
- You’re new to investing
- You want professional help
- You prefer diversified and low-risk options
Example:
Ravi invests ₹10,000 in Infosys shares – if Infosys grows, he gains. If Infosys falls, he loses.
Meena invests ₹10,000 in a mutual fund that invests in Infosys, HDFC, and TCS. Even if Infosys falls, others may balance her return.
Conclusion
Shares and mutual funds are both great ways to grow wealth — but they suit different people. Shares offer high reward with high risk and need active tracking. Mutual funds are safer and easier, especially for new or busy investors.
