What’s the difference between stocks, bonds and mutual funds?
In: Economics
Stocks are issued by companies in forms of shares. This means you technically own a portion of the company.
Bonds are like loans that you can buy. You can buy them from the government, and they agree to pay you back later at a certain date (the original loan plus interest).
Mutual funds are investors throwing their money together in a pool to buy a variety of stocks or bonds. It’s run by a manager and that person decides what is bought inside the fund. Investing in mutual funds means you’re exposed to a more diversified risk than buying stock in a singular company.
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