SHARES vs BONDS vs MUTUAL FUNDS.
Using money to make more money is an investment. Financially speaking an investment basically is an asset that is used with the idea of further growth.
There are several options to invest your capital in:
1.Ownership Investment
2.Lending Investment
3.Cash Equivalents
out of the above given our topic of focus would be Ownership Investments based upon different routes namely stocks, bonds, mutual funds to invest in the market.
A smart investor never streamlines its investments but rather channelise it into various streams.
But to channelise one should have a certain sense about the different streams.
A look into ….
Shares: one of the equal parts into which a company’s capital is divided, entitling the holder to a proportion of the profits, or in laymen’s language a person with any amount of shares of a company is also an owner but bigger the amounts of share bigger is your say in the company.
Bonds: A bond is a contract between two parties. Companies or governments issue bonds because they need to borrow large amounts of money. They issue bonds and investors buy them (thereby giving the people who issued the bond money). This means that at some point, the bond issuer has to pay back the money to the investors.
Mutual Funds: Mutual funds cannot be called investments, these are the funds gathered pooling in investments from several investors to buy large securities (financial assets such as equities, mediums for fixed incomes, etc.). There are two types of mutual funds: Debt mutual funds and equity mutual funds. (equity mutual funds will contain stock and debt mutual funds will contain bonds and securities.).
Let us now compare shares, bonds and mutual funds to have a better understanding
SHARES VS BONDS
Bonds investments and Stock investments are two different kinds of investments. Buying bonds is basically issuing a loan whereas buying stocks is having an ownership opportunity. When people invest in the bond they just own a bond but when investing in stocks you own small integral parts of a company known as shares. But now the question arises should we invest in bonds or shares?
CONCLUSION: SHARES ARE RISKIER THAN BONDS.
SHARES VS MUTUAL FUNDS
Shares are small portions of a company’s big stock value that are traded in the stock market whereas mutual funds are pools of investments.
Here we will compare the shares with equity mutual funds (equity mutual funds are pools of stocks).
Let's compare slightly deep:
CONCLUSION: YET AGAIN SHARES TURNED OUT TO BE RISKIER OPTION OF THE TWO.
BONDS VS MUTUAL FUNDS
Bonds and Mutual funds hold almost similar difference as shares and mutual funds, but the only key difference is bonds are compared with debt mutual funds (debt mutual funds are pools of bonds and securities).
(SCALE: on the basis of comparison between bonds and mutual funds from the scale of 0–10.)
CONCLUSION: Bonds might be a slightly safer option than mutual funds.
SUMMARY
I would summarise the above study with shares being the most riskier medium to invest and bonds might be the least riskier but that does not mean one shouldn’t invest in shares because risk-takers are the ones leading our world economy.
