Buy your first stock or your first fund?You say you want to invest, but you don’t know where to start? This investing primer walks beginners through each step along the way to becoming a shareholder.
What is a share of stock?
Corporations sell shares of stock to raise cash to fund their operations. The first time that a company sells its shares is termed its initial public offering (IPO). Most companies make additional stock offerings from time to time to raise additional funds.
When you buy stock, you are buying ownership in the underlying corporation. For instance, if XYZ Corporation has issued 100 shares, and you buy one share, you have purchased a 1% ownership stake in XYZ.
Corporations sell shares of stock to raise cash to fund their operations. The first time that a company sells its shares is termed its initial public offering (IPO). Most companies make additional stock offerings from time to time to raise additional funds.
When you buy stock, you are buying ownership in the underlying corporation. For instance, if XYZ Corporation has issued 100 shares, and you buy one share, you have purchased a 1% ownership stake in XYZ.
What is the Fund (Public Mutual Fund)?
Mutual funds invest the pooled funds of thousands of investors. By investing in mutual funds you gain the advantages of professional management. Because most funds hold dozens, if not hundreds, of stocks in their portfolios, investing in funds also gives you automatic diversification.
That is an important advantage. Even if you're a gifted stock-picker, inevitably something unexpected will happen that will sink the share price of one of your stocks. Such an event could be a disaster if you own only a few stocks, but would be no big deal for a mutual fund holding a hundred or so stocks.
Mutual funds often specialize in specific market niches, such as small companies, fast-growing companies, etc. You can buy mutual-fund shares directly from a fund company -- such as Public Mutual Fund, which offer a variety of fund types.
Mutual funds invest the pooled funds of thousands of investors. By investing in mutual funds you gain the advantages of professional management. Because most funds hold dozens, if not hundreds, of stocks in their portfolios, investing in funds also gives you automatic diversification.
That is an important advantage. Even if you're a gifted stock-picker, inevitably something unexpected will happen that will sink the share price of one of your stocks. Such an event could be a disaster if you own only a few stocks, but would be no big deal for a mutual fund holding a hundred or so stocks.
Mutual funds often specialize in specific market niches, such as small companies, fast-growing companies, etc. You can buy mutual-fund shares directly from a fund company -- such as Public Mutual Fund, which offer a variety of fund types.
Funds versus stocks:-
There are two basic ways to invest in the stock market: You can buy stocks of individual corporations, or you can buy mutual funds such as Public Mutual Fund.
