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When you invest in a stock, you are purchasing a share of one company. A mutual fund offers more diversification by bundling many company stocks into one investment. ... But that doesn't mean you have to buy and trade individual stocks u2014 you can also gain that exposure through equity mutual funds. Get more knowledge at our website: https://www.astrahorizon.com/
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PROS • Easy diversification, as each fund owns small pieces of many investments. • Professional management available via actively managed funds. • Investors can typically avoid trade costs. • Many index funds and ETFs have low ongoing fees. • Convenient and less time-intensive for the investor.
CONS • Annual expense ratios. • Many funds have investment minimums of $1,000 or more. • Typically trade only once per day, after the market closes. However, ETFs trade on an exchange like stocks. • Can be less tax-efficient.
PROS • Highly liquid. • No annual or ongoing fees. • Complete control over the companies you choose to invest in. • Tax-efficient, as you can control capital gains by timing when you buy or sell.
CONS • Carry more risk than mutual funds. • Must hold many individual stocks to adequately diversify. • Time-intensive, as investors must research and follow each individual stock in their portfolio. • You'll generally pay a commission to buy or sell.
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