• Learn the differences between mutual funds and stocks to decide how to build your wealth."Money" is Copyrighted by Flickr user: AMagill (Andrew Magill) under the Creative Commons Attribution license.
  
  

Features

• Individual stocks represent equity, or ownership rights, over a corporation. Mutual funds are pools of investor money that that a professional money manager allocates.
  
  

Valuations

• The stock market negotiates individual stock prices according to management decisions and economic factors that influence the future profit potential of the company. Mutual fund valuations are generally set by net asset value (NAV), or the total assets of the mutual fund divided by the number of outstanding mutual fund shares.
  
  

Identification

• One- to four-letter ticker symbols identify individual stocks. Mutual fund tickers carry five letters, including a closing "X."
  
  

Risks

• Individual stocks are generally riskier because the bankruptcy of a particular business means that its shares are nearly worthless. Mutual fund investments carry risks from improper money management decisions and hefty tax bills beyond your control. Money managers buy and sells stock at their discretion, and you are responsible for capital gains taxes on these transactions.
  
  

Selection

• Generally, investors who are willing to take on more risk and have the time and knowledge to research the stock market should buy individual stocks. Those who lack the money to diversify their investments are better served with mutual funds.