When investing in stock, you buy the shares, which also known as equity shares of ownership in a company. The return on investment depends on the success or failure of that company. If the company you invested does well and making profits from the products or services it sells, you expect to share with it success.

A mutual fund is an investment company that pools the money from investors and invests those money based on certain investment objectives. Usually the fund manager purchases a portfolio of stock, bonds, money market instruments or combination of these investment and investors can buy the shares of the portfolio.