human
Explain the differences between stock and mutual funds?
assistant
Stock and mutual funds are two different types of investments. Stocks are individual securities that represent a share of ownership in a company. When you buy a stock, you're investing in that company in hope of a future return. Mutual funds, on the other hand, are collections of investments, including stocks and bonds, that allow you to diversify your portfolio. With mutual funds, an investor buys shares in the fund itself, rather than buying a direct stake in the products within the fund. Both types of investments offer different levels of risk and potential returns, but generally stocks offer higher returns with higher risk, while mutual funds offer lower returns but with lower risk.