Diversification allows you to pool funds with many other investors to buy a larger number of stocks or bonds than you might be able to purchase on your own. Additionally, your funds are liquid. Your mutual fund shares can be sold at their current net asset value at any time at the prevailing market price. There are mutual funds available to meet almost any investment objective. When you invest in shares of common stock, you become an owner of the company which issues the shares.
Common stocks offer tow types of returns.
The dividends paid on your shares, and the potential increase in the price of the shares. Stock prices can fluctuate for many reasons, including the expectation of a change in a company s earnings, revenues and assets. Profitable companies in mature industries ordinarily pay relatively high dividends. Other companies pay modest dividends or not at all, preferring instead, to reinvest their profits for internal growth. You shouldn t expect to find a company with considerable growth potential that also pays a high dividend.