Mutual funds, while attracting low risks, also earn low-medium yields. On the negative side, they have higher fees than stocks. Stocks, on the other hand, are riskier, but their potential reward is medium to high. Their investment is in the ownership of a company. That is, as the company grows into a behemoth, so will the shares.
A mutual fund's fund managers do not always invest in stocks. To protect investors from adverse risks, they diversify their portfolios with bonds or other debt securities. As an investor, you must weigh your risk tolerance against your income objectives. In general, a mutual fund is a better option if you have a low risk tolerance. Invest in stocks, on the other hand, if your goal is a higher reward without being bothered by the risk level.