What is the difference between a mutual fund and a bond?

The main difference between a mutual fund and a bond is their nature and purpose.

A mutual fund is an investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. It is managed by professional fund managers who make investment decisions on behalf of the investors. The objective of a mutual fund is to generate capital appreciation or income for the investors.

On the other hand, a bond is a fixed-income security issued by governments, municipalities, or corporations to raise capital. When an investor purchases a bond, they are essentially lending money to the issuer in exchange for regular interest payments and the return of the principal amount at maturity. Bonds are considered relatively safer investments compared to stocks as they offer a fixed income stream and have a predetermined maturity date.

In summary, while a mutual fund is a diversified investment vehicle that invests in various securities, including bonds, its objective is to generate returns for investors. A bond, on the other hand, is a fixed-income security that represents a loan made by an investor to an issuer, with the aim of earning interest income and the return of the principal amount.