You don’t have to be a stockbroker or fiscal planner to become a prosperous investor. But from stocks to mutual funds, a beginning investor can well get stuck in the maze of stock market terminology. So what’s the deviation between a stock and a mutual fund? And how do I get started investing in either one?

Corresponding to  Gentry, a registered financial planner for five years at Merrill Lynch in Scottsdale, Ariz., there are several differences between stocks and mutual funds.

“With stocks, you [the investor] have possession in one company,” Gentry said. “Mutual funds, on the other hand, provide more diversity and allow you to have ownership in several companies.”

Another reward mentioned by Bonnie Gentry includes the fact that your money could also be invested in bonds within that fund or even as true cash, providing for the mutual fund company to make new stock purchases.

While mutual funds do offer greater diversity and consequently less risk, Arizona State University assistant professor of finance, J Griffin said there are still reasons for investors to be cautious.

“The fallacy of investing in mutual funds is that most people will say ‘Oh, since my mutual funds are diversified, I’m safe,’” Griffin said. “These mutual funds [managers] invest in the market just like regular stocks and they’ve gone down before as well.”

However, Merrill Lynch’s Gentry still recommends mutual funds for first time investors looking for a safer option to stocks.

Once you’ve studied the dangers involved, there are a number of means to open and handle your own account Online brokers like Ameritrade and Datek, for example, are both free of fees when starting a new account, but have various prices when it comes to individual trades. Most companies will expect a minimal starting investment of $500.

One such pupil that took on the risk of investments is Pat Jennings, a 17-year-old supply chain management senior at Arizona State University. Jennings started investments 2 year ago and said her aspiration came from learning various books that discovered the grandness of investing and how careful planning and solid long term investments could lead to a moneymaking future.

So, should the recent scandals surrounding companies like Enron and WorldCom, detract pupils from entering the market? Not for Jennings, who aforementioned most fears of investing in the market are typically unwarranted and has not touched her decision to keep investing.

“It’s a fragile concern,” Jennings said. “One matter I did was break into was several [analyst] reports and the background of each company before investing. The realness is that you have to be willing to take on some risk.”