With £ 100 to invest, is it better to buy 26 shares of Tesco or 159 shares in Lloyds?

He Tesco (LSE: TSCO) The price of shares is currently £ 3.89, while shares in Lloyds banking group (LSE: Lloy) Commerce to less than 63p. So, someone with £ 100 to invest has to make a decision.

Obviously, it is worth considering other actions, but for the same amount of cash that is needed to buy 26 shares in Tesco, an investor could buy 159 Lloyds shares. So is the decision obvious?

Not so fast

Unfortunately not. While £ 100 buys many more Lloyds shares than Tesco, there are a couple of reasons why the investment equation is not as simple as this.

The first is that there are around 60 billion Lloyds shares in the world, compared to a little less than 7 billion shares of Tesco. That means that £ 100 really buys a bigger participation in the retailer than in the bank. There is definitely something satisfactory in having a lot of shares in a company. But investors must take into account that the total number of shares is also important.

So, is it better that an investor considers having a smaller part of Lloyds than a larger part of Tesco? Much of the response is reduced to how companies will work long term.

Similarities

Despite operating in very different industries, companies actually have some important things in common. In both cases, their size and scale give them an advantage over competitors.

For Tesco, having more stores than his rivals gives the supermarket more purchasing power. And this puts it in a stronger position when it comes to negotiating terms with manufacturers and suppliers.

With Lloyds, its scale allows you to attract more consumption deposits than other banks. This gives it an advantage when it comes to financing the loans it gives customers in the form of mortgages.

Whether it is banking or retail sale, size can be a great advantage for a business. But there are also some important differences that investors must pay attention when it comes to Lloyds and Tesco.

Differences

One of the biggest differences is stability. The amount of food and cleaning products that people buy does not tend to change if the growth or hiring of the economy.

As a result, Tesco tends to benefit from relatively stable demand even in more difficult economic conditions. However, Lloyds no: the demand for loans can fall sharply when interest rates increase.

This makes the possibility that interest rates are lower in the long term, a risk with investing in the bank. But it does not automatically mean that the supermarket is a better option.

Banking comes with much higher entry barriers than retail trade, which is a risk for Tesco. And possibly the tastes of Aldi and Lidl provide much more competition than other banks by Lloyds.

What shares should investors consider?

Given the difference in sensitivity to interest rates, I believe that the most important thing for investors is their vision of the future macroeconomic growth. This is not easy, but it is crucial.

For those who trust the underlying economy, Lloyds' actions could be worth a closer look. But for anyone who is less safe, considering Tesco's stability could be a more attractive proposal to consider.