What is a mutual fund?

A mutual fund is an investment vehicle that pools money from multiple investors to create a diversified portfolio of securities such as stocks, bonds, or other assets. This collective investment approach allows individual investors to gain access to a broader range of investment opportunities than they might be able to afford on their own. By pooling funds, investors can benefit from professional management and diversification, which can reduce risk compared to investing in individual securities.

Mutual funds give investors an opportunity to spread out their risk as the capital is distributed across various assets, and the performance of the fund is typically managed by financial professionals who research and select the investments. This makes mutual funds an attractive option for those looking to invest their money in a more managed and diversified manner rather than picking individual stocks or bonds.