These funds are more risky than saving accounts. Mutual funds are portfolios of stocks set up by the company you choose to manage your mutual funds. If the economy is doing well, mutual funds are a safe investment bet. However, if the economy is doing poorly, mutual funds could be disastrous. Although mutual funds are less risky than trading only stocks, the success depends greatly on the stock market.
Mutual funds involve much less work than investing in individual stocks.
The broker does most of the work, and all the student or parent has to do is pick out the portfolio he prefers. But the parents are legally bound to spending on their children's education. When the minor turns 18, the fund is in their hands. Mutual funds are the most risky choice, but the returns on mutual funds could be enormous. This creates popularity among students.