A mutual fund is a type of company which pools money from a large number of investors and invests it on behalf of the group, in accordance with a stated set of objectives. Shares are issued and redeemed on demand, based on the fund's net asset value which is determined at the end of each trading session. You can own a small share in hundreds of companies, which would be difficult and expensive to do by buying shares in each of them individually. Professional money management. It's easy to sell your shares whenever you want.
Most funds have minimum investment requirements.
You're trusting someone you don't know with your money, someone who doesn't know anything about you, your goals, and your tolerance for risk. There are over 10,000 mutual funds, and the number keeps rising. Since they've become so popular, there are many different types. Some funds, called index funds, attempt to match the performance of the overall market or a specific index or sector. A few more words about mutual fund fees are in order.