A stock mutual fund is a portfolio of stocks that has been purchased by a fund manager using money that has been invested by many individual investors. At the end of each trading day, the total value of the portfolio is determined and divided by the total number of outstanding shares, resulting in the current share price. The fund manager then invests the new investment capital. When you decide to sell your shares, the price per share you will receive is the computed share price at the next market close. As the fund manager buys and sells shares, the fund is charged commissions, but they are charged at a smaller institutional rate and absorbed by the entire fund.
Small investments are properly diversified in many different stocks.
You have a professional manager who is highly skilled at picking individual stocks and managing the fund. This is how the mutual fund company makes money. You can easily determine how much risk you are taking based on the type of mutual fund you have invested in. With a single phone call, you can transfer money between different types of funds within the Mutual Fund Family. Most families contain aggressive growth stock funds, conservative stock funds, bond funds, money market funds, and many other types of funds.