It is a reserve of money from many different people that is then invested in a portfolio of stocks, bonds, and / or other investments to achieve a specific goal.

They are very attractive to the average person because you can actively participate in a wide range of investments that are prohibitively expensive on your own.

Because mutual funds are managed by professionals, you only need to know which funds are consistent with your own goals and tolerance for risk.

How do they work?

Instead of buying individual stocks or bonds, you are buying a portion of the fund, making you a shareholder. You can buy and sell shares in mutual funds, and as long as you have your shares, you can participate in the fund’s rewards (increase in value) and risks (decrease in value). Mutual funds are very easy to invest, although fees and costs can vary widely.