What are mutual funds?

Mutual funds are investment vehicles that pool money from a variety of investors to collectively purchase a diversified portfolio of securities, such as stocks, bonds, or other financial instruments. This collective approach allows individual investors to gain access to a broader range of investments than they might be able to manage on their own. By investing in a mutual fund, participants benefit from professional management and diversification, which can help to mitigate risks associated with investing in individual securities.

While loans for vehicles, investment products with tax benefits, and financial products that guarantee returns are all related to personal finance, they do not accurately describe what mutual funds are. Mutual funds specifically focus on pooling resources from multiple investors to invest in a mixture of securities, providing an opportunity for management by experienced professionals and access to diversified investment strategies.