A mutual fund is a type of pooled investment that enables individuals to contribute money alongside other investors to create a diversified portfolio of securities. These funds are professionally managed and typically invest in a mix of assets such as stocks, bonds, and money market instruments.

By combining resources, investors gain access to a broader range of investments than they could individually, helping to spread risk and reduce the impact of market fluctuations.

Mutual funds are designed to offer diversification at a relatively low cost and are suitable for both new and experienced investors. Returns are shared proportionally based on each investor’s contribution to the fund.