Mutual funds pool money from many investors to buy a diverse range of stocks, bonds, or other securities. For example, if you invest $1,000 in a mutual fund that has 100 other investors, the total pool would be $100,000. This helps you own little pieces of various investments without buying them individually. Let's say the mutual fund has an average annual return of 6%. If you leave your $1,000 invested for 10 years, it could grow to about $1,790, thanks to its diversified portfolio and professional management.

A mutual fund is an investment vehicle that gathers money from multiple investors to purchase a range of securities. It allows individual investors to own a diversified portfolio without having to buy each investment separately, while also providing professional management.