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Mutual Funds

A mutual fund is an aggregation of money from a group of investors. A professional mutual fund manager invests the group's money across a variety of bonds, stocks and other financial products. The fund manager decides the optimum timing for buying and selling the securities that are part of the fund. The advantage of mutual funds, to the individual investor, is the inherent diversification of the pool of investments. If you are not sure which stocks to pick, a mutual fund is a safer bet, because a professional does the picking for you. Usually, you will pay a small fee for that service. Additionally, index funds are mutual funds that just invest in the S&P 500 stocks or other indexes.