Mutual funds pool resources from many investors to buy securities according to a specified investment strategy. Investors can pick from several types, such as bond and stock mutual funds.

Investing in mutual funds provides investors with fractional ownership of the total portfolio of securities, allowing them to achieve portfolio diversification more easily. Investors should read the prospectus before investing in mutual funds in order to understand their classification, purpose, and investment strategy. The prospectus also provides information on the fund's risks, fees, and expenses.

Mutual funds offer diversification and professional management access without requiring large initial investments. Investors can contribute small amounts, set up regular contributions through automatic transfers, and adjust their investments over time, allowing investors to build diversified investment portfolios.

Finally, mutual funds offer liquidity, as investors can typically redeem their shares for cash through the fund company during business hours. It’s generally advisable to pay attention to investment objectives, risk tolerance, time horizon, and past performance when choosing a fund.