Mutual fund is a single portfolio of stocks, bonds, and/or cash managed by an investment company on behalf of many investors. The money you contribute to a mutual fund buys you shares, or units, of that fund.

When you buy a mutual fund, you're actually putting your money together with many other people, who like the same sorts of investments as you do. A professional investment expert takes that large pool of cash and invests it for the whole group. If the investments make a profit, you share that profit with everyone else in the group. If the investments lose money, everyone shares in the loss.

There are primarily three different types of investments for mutual funds:
Cash, Bonds, and Equities. Your mutual fund will invest in one of these asset classes or a combination.

ADVANTAGES OF MUTUAL FUNDS

• Professional management – There are full-time investment professionals to manage the fund on your behalf.
• Flexibility – There are a variety of mutual funds and you have the flexibility to change your investments. You can transfer part or all of your investment from one fund to another.
• Diversification – Because each fund contains a variety of investments, you can diversify your portfolio across a range of securities, asset classes and/or geographic regions. This allows you to reduce your risk while increasing your potential for return.
• Choice –You determine your own needs choose a mutual fund that fits with your financial goals.
• Affordability – You can invest a little or a lot. Funds are available for both the investor with $500 and the investor with $1,000,000.
• Liquidity – Mutual funds are liquid so you can sell your units at almost any time and get your money when you need it.