What is a mutual fund?

It's simply a pool of money from thousands of people like you that invests in certain things. One mutual fund might invest in the stocks of large U.S. companies. One might invest in Treasury bills. Another might invest in a huge assortment of stocks, bonds, real estate, cash equivalents and other securities. You name it, and there's probably a mutual fund that's already investing in it.

Each investor in the fund gets a slice of the total pie, sharing in the fund's gains - or losses.