What is a Mutual Fund? A mutual fund is a pool of money collected from multiple investors to invest in a variety of financial assets like stocks, bonds, money market instruments , and other securities. The main goal is to help investors diversify their investments (spreading risk) and potentially earn returns over time. How Does a Mutual Fund Work? Pooling of Money : Many people (investors) contribute money into a single fund. This is managed by a professional fund manager or team. Investment Strategy : The fund manager decides where to invest the pooled money based on the fund’s objective. For example, some funds invest in stocks (high risk, high return potential), while others invest in bonds (lower risk, more stable returns). Diversification : By investing in a wide variety of assets, mutual funds reduce the risk of a single investment going bad. If one stock or bond doesn’t perform well, others in the portfolio might do better, balancing out the risk. Returns : Over time, the mutu...