What is Mutual Fund?
A mutual fund pools money from many investors to buy a professionally managed portfolio of stocks, bonds, or other assets. Investors own units proportional to their contribution.
Example
You invest $1,000 in a mutual fund and a fund manager spreads it across dozens of stocks on your behalf, charging a small annual fee.
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Related terms
ETF
An ETF (Exchange-Traded Fund) is an investment fund that holds a basket of assets and trades on a stock exchange like a single share, offering low-cost diversification.
Compound Interest
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Over time it produces exponential growth, which is why it is central to long-term investing.