A mutual fund pools money from investors and puts it into stocks, bonds or other securities. It's a massive industry; in the U.S. alone as of 2020, an estimated 120 million investors had around $23.9 trillion in total net assets, according to the Investment Company Institute.
Most funds have specific objectives, like limiting risk in the short term or maximizing long-term returns. Many traditional mutual funds also are actively managed by financial professionals, who are charged with making the right decisions to meet these goals.
People use mutual funds for a variety of reasons, including saving for retirement or college, or to buy a house. Watch the video to learn the basics about mutual funds — and see if they may fit as part of a strategy to meet your investment goals.
More from Invest in You:
Here’s what your credit score means and how it impacts you
Here’s a simple way to make a monthly budget and start saving money
81% of U.S. adults are worried about a recession hitting this year, survey finds
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.