What are mutual funds?
by 
kamal jamal
ANSWERS: 4
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"These are open-end funds that are not listed for trading on a stock exchange and are issued by companies which use their capital to invest in other companies. Mutual funds sell their own new shares to investors and buy back their old shares upon redemption. Capitalization is not fixed and normally shares are issued as people want them." source: http://www.rbcinvestments.com/ds/gloss.html
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Mutual funds are like buying a basket of stocks, bonds etc. Instead of putting "all your eggs in one basket" which is what happens when you buy the stock of one company, mutual funds may have stocks from any number of companies inside it. Then anyone can invest into the fund. There are not a limited number of shares available (hence the other answer mentions the idea of it being "open ended") whereas individual stocks have a limited number of shares available (making it "closed ended"). Mutual funds have the ability to reduce risk (not eliminate) because you investment is spread across a number of companies.
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Agreeably friendly & selfless funds? ;-)
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A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, or other securities. Legally known as an "open-end company," a mutual fund is one of three basic types of investment company. The two other basic types are closed-end funds and Unit Investment Trusts (UITs). Source, and more info from: http://www.sec.gov/answers/mutfund.htm
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