What is a mutual fund?

A mutual fund is a group investment managed by a professional fund manager. It can be used to invest in stocks, bonds or other assets and enables you exposure to higher-value portfolios that you otherwise might not have been able to afford by yourself.

Key benefits of a mutual fund:

Diversification

Due to the multiple investors involved in this kind of fund (and its nature), you get access to a lot of different stocks or bonds, providing an easier way to diversify your portfolio.

Affordability

Similar to the above, a mutual fund offers a more cost-effective way to invest in a wide range of stocks without having to deal with individual transaction fees for every stock you hold.

Management

As opposed to going it alone, a mutual fund allows an experienced investment team to monitor performance and work on setting out the most effective fund strategy.