Using a mutual fund is one way to invest in the stock or bond market without buying individual stocks or bonds. You buy shares of the mutual fund and the investment company (such as Vanguard, Fidelity, T.Rowe Price, American Funds, etc.) that issues the shares of the mutual fund pools your money, along with thousands of other people's money, and makes investment decisions on your behalf.
Each mutual fund will have a pre-defined objective, so you can choose a fund that is aggressive, conservative, a fund that invests only in stocks or only in bonds; or a fund that can invest in a multitude of things depending on what the fund's management committee thinks would be best (this last type of fund is sometimes called an absolute return fund).
Before investing in a mutual fund make sure you have a thorough understanding of the mutual fund fees, and learn the difference between an index fund and an actively managed fund.
In addition to traditional mutual funds there are investment vehicles called exchange traded funds and closed- end funds, which have many similarities to traditional mutual funds, as well as some key differences.
