It is a fund containing many securities (stocks and bonds) from many different companies, so as to spread the risk around. If some go down, others will go up, and you do not take as large a risk overall. The value of the fund is generally very dependent on who is choosing the stocks/bonds. So your care must be taken in choosing the broker or fund developer, rather than learning about individual stocks. Also, investment companies generally recommend you put your money into several different funds, as they tend to specialize. Some will be all high-tech firms, some health care companies, etc. You need to decide which areas of the economy seem to be going up or down. One of today's big questions is how the Baby Boomers and their approaching retirement will affect the marketplace. Health care, most likely, and leisure activities generally: but you have to make your own analysis and choose your mutual funds carefully. Putting your money in a pool does not relieve you of the obligation to use your own good judgment. It just means now you are choosing the pool, not the individual stock.
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