Investing in mutual funds can give you access to a wide range of securities, such as stocks and bonds, with just a single investment.

Mutual funds pool money to create larger investment opportunities with higher returns for anyone who initially invests in the fund.

ETFs and mutual funds both pool money into a basket of investments—but the key difference between them is that mutual funds trade just once per day after the market closes, while ETFs trade like stocks throughout the day at fluctuating prices.

Mutual funds invest in multiple different companies with money from many investors, while an individual stock invests in one company with funds from a single investor.

Mutual fund investors typically must pay a variety of different types of taxes associated with their investment, unless the funds are within tax-advantaged accounts like a 401(k) or IRA.

How mutual funds work

Mutual funds function similarly to other types of investments. If you want to invest, you go through a brokerage firm. However, they have a few key differentiators. Most are actively managed by a broker instead of passively earning you returns. Plus, they can carry some hefty fees.

Read about the pros and cons of mutual funds.

Mutual fund share classes are rankings of different types of services for investors.

Mutual funds come with a few associated fees.

Mutual funds in seven broad categories averaged a 13.1% annual return in 2023.

Explore a list of the world's largest mutual funds.

Index funds are typically structured as either mutual funds or exchange-traded funds, but investors can manually recreate an index through 'direct indexing.'

Figure out what type of mutual fund is right for you with a tool that lets you compare different mutual funds, from rates to returns.

Investors can buy three main types of bonds: government, corporate, and municipal

Each type has variations of its bond offerings with different interest rates, loan lengths, maturity dates, and terms. Each type also carries its own risks and rewards.

The term 'securities' refers to different types of investments, such as stocks or bonds.

Open-end and closed-end mutual funds differ in how they create and distribute shares.

Alternative investments can be sorted into seven major categories, according to some experts

These categories include real estate, private equity, private debt, hedge funds, collectibles, and more.

Contrary to popular belief, random investments can outperform managed funds.

Mutual funds were first created and sold in the US in 1924.

There are three main ways to start investing in the bond market

Invest in the boind market through a brokerage, mutual fund or ETF, or the US government. Each has different steps and terms to follow, from starting rates to opening specific accounts. Some bonds are relatively easy to purchase, but the process differs depending on the type of bond you want.

The difference between stocks and bonds

While more people invest in stocks than bonds, experts say owning both can make for a healthier portfolio. Stocks are considered a riskier investment than bonds, but tend to have higher returns. While bonds might be the safer option, they won’t grow your wealth as quickly.

Explore a step-by-step guide for getting started as a retail investor

Instead of purchasing individual stocks and bonds, new investors may want to start in funds that track an index—like the S&P 500—or that hold a group of themed stocks.

There are more than 300 different thematic ETFs

Exchange-traded funds seem to offer something for everyone. As tracked by ETF.com, there are 338 thematic ETFs, offering exposure to “baskets” of stocks covering global infrastructure, genomics, cannabis, and more.

The financial crisis in 2008 had a major impact on many 401(k) plans

Amid the 2008 financial crisis, stocks and bonds cratered as the broader market floundered due to the subprime mortgage crisis. Investors with so-called "target-date" funds—which shift allocations based on the maturation of a fund—shared in the slump, with some funds declining by 20% or more just a year or two away from maturation.

Explore the differences between private equity, venture capital, and hedge funds

Private equity firms focus on buying and improving private companies with the intent to sell them for profit or take them public. Venture capital is technically a form of private equity in which investors focus on startups and generally don't seek majority control of the company. Hedge funds are pooled investments for sophisticated investors that pursue a wide range of often complex strategies.

The 'Big Three' asset managers—Vanguard, State Street, and BlackRock—collectively manage more than $30T in assets and are the largest shareholders in roughly 88% of all the companies listed on the S&P 500.

Alternative investments can include everything from cryptocurrency to fine art

The financial assets typically fall outside the scope of traditional investments like stocks and bonds, and they’re often intended to diversify investor portfolios.

ETFs were first created as an alternative to mutual funds, combining the diversification benefits of a mutual fund with the ability to trade throughout the day on a stock exchange.

A bond ETF lets someone invest in multiple bonds through one single fund

There are risks, there are also major perks to buying a bond ETF, like the ability to purchase bonds on the stock market.

ETFs and mutual funds are both taxed on capital gains and on dividends.

Test your ETF knowledge

A 10-question quiz from the SEC allows investors to test their basic knowledge about exchange-traded funds and their investing counterparts, mutual funds. Here’s a sample question: Is the past performance of a fund a good indicator of future results? (Hint, the answer is no).

Explore a giant ETF database

Given that there are more than 3,000 ETFs trading in the US, the list of options for individual investors may be overwhelming. VettaFi provides a database that allows potential investors to sort funds by sector, region, strategy, fund issuers, and more. It tracks nearly 100 funds focused on general technology but just one that focuses on copper mining.

People often invest in alternative investments to diversify their portfolios

Because alternatives often have little correlation with traditional investments like stocks and bonds, adding them to a traditional portfolio can reduce its overall risk exposure.

BlackRock says investor demand and improvements in underlying fund technology have supercharged ETF availability in 2025

Investors are likely most familiar with ETFs that invest in an index or other grouping of stocks. However, BlackRock breaks down a wide variety of options, including commodity ETFs, currency ETFs, and bond ETFs.

The price of a mutual fund is based on its net asset value (or NAV).

Investing in bonds comes with a few risks

Think: changes in interest rates that impact the bond’s value, or a bond issuer completely defaulting on a loan. There are steps investors can take to lower their initial and future risk when investing in the bond market, such as checking a company's bond rating before investing.

Vanguard Group founder Jack Bogle created the first index fund, the Vanguard 500, in 1976—but the fund didn't take off until the 1990s.