Mutual funds are simply a method by which people invest. People often ask, "What do mutual funds pay?" The truth is that mutual funds do not pay anything! People also say, "I do not like mutual funds because they are risky". But there is no "risky" fund. No one has ever lost money in a mutual fund. Mutual funds are not good and they are not bad.
In fact, a mutual fund is just a mirror, a reflection of something else. For example, if you invest in a mutual fund that invests in stocks, you risk losing as much money as losing money like anyone else who invests in stocks.
In fact, you can use mutual funds to buy virtually any type of investment: stocks, bonds, government securities, real estate, gold and other precious metals, international securities, foreign currencies, natural resources, even hedging positions and money markets . You can find funds that carry out virtually any type of trading activity, including options and futures, derivatives and even short selling.
Technically, mutual funds are called "open-ended" investment companies because they buy and sell their shares forever. In industry jargon, mutual funds "sell" shares to the public and, when you want to get your money back, the fund will "buy" them for you.