What is a "mutual fund"?

A mutual fund is indeed an investment vehicle that aggregates capital from numerous individual investors to collectively purchase a diversified portfolio of securities, such as stocks, bonds, or other financial instruments. This pooling of resources allows investors to share expertise, reduce risks through diversification, and access a broader range of investment opportunities that they might not be able to afford or manage individually.

Mutual funds are managed by professional fund managers who make investment decisions on behalf of the investors, aiming to achieve specific financial objectives while adhering to the fund's stated investment strategy. This structure provides an efficient way for investors to enter the financial markets, benefiting from economies of scale and professional management.

In contrast, direct investments in real estate involve purchasing physical property, while alternatives to traditional savings accounts generally refer to different investment vehicles with varying risk and return profiles. Loans to small businesses involve lending practices rather than investment in securities, distinguishing them from the mutual funds' investment nature. The primary function of a mutual fund is to facilitate collective investment in the financial markets, helping investors achieve their financial goals.