Mutual funds are a good way to get into investing money, without the worry of individual stocks, or having to understand too much about the stock market in general. Many retirement accounts that you contribute to at work are put into mutual funds. A mutual fund allows a whole group of people to invest monies collectively, saving on fees, giving more purchase power and usually getting higher returns. There is a manager that takes care of the funds. The manager is in charge of buying and selling stocks, bonds, or money markets, with the funds that are put in. With just a few dollars a week you can build up quite a financial portfolio, one that would take a much larger amount of money to have such diversification. Depending on how you got involved in the mutual fund, you may opt to receive any dividends as they are paid, or you can have them reinvested, added to what you are investing. You will receive reports, usually quarterly, on what has been bought and sold, and any dividends paid out. There are fees paid to the manager of a mutual fund, sometimes these fees are paid up front, and sometimes they receive a portion of any profit made in a sale. You may find, when reading a quarterly report, that some of what was invested in did not do well, and was sold at a loss, for the most part, there will be another investment that more than made up for the loss. If you have a mutual fund from work, you may not see a whole lot going on, and there may not even be big returns, but it is an investment, and although not as safe as just putting the money in the bank, it usually a much better place to stick some money away for retirement. The amount comes right from your pay, you don’t need to do anything with it, often the company you work for adds some to your investment, and you aren’t as tempted to spend it as you would be if it were just in your bank account.