Very few people have the time, training, or discipline to research investments such as stocks or real estate. That is why the mutual fun was invented. If you let professionals make the buying and selling decisions with a fund you're able to purchase shares in hundreds of companies for as little as $25 a month. The mutual fund is a remarkable invention, allowing investors with little money to get the same level of diversification that was previously only possible with the wealthy.
With a mutual fund, you share with other investors by putting your money into a trust fund managed by one or more professionals have the time, training and discipline to analyze what you should own. You pick the funds that fit you risk tolerance, so you do not panic and sell low, and these managers buy and sell stock, bond, real estate, precious metals… and the like for you. The mangers will diversify the holdings by buying different companies, in carious industries, among different sectors of the economy… even in carious countries around the world if a fund you choose allows international investing. This diversification reduces the volatility in the values of what you own and reduces the risk of loss.
More information about mutual funds and other investment vehicles can be found in Tim's book, If I Had a Million Dollars - How to Achieve Financial Independence Before Your Parents Do.