A mutual fund is a professionally managed investment pool that collects money from multiple investors with a shared financial goal. This pooled money is invested in assets like stocks, bonds, and other securities, with income or gains distributed proportionately among investors based on the Net Asset Value (NAV) per unit.

For instance, imagine friends pooling money to buy a box of chocolates, each getting units based on their contribution. Similarly, mutual funds allow investors to own a portion of a diversified asset pool without needing large sums or market expertise. Managed by fund houses for a fee regulated by SEBI, mutual funds cater to various financial goals and provide a convenient way to diversify investments across equities, debt, and gold. This makes mutual funds an ideal choice for wealth growth, especially as Indian investors increasingly look beyond traditional savings avenues.