Mutual funds are an investment tool that pools money from several investors and invests it in company stocks, bonds, government instruments, etc. in order to generate a profit for investors. This profit may be paid out as dividends to investors (dividend plans) or reinvested by the fund for capital appreciation (growth plan), There are many different types of mutual funds based on various characteristic differences. Most mutual funds try to diversify their investments into as many different companies and industries as possible, and some invest in only specific industries and sectors of the economy. Some funds aim for high-risk-high-reward strategies, while some opt for low-risk-regular-income strategies. Theres a huge variety of funds to choose from, and a large number of Asset Management Companies (AMCs)/fund houses. that offer excellent schemes for all types of investors. Some banks and financial distributors also sell mutual funds.