March 30, 2022

How to explain mutual funds to kids

Onu ABCs

Investing can feel intimidating, but we're here to simplify it a bit. Your investing journey starts today!

A mutual fund is an account where many investments are pooled together and taken care of by a professional. You can then buy a piece of that mutual fund and slot it into your own portfolio. Mutual funds can be made up of dozens of different holdings, sometimes even hundreds! The primary benefit is that you get access to a whole bunch of stocks and someone else manages it for you. Those professionals will choose the stocks carefully and rebalance the fund to focus on the goals of the fund.

When the value of your mutual fund goes up, you make money. The money you earn can then be invested back into the mutual fund so that you hold even more shares. When those shares make more money, you can invest again! That means you get a bigger share of the profit. On the flip side, if the shares go down in value and you decide to sell, you will have less money to reinvest than you started with.  


A mutual fund is a portfolio of stocks, bonds, and other investments managed by financial professionals. It allows investors to buy into many different companies with a single purchase. Investing in a diverse portfolio can make your experience investing a little more steady because you don't have "all your eggs in one basket." It's why mutual funds are popular choices for investing in a number of different retirement accounts.


  • Brokerage account
  • investments

Brokerage accounts

A brokerage account is an account that is used by a person who wants to invest in securities like stocks, bonds, and mutual funds. Choosing a brokerage firm and an investment account can be stressful since many options are available. It is essential to explore what is out there before settling on one.


An investment is something you can buy and hold with the hope that it will make you money. Like a seed, it needs time to grow into a tall tree or produce delicious fruit. But like plants, it's no guarantee that things will go as planned. Through diversification, buying a bunch of different things increases your chances of some of those "seeds" doing well, even if others don't.  

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This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.