Buying stocks is rather costly, and if you have ever heard about diversification it is also not enough to buy only one stock. But buying 50 or even hundreds of stocks, in order to achieve some sort of diversification, is not only very costly regarding trading cost, but you also need to have quite a lot of money to do so. Should you arrive at the conclusion that you actually want some foreign exposure it gets even worse.
But there is a solution to this problem: have a look at mutual funds.
A mutual fund is a simple tool that allows a group of investors to pool their money. If hundreds of participant put their money together trading costs and diversification become possible to manage.
But please note, cost matter also when buying a mutual fund. And the costs of funds does make a big difference for your financial achievements.
Mutual funds exist in almost every setup possible:
mixed (balanced) funds
funds that invest in real estate
funds that invest in precious metals
funds that deal in currencies
funds that have huge teams of “experts” trying to beat the market
funds that track an index, but have no expensive “experts”
. . .
For a more comprehensive listing of funds see the asset classes, where the relevant indexes and the matching instruments are listed.