Basically it's a group of stocks, chosen by a 'fund manager', so rather than buying an individual stock you're actually buying a bunch of stocks.
Mutual funds generally have some kind of 'target', such as tracking a specific market (an index fund tracks a market, such as the S&P500). Others might be going for stocks that pay high dividends, or have a lot of potential for growth.
I'm a big fan of index funds, because you get a lot of diversity (aka you spread your investment out so if one stock tanks, you're still 'up' overall), and generally the fees are pretty low.
There are 'active' and 'passive' funds. Active funds are where the fund manager actively looks to move the money around to stocks they think will do better, whereas a passive fund does not move the money around as much (maybe yearly, for example).
Hope that helps. Google 'mutual funds' for a lot more info.
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