When I was minoring in Financial Management, we talked about this. It's quite easy to understand how mutual funds work. An entry in Wikipedia states that:
A mutual fund is a form of collective investments that pools money from many investors and invests their money in stocks, bonds, short-term money market instruments, and/or other securities.[1] In a mutual fund, the fund manager, who is also known as the portfolio manager, trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding.
If I remember correctly, mutual funds would only give you lots of income when it isn't saturated yet. Once it becomes too saturated, the fund income will be divided among the numerous investors, thus decreasing net income.
When it comes to stock market, you really need to study the trends regarding the shares of stock that you are holding or would want to hold. Basic is the rule of high risk- high rewards in Finance. In order to make the most out of your investments, you need to find the right combination of stocks to get the most reward while being exposed to the least risk. If you have trouble or do not know how to find the best combination, there are many financial analysts here in the country and you may ask help from them - of course with a price.
