I have a Financial Literacy Class essay to write, in which you have 100,000 dollars to spend on investments, one stock and one mutual fund. I have already finished the stock portion, because I understand stocks very well…
Mutual funds on the other-hand… I don’t get. I understand that they are basically a way of investing in a bunch of stocks in one category, but I have no idea how to find them, research them, tell if they are a good investment, or how to find out what category they are in.
If you could recommend one, or just explain that to me, it’d be great.
Thank you!

Here are the essay requirements, because I feel that I failed to properly explain what I was saying.

QUESTION

Imagine your parent(s) just inherited $100,000 from a long lost aunt. Explain to them why it’s important to invest their money so that it grows over time for retirement. Also, explain why it’s important to diversify their investments among stocks, bonds and mutual funds, which are called asset classes. Choose two investments from among the stock, bond, and mutual fund asset classes that you would recommend for the long-term. (For example, choose a stock and a mutual fund, a stock and a bond, or a bond and a mutual fund.) Explain why you would choose each one. Also, explain why you think your choices would be good investments for their retirement.

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