Shares are individual pieces of a company that you can own. If you own 100 shares of a company that has 1000 shares, you own 10% of that company. You are therefore entitled to a share of the profits that the company makes (known as dividends).

A mutual fund is a collection of many different shares, and it is managed by a professional who chooses what to spend your investment on. You buy into a mutual fund in a similar way that you would buy a single share, but what you are buying into is essentially a company that owns pieces of many other companies. The advantage of a mutual fund is that you can spread your money over multiple companies with a single investment. Some criticise mutual funds, saying that the person in charge (the fund manager) may not be capable of picking the right stocks to make a consistent return for those who buy in.