What is a Mutual Fund? Understanding the Basics Lesson

A lesson for students on about the fundamentals of mutual funds, including diversification, fund management, types of funds, fees, and investing strategies. This guide is ideal for beginners seeking to understand and grow their wealth through mutual funds.

Students learn about mutual funds as being collective investments in a variety of securities, underscoring the advantage of diversification in minimizing risk. The guide also elaborates on the critical role of fund managers who focus on distinct investment goals, such as growth or stability. Vital aspects like the range of management fees and their effect on overall returns are emphasized. Additionally, it delves into various types of funds, including equity, bond, and balanced funds, aiding in the selection of a fund aligned with individual investment goals and risk tolerance. Finally, the process of investing in mutual funds is presented in a simplified manner, showcasing them as an accessible avenue for long-term financial growth, especially for those new to investing.


Use this video lesson on the topic of mutual funds. Learn related concepts of:

  • Investment Basics
  • Portfolio Diversification
  • Fund Management
  • Investment Fees
  • Types of Funds
  • Risk Assessment


7-12th grades. High School. College. Adult Education.


45-60 minutes. Adjust the lesson plan and allocate time to certain topics based on the needs and interests of the students.


Hand out the worksheet below (see the GET LESSON button near the bottom of the page).

Show students the video and have them complete the worksheet.  Review the questions on the worksheet.  A more comprehensive and detailed lesson plan can be accessed below for further instruction and study.

What is a Mutual Fund? Understanding the Basics

After watching the video, have students tell what the most important things they learned from the video.


Lesson Plan: What is a Mutual Fund”


Objective: To provide students with a comprehensive understanding of mutual funds, their structure, management, benefits, and how to invest in them.


  • Video: “What is a Mutual Fund?”
  • Worksheets for quiz and activities
  • Access to computers/internet for research activities

Lesson Duration: 45 minutes to 1 hour

Introduction (5 minutes)

  • Briefly introduce mutual funds as an important financial instrument.
  • Explain the objective of the lesson.

Video Viewing (15 minutes)

  • Show the video “What is a Mutual Fund?”
  • Encourage students to take notes for the quiz and discussion.

Discussion (10 minutes)

  • Discuss the concept of diversification and its importance.
  • Explore the role of fund managers in mutual funds.
  • Analyze the impact of fees and expenses on mutual fund investments.

Activity: Mutual Fund Research (10 minutes)

  • Students research different types of mutual funds (equity, bond, balanced).
  • They present their findings, focusing on risk levels and potential returns.

Quiz (10 minutes)

  • Conduct a quiz based on the video to assess understanding.
  • Include questions on the basics of mutual funds, their management, and investment strategies.

Conclusion (5 minutes)

  • Summarize the key points learned.
  • Highlight the importance of mutual funds in long-term investment strategies.

Homework Assignment:

  • Ask students to write a short essay on the pros and cons of investing in mutual funds, incorporating concepts learned in the lesson.

Further Study:

  • Recommend additional resources for students interested in deepening their understanding of mutual funds and investment strategies.

Lesson Resources

Get Lesson


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