Which investment vehicle is designed for collective investment?

Mutual funds are specifically designed for collective investment, allowing multiple investors to pool their money together to invest in a diversified portfolio of stocks, bonds, or other securities. This structure provides individual investors with access to a professionally managed investment that they might not be able to achieve on their own due to costs or expertise needed for portfolio management. By contributing to a mutual fund, investors benefit from diversification and reduced risk, as their individual investment is spread across a wide array of assets.

In contrast, bonds and stocks are individual investment vehicles that represent loans to entities or ownership in companies, respectively. They do not inherently involve collective investment mechanisms. Savings accounts, on the other hand, are financial products that allow individuals to deposit money and earn interest but do not function as investment vehicles for pooled resources in the same way as mutual funds.