I think some more detail is called for here too, on mutual funds vs ETFs:

When you buy part of a mutual fund, you are giving your money to professional fund managers to invest for you. Mutual funds are often devoted to a single investment strategy (value, growth, index...) or a specific business sector (energy, health care, high technology), or even a specific kind of investment vehicle (stocks, bonds, commodities...).

You pay the fund managers a small percentage of your assets each year (the number you want to look for here is the "expense ratio"). Something on the order of 1%. Sometimes you also pay a fee when you put your money in or when you take it out; funds that do this are called "load" funds, funds that don't are called "no-load" funds.

When you buy into an ordinary mutual fund, it's a similar process to having a savings account: you send the fund money, they use it to buy financial investments. Mutual funds are generally sold and redeemed at par; each dollar you invest in the fund buys a dollar's worth of investments. When you cash out, each dollar of investments they sell is a dollar that goes back into your pocket.

ETFs are similar to stocks. When you buy shares of an ETF, you're buying a piece of the fund from another investor, not putting money into the fund directly. ETFs are often traded at a discount to net asset value. In other words, you pay less than the market price of the investments the fund owns. But that doesn't necessarily make it a better deal, because of course when you want to cash out, you will probably be selling below par as well.