Investment companies are financial institutions that pool money from multiple investors to purchase a diversified portfolio of securities, such as stocks and bonds. They offer individuals an opportunity to invest in a professionally managed fund, which can help reduce risk through diversification. Common types of investment companies include mutual funds, exchange-traded funds (ETFs), and closed-end funds. These companies are regulated by government agencies to protect investors and ensure transparency. Investors can buy shares in these funds, allowing them to participate in the financial markets without needing extensive knowledge or experience. This makes investment companies a popular choice for both novice and experienced investors.