"Mutual funds let you run with the big dogs . but on a smaller scale." Like the idea of investing in stocks and bonds, but not sure you have the expertise, time, or startup stakes? Mutual funds might be the answer. Each fund represents a package with a modest buy-in cost.sometimes as low as $25. They're professionally managed.meaning a fund manager decides how to diversify, which investments to buy, and when to sell them. And they're relatively liquid.meaning you can redeem your shares by selling them back to the mutual fund.

Like any investment, though, mutual funds also have risks, too. Know what you're buying.

Mutual funds come in different flavors. Each one focuses on a specific objective (like growth or income) so investors with like-objectives can invest in the same fund. But they differ in how the manager tries to accomplish that objective and what they invest in. We'll take a look at three broad categories:

Stock funds Bond funds Asset allocation funds

"Here's a fund option with lower fees." Ever heard of index funds? These funds invest in the same companies represented by an unmanaged industry index - like the S&P 500 which is made up of the 500 largest U.S. companies. The upside of an index fund? They may have lower fees, since they're not actively managed. But not having a professional in the driver's seat deciding when to buy and sell may also be a downside as well.