If this is a problem that you're facing, don't worry. We're going to help you by going through a few different types of mutual funds.

Balanced Funds

These funds are probably best for conservative investors (those who try to minimize their risk). These funds often invest in many different stocks and bonds. Some balanced funds invest in over 200 stocks. By doing this, they minimize your risk while also providing fairly stable growth.

Dividend Growth

These mutual funds use a special kind of investing strategy. They look for stocks that pay dividends and determine the health of the company by seeing how fast the dividend payments are growing. When a company is doing well, it often raises its dividends. The fund managers look at these as the key factor in deciding which stocks to buy.

Companies that pay dividends are often large, well-established companies. Therefore, dividend growth funds are fairly safe investments but they also provide quite a bit of growth.

Capitalization Funds

These funds invest in companies whose market capitalization (the total value of all of their stock) falls into their area. Small-cap stocks are those that have market caps of less than $1 billion. Mid-cap stocks are those with market caps in the range of $1-5 billion. Large-cap stocks are those with market capitalizations of atleast $5 billion.

Of all of these funds, small-caps are the most risky beause they invest in many small and new companies but their potential is also the greatest. When it comes to low risk long-term investing, mid-cap and large-cap mutual funds are probably the best because those stocks provide the most stable growth.

Index Funds

Index funds are seen as the best type of mutual funds to invest in because they outperform 85% of all mutual funds. These funds invest in stocks that make up stock indexes such as the S&P 500. These funds also have fewer fees because they buy and sell stocks less often. Also, because they sell stocks less often, the capital gains are usually seen as long-term so you will pay less when tax season comes around. With these factors in consideration, index funds are excellent for long-term investing.

Sector Funds

These are specialty mutual funds that invest in stocks that fall into a certain sector of the economy. For example, the T. Rowe Price Health Sciences fund invests in health care, life sciences, and pharmaceutical stocks.

These funds usually have the highest potential for gains but also carry considerable risk. If the sector that the mutual fund invests in does poorly, the mutual fund will be hurt pretty bad because it doesn't have the option of moving money to another sector.

Growth and Income

Growth and Income funds are mutual funds that are a mix between income (bond) funds and growth (stock) funds. These funds split their holdings between bonds and stocks to try to give investors stable income through bonds as well as growth through stocks. These funds perform pretty well but because they hold a large amount of bonds, they are probably better for investors who are less willing to take risk or those who are nearing their financial goal (such as retirement).

Hopefully, this has helped you decide what mutual fund objective best suits you without having to spend all of your time researching the thousands of mutual funds on your own.