You may have first heard of a mutual fund if you ever had a 401(k) through your employer. Most employer retirement plans utilize mutual funds because they’re pretty straightforward. That being said, there are many types of mutual funds you can invest in as a self-directed investor, with each having its own unique objectives and risks.
These investment objectives can vary from low-risk investments like commercial paper or treasury bills in a money market fund to capital appreciation with equity funds. Let’s compare mutual funds that are the most common: