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The different types of mutual funds include fixed-income, index funds, balanced funds, equity funds, specialty funds, fund-of-funds, and money-market funds.

Mutual funds are investment trusts made of money collected from various investors and are managed by portfolio managers who invest in bonds, stocks, and other securities.

ETFs or exchange-traded funds are investment funds that hold assets such as commodity, bonds, or index and are traded on the stock market like regular stocks and securities.

It is best to pick both ETF and mutual funds so that you have a diversified portfolio that includes bonds, stocks, and other such assets, at low costs.

A person can invest in mutual funds through banks, directly through mutual fund companies, or through brokerage firms after creating an account with any of these places.

To pick the best mutual funds, avoid funds that have high turnover ratios and experienced teams and also focus on the expense ratio and do dollar cost averaging.