• Know the different types of mutual funds before you start investing.stock market analysis screenshot image by .shock from Fotolia.com
  
  A mutual fund is a popular investment vehicle using either stocks, bonds or treasure notes that allow one investor to buy into several companies at the same time. According to the online financial resource Investopedia, there are thousands of different mutual fund products for investors to choose from, and numerous types of mutual funds that those products can be put into. Before you start investing, you should be familiar with the various types of mutual funds.
  
  

Money Market Fund

• A money market fund may be familiar to some investors because the term gets used in advertising for financial institutions. According to Investopedia, a money market fund is a short-term mutual fund that is usually made up of government treasury bills. A principal investment is normally considered safe in a money market fund, and the returns generated are typically twice that of a bank savings account.
  
  

Value Funds

• A value mutual fund is based on buying stock in a company that has lost significant value in the market, explains CNN Money. A small cap value fund is one that looks for the companies valued at $1 billion or less that other investors will not touch. A large cap value fund looks for much larger companies that have experienced hard times and are selling their stock at a bargain price. In most cases, it can take months or even years before a value fund shows a significant profit.
  
  

Aggressive Growth Funds

• The financial experts at State Farm categorize an aggressive growth fund as one that invests in smaller companies that are regarded as having strong growth potential. This kind of a fund is very speculative, and even though the goal is long-term profit, there is also the risk of significant loss should the smaller company fail.
  
  

Balanced Funds

• A balanced mutual fund is one that tries to invest equally in aggressive growth stocks and stable blue chip stocks. The goal is to protect the capital investment as much as possible, while still offering the chance at generating long-term revenue.
  
  

Fixed Income Funds

• Many of the types of mutual funds offered invest in stocks, but a fixed income fund invests in bonds, according to State Farm. The goal of this kind of a fund is to generate consistent returns that provide a steady stream of revenue to the investor. The returns may not be as substantial as an aggressive growth stock fund, but the risk is significantly less.