When it comes to investing it is crucial not to put all your eggs in one basket. There are significant losses if one investment does not work. A better option is to diversify across asset classes, such as stocks (representing shares in individual companies) bonds, stocks and cash. This will help decrease the fluctuations in your investment returns and allow you to enjoy higher long-term growth.

There are a variety of kinds of funds, such as mutual funds exchange-traded funds, unit trusts (also known as open-ended investments companies or OEICs). They pool money from many investors to purchase bonds, stocks and other assets and share in the gains or losses.

Each type of fund has its own unique characteristics and risk factors. For instance, a cash market fund invests in investments for short-term duration issued by state, federal and local governments as well as U.S. corporations. It typically is low-risk. These funds usually have lower yields, but they have historically been more stable than stocks and offer steady income. Growth funds seek out stocks that do not pay a regular dividend however they have the potential to grow in value and generate above-average financial gains. Index funds adhere to a specific index of the stock market such as the Standard and Poor’s 500. Sector funds are a knockout post focused on particular industries.

Whether you choose to invest via an online broker, robo-advisor or another service, it’s vital to know the types of investments available and the terms they come with. Cost is a crucial factor, since charges and fees will take away from your investment return. The top brokers on the internet and robo-advisors are open about their charges and minimums, and provide educational tools to help you make informed choices.