We aren't born with the right knowledge to effectively invest in stocks and bonds. Fortunately, you don't have to be a finance expert to invest your money. Mutual funds is a way to invest in a variety of investments and you don't have to do it all on your own. In fact, you can get someone else to do it entirely.

How does a mutual fund work? First, anyone who invests in the fund pools their money together. Then, a fund manager takes the money and invests it into all different investments that they have researched carefully. The fund manager does all the research and diversification work for you.

You can choose basically two different kinds of mutual funds, load and no load funds. Load funds will charge you a fee. You can earn a higher return on your money and that is why you are charged a fee.

If you are investing in a load fund, you will be charged an amount of what you earn. For instance, if they charge 3 percent and the fund returns 9 percent, you will get a total of 6 percent in return.

You don't get charged any fees if you are investing in no load mutual funds. They have 'no load'. You get all that you earn because they don't subtract a fee. It's just that simple and not complicated to understand at all.

You don't necessarily need to go with the load fund. They can't guarantee a higher return, just based on chance. You might be able to get a higher return with a load fund, but if they charge you a fee, it might add up to the same amount or more than the higher return anyway.

With no load funds, because you don't have to pay a fee, all the money the investment returns goes to you. You can get every last bit out of your investment because you aren't paying any commission fees.

Which type of mutual fund should you choose? Do your research into different funds and put some thought into it. Don't jump into it. Take some time to choose which fund type to invest in.