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Mutual funds are one of the most popular investments not only because of the diversification they provide, but also because of the many types available and the fact that they are managed by professional portfolio managers.
It's also important to point out that there are a number of ways that you can invest. You can invest through an employer sponsored savings plan, open a brokerage account on your own, or choose an investment advisor to help you manage your investment portfolio.
Here is a link to an article I wrote that gives a brief overview of the seven most common types of mutual funds:
Investing Basics: 7 Common Types of Mutual Funds