Although the past performance of a particular fund is no guarantee for future performance, it is wise to base one’s investment decisions on funds that have historically performed well. The following Mutual Funds have been identified as some of the top mutual funds to buy in 2012, based on these funds’ three years of risk and return data.

Mutual funds are often discussed as wise ways to invest. For those who are new to investing or are cautious investors, mutual funds can be an excellent tool for investing. Why buy mutual funds? Because they are diversified investments by design, and are managed professionally, your risks are minimized.

While you may not get to invest in the flavor of the month with a mutual fund, you also don't have to worry about your hot stock suddenly going cold, either. So what are mutual funds?

To understand what municipal bond funds are, you first have to understand what a municipal bond is. These bonds are made out to local governments and their value fluctuates depending in the credit of the area where they are issued.

Municipal bond funds are typically created by large financial groups and controlled by various professional traders that in turn invest these bonds. They are not subject to taxation and as such are a favorite of investors who have state with high tax rates.

There are five basic types of municipal bond funds;

Yes, it’s true that creating your own investment portfolio can be an intimidating experience especially in terms of the risk involved in investment. However, every business involves a certain amount of risk and investing in mutual funds is no exception.

If you like to enjoy the benefits of the stock market, but lack enough knowledge or time to delve into individual stocks, investing in mutual funds could be a viable option for you.

Buying mutual funds could probably be one of the safest forms of investing when compared to other more aggressive and risky investment vehicles. People who are new to investing or those would wish others to manage their investment decisions would find mutual funds ideally suited to their requirement.

Here are a few tips on how to buy mutual funds:

1. Buy Diversification