What kinds of funds are best for retirement?

A good retirement portfolio should include both stocks and bonds - and maybe a little cash. Therefore, if you decide to do your investing via mutual funds, you need funds that invest in all of those asset classes.

In order to be adequately diversified, you could pick a few different stock funds that invest in different kinds of stocks, plus a few different bond funds that invest in different kinds of bonds. Or, if you'd rather simplify things, you can buy a fund that invests in all that stuff at once. These funds are known as balanced funds, life-cycle funds or target-date funds.