The higher the income paid by a bond fund, the higher the risk in the form of greater swings in the fund's share price. If you want to keep price swings to a minimum, select a bond fund with a weighted average maturity under five years and high overall credit quality. But, if you can tolerate price changes in exchange for higher income, choose a longer-term fund or perhaps one with lower average credit quality. Lastly, you may wish to consider whether you would benefit from tax-exempt bond funds. Income earned on municipal bonds issued by state and local governments is not subject to federal income taxes and may also be exempt from state and local income taxes in the state of issuance.
Growth means growth of capital.
Stocks represent ownership of a company, so if the company prospers, its stock price should rise. While stocks have the greatest potential market risk, they also have the lowest inflation risk and offer the highest potential for growth over time. Stock funds come in every imaginable variety. Likewise, funds that invest across a wide variety of industries should be less volatile than ones investing in a narrow sector, such as technology or energy. If you expect to invest in several stock funds, consider diversifying overseas.