All you know is that you want to buy a car one day. Or a home. Have a kid. Or two.

Meanwhile, your money is just sitting there. You’re afraid to touch it and afraid not to. At 2% interest, your bank account isn’t doing your goals any favors. But it could be worse, right?

It could also be a lot better. I’ve talked to some of the smartest minds on Wall Street about what they do with their own money. And whether you have $50 or $50,000, you can adopt their key strategy right now. It starts with two words: mutual funds.

Lots of people try to make money buying and selling individual stocks. Some of them even succeed—as your cousin who made a mint on Yahoo! stock last year will be more than happy to tell you. But the problem with individual stocks is that you’re placing all of your proverbial eggs in one proverbial basket. If your stock does well, terrific. But if it does badly, you’re stuck with a basket of rotten eggs.

Mutual funds are investments that can include hundreds, if not thousands, of different stocks. Essentially, they allow you to lower your risk by spreading your money around. That way, if some of the stocks in a mutual fund tank, others will hopefully make up for the loss.

The average mutual fund charges annual fees (known as “expense ratios”) of around 1.5% per year. So if a fund returns 15% in a given year, your actual return could be more like 13.5%. And if the fund returned 7%, you’d be down to 5.5%. These differences may not seem so bad, but over the years they could cost you tens of thousands of dollars.

That’s why it’s important to pay attention to expense ratios when you’re deciding where to invest. Information about expenses can be found in a document called a “prospectus,” which you can get from your mutual fund company before you put your money into any fund.

Now here’s the part that kills me: historically, funds with high expenses have performed no better than funds with low expenses. Of course, there are exceptions. But in my book, unless you’re willing to throw money away —and there are many more fun ways to do that— it’s tough to justify going with high-expense ratio funds.

In addition to their regular expenses, many mutual funds also charge one-time commissions known as “loads.” A load is typically 3% of your investment, but can sometimes be as high as 8%. So if you invest $1,000 in a mutual fund with an 8% load, you end up investing just $920. The extra $80 goes right into the broker’s pockets, which are probably full enough already. 

The good news is that studies have shown for years that “load funds” do no better than “no-load funds.” And there are now literally thousands of no-load mutual funds to choose from. 

But how do you find the right one?

The world of mutual funds is divided into two basic camps: actively managed mutual funds and index funds. Most mutual funds are actively managed, which means that someone, somewhere, is picking exactly which stocks will be part of your fund. As an investor in that fund, you end up paying a fee for the benefit of that manager’s expert stock picks. 

Then there are index funds—also known as passively managed funds. The fees are much lower (up to ten times lower) and the return over time has been just as good (and often better) than what you get with actively managed funds. Though no one can guarantee that index funds will always do better, their lower expenses give them a leg up on their actively managed counterparts.

An index is a group of stocks that are bunched together to track all or part of the market. For example, one popular index, known as the Standard and Poor’s 500, tracks the performance of 500 very large companies. Because these 500 companies account for a huge part of the stock market as a whole, the S&P 500 Index is very closely watched.

Now, here’s the part that matters to you. You can invest in a mutual fund—called an index fund—that purchases only the stocks in a given index like the S&P 500. These funds tend to have very low expense ratios, because no one is being paid to select individual stocks to put in them. 

Let’s talk numbers. Over the past 10 years, the S&P 500 has returned 17.6% annually on average. The average large company stock fund, on the other hand, returned 15.3%. The Wilshire 5000 Index—another one I like—outperformed more than 75% of general equity funds over the last decade.

In other words, index funds are not only less pricey than actively managed funds—they’ve actually been more lucrative, too. But don’t expect your broker (even if he is your half-brother’s cousin on your mother’s side) to tell you that. 

Some of my favorite sites for finding an index fund: www.indexfunds.com; www.vanguard.com; and www.troweprice.com.