We consider mutual funds about the best way for the average family to invest. The key: You must choose your funds wisely.

Data seem to agree that families like mutual funds. Almost one of every two households invests in them, according to the Investment Company Institute. The median amount -- or the middle amount invested in mutual funds -- is $48,000. That's more than one-third of a household's financial assets, which also include stocks, bonds, cash, bank and insurance investments.

But if your family invests in mutual funds, be sure you know what you are doing.

Here are 10 commandments to adhere to when investing in mutual funds, as originally published in our book, "The Complete Idiot's Guide to Making Money with Mutual Funds" (Alpha).

1. Always understand exactly what you're investing in. You could lose a bundle if you pick the wrong kind of mutual fund. Most mutual fund companies offer free literature on their funds.

2. Don't rush out and buy the first mutual fund that looks good. Instead, determine how much money you need and by when. Also figure out how much money you can handle losing. Choose your investments accordingly.

3. Don't try to make quick profits. Always invest for the long term. You should plan to keep some of your mutual funds an absolute minimum of 10 years.

4. Mix up your investments. Unless you invest in FDIC-insured CDs, there's no way to avoid losses in most mutual funds. You can cut your chances of losing, though, by putting your money in different types of investments.

5. Invest regularly with each paycheck -- before you have a chance to spend all your money.

6. Do your homework. Once you've determined how much money you need and by when, as well as how much you can afford to lose, research the best investments to meet your goals. Most library business sections carry information on mutual funds. You also can go to Morningstar.com for educational and performance data on funds.

7. Avoid paying high commissions and fees for mutual funds. Make your money work for you, not your stockbroker. Stick with low-cost, no-load mutual funds.

8. Earn enough so that your nest egg at least keeps pace with rising prices. Financial research shows that you need to invest at least 20 to 30 percent in common stock mutual funds in addition to bonds and CDs for the value of your investment to keep pace with inflation.

9. Know when to sell your mutual funds. Check how your fund performs vs. similar funds or benchmark index over at least three years. If the fund is severely underperforming, call the fund and find out why. In most case you should find a better fund.

10. Invest to beat the tax man. Take advantage of Individual Retirement Accounts, Roth IRAs, tax-free municipal bonds and tax-deferred annuities. Watch your money grow tax-free until you retire.