Yes, size does matter. In each broad category, we have the choice of buying mutual funds that invest in small companies, which may have a higher potential return, but more risk. Medium sized companies may reduce the risk over time since they are not as small and are more established than small companies, but have the ability to generate profit growth over time. Large company stock funds may have fewer risks, as these are very established companies that have proven track records, dividends, and growth, and are thought to be less risky than small company funds.