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Taking A Look At Your Portfolio

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420x316-grad-lee Dee Lee
Dee Lee is a Certified Financial Planner who received a diploma in...
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BOSTON (CBS) – Let’s start the New Year with a look at your portfolio. And most of you do have a portfolio if you invest in your retirement plan at work.

To reach your financial goals of a comfortable retirement or sending the kids to college you will be investing in the stock market.

Mutual funds are what most of us invest in. We pay someone else, a fund manager, to mind the store for us and choose the investments.

You will want to build a portfolio based on your goals and time horizon. How many funds you own is partly a function of how much money you have to invest.

I would recommend a simple six-pack of mutual funds in the beginning that might include the following:

  • Large Cap Growth
  • Large Cap Value
  • Small Cap Blend (Value & Growth)
  • Mid Cap Blend (Value & Growth)
  • International
  • Bond/Money Market/Cash

You will need to know the various fund minimums and you want enough money in each fund to make an impact on your portfolio’s overall performance.

As your money available for investing increases, limit your fund choices to a maximum of a 10-12 funds. With more funds than that you just end up being closer and closer to an indexed portfolio. You’d be better off just buying index funds in the beginning because the management fees will be lower.

Learn about overlap. Overlap is owning too many of the same style mutual funds which invest in the same individual stocks. In doing your research check what the funds top holdings are to see how much overlap is there.

If you are investing outside your retirement plan at work, consider going to some type of mutual fund super market that allows you to own the best mutual funds from different companies.  Fidelity and Schwab both allow you to own other fund families.

This will put all your holdings on one statement which makes life a whole lot easier when it comes tax time.

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