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

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Mutual funds are what most of us invest in. We pay someone else, a fund manager, to mind the store for us; choosing the investments and when to sell or buy.

You will want to build a portfolio based on your goals and time horizon so you can ride out the ups and downs of the stock market. 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.

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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.

The final point is that your six-pack shouldn’t be divided equally among six funds. The key to making money is finding the right mix of this six-pack to fit your financial objectives and risk profile. This is your asset allocation.

A model portfolio for a goal that is 10 years away might be 60% stock and 40% bond/cash. The stock portion might be 50% large and mid-size company stock, 30% small company stock, and a 20% international exposure. The 40% bond portion could be in bonds, bond funds, or even a money market.

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With a goal of retiring in 5 years, you should consider having a very larger portion of the portfolio in bonds and cash so you could ride out several years of a bear market without having to sell the stock positions in your portfolio.