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 most of you will be investing in the stock market.

And mutual funds are what we 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. And for many the easiest thing is to invest in an index fund. Eighty percent of managed funds underperformed their indexes so index funds are for the most part good choices.

You don’t need a lot of mutual funds to be successful. Start with an S&P index fund and then add a mid-cap and a small cap index fund. When you are ready to venture more add an international fund.

Keep your emergency fund in a money market. And the older you are, the more conservative you should be with your portfolio and begin to add bonds.

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.

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 there is.

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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You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee’s Money Matters newsletter here.

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