I’m a big fan of mutual funds. Investing can be simpler if you forget about the individual stocks and stick with mutual funds.
They’re pretty close to being one-stop shopping for investors. And therein lies a problem: Do you buy’em and forget’em?
A lot of investors do. But I want to remind you that a portfolio of even the best funds needs attention.
A key question: is your money divvied up the way you want among stock funds, bond funds, and cash-equivalent money market funds? This is called asset allocation, and it likely will significantly affect your future returns.
No one mix is right for every investor. So what you need to do – on your own or with your advisor – is decide on your ideal allocation.
Then rough out your portfolio’s current composition before buying or selling funds to realign your portfolio. It’s crucial that you know where you are now and get back on track.