How Many Funds Should You Own?

How Many Funds Should You Own?

As time passes, you may discover a second fund you would also like to begin accumulating in another long-term program. If so, do it. At the end of 10 or 15 years, you might own a worthwhile amount of two or even three funds, but there is no reason to diversify broadly, so don't overdo it. Those rare individuals with multimilliori-dollar portfolios could spread out in more funds which would allow them to
place almost unlimited sums into a more diverse group of funds. If this is done, some attempt should be made to own different-style managers. For example, money may be spread among one value-type growth fund, one aggressive
growth fund, one small cap fund, one global fund, and so on.

If you own a growth fund which, by definition, invests in more aggressive growth stocks, it should go up more in bull-market years and fall off more in price than the general market in some bear market years. This is fairly common and in keeping with the nature of most growth portfolios, so don't get alarmed and panic out at the wrong time. During the poor periods, try to look ahead several years. Daylight follows darkness.


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