Chapter 10. Perfecting a Fund Portfolio

In This Chapter

  • Creating the best mix of funds for your situation

  • Understanding how taxes factor into selecting funds

  • Recognizing wise and unwise fund investing strategies

  • Executing your plan

Although portfolio usually describes a collection of funds, it doesn't have to. For certain goals, one or two funds may be all that you need (for example, a short-term bond fund and a money market fund for a home down payment). Even for a long-term goal, such as retirement, you may select just one fund; some mutual fund companies offer funds of funds, which, as the name suggests, are mutual funds comprised of other mutual funds. (See Chapter 13 for details on such funds.) And although a portfolio is sometimes held inside one account, it doesn't have to be. The funds that make up your retirement portfolio, for example, could be in numerous accounts from different investment companies.

This chapter shows you how to draw up a blueprint for your investing goals that includes all the key considerations, including asset allocation (how you divvy up your portfolio among different investments), tax implications (especially for portfolios held outside of tax-sheltered retirement accounts), and some mutual fund investing strategies. I then help you execute your plan.

Asset Allocation: An Investment Recipe

Asset allocation simply describes the proportion of different investment types (stocks, bonds, international investments, and so on) that make up your mutual fund portfolio. ...

Get Mutual Funds For Dummies®, 6th Edition now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.