11. Do This

Now you know how professionals think and what they try to do with your money. It's time for you to do the same—to master the finishing touches.

Asset allocation—or mixing and matching a variety of funds—is the most important move you will make as an investor. And you now have all the tools you need to do it well.

You already know what's inside various mutual funds, what makes them soar and plummet in cycles, and how to match the key terms like "large cap" and "small cap" to your list of mutual funds. Now, I'm going to show you how to select the appropriate proportions, and you will be done. You will be a skilled investor.

We'll start with a classic mixture of funds. Among investment professionals, there is agreement that a moderate ...

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