Already Diversified Enough
By definition, a mutual fund is already diversified!
Indeed, the fund manager buys different titles with money invested by all shareholders of the fund.
Some specialized funds are a little less diversified but in general, mutual funds are a well diversified investment vehicle.
Limit Yourself to a Couple Funds
It is not necessary to select a large number of funds for your portfolio. Three or four different funds should be sufficient to meet your needs. In some cases, a single fund may do a great job.
By opting for too many funds, you increase the risk that one or more of these will perform poorly, thereby reducing your portfolio’s performance.
Choose One Good Fund-Manager or Use ETFs
Because 80% of fund-managers don’t beat the market, it’s pretty tough to pick the good ones.
Then concentrate on choosing one good fund-manager that fits your investment style and that will meet your specific needs. We suggest choosing a manager that’s focuses on long-term investments rather than short-term ones.
If you are at ease with a fund-manager’s philosophy, trust him, he’s a specialist and will work to ensure that the fund is well diversified and performs well.
If it’s too difficult to choose your fund-manager or it takes too much of your time, buy one Exchange-Traded-Fund (ETF), it’s a great solution. Many ETFs offer great diversification by mimicking an exchange or an index and are cheaper to own than mutual funds.