Mutual Funds/One Fund or Many?


Hi Warren,

I have $100,000 that I'd like to invest in 4 or 5 dividend paying funds with low fees, but I'm wondering if I should put it all in one fund and pay one fee? What's your opinion? I'm 59 and will retire at age 65.
thank You

Dear Roger Bowers--

More than one. There's safety in numbers.

The total fees charged by one no-load fund should just about equal the total fees charged by a variety of no-load funds.

And there are solid benefits conferred by your owning a variety of funds.

Not all dividend-paying funds invest the same. Some may just buy stocks with high dividends; others may buy stocks that keep raising their dividends; still others may buy stocks very unlikely to cut their dividends. So the funds should wind up have different records.

Check how dissimilar the funds are before buying any. See how they've behaved in up and down markets. (Check with Morningstar.) Naturally, you want dissimilar funds--so your portfolio has a chance to remain stable.

If the funds you buy are not in a retirement account, you might sell any that have tax-deductible  losses over the year.

I hope this helps.

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Warren Boroson


Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.


Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.

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