Dave gives a quick primer in mutual fund investing.
QUESTION: José follows Dave on Twitter. He asks if there is a maximum amount that should be invested in a single mutual fund. Dave gives him a quick primer on mutual fund investing.
ANSWER: I suggest that you do your investing equally across four types of mutual funds. Those categories are growth, growth and income, aggressive growth, and international. So that would be 25 percent in each type.
I probably wouldn’t go as high as $25 million in each one, but until you have over $10 million I really wouldn’t worry about it much. If you want to spread out some and have a couple of families of funds, that’s fine. I only have about three families of funds, so I don’t spread it out that much. And I own less than 20 mutual funds, maybe even less than 10, but with substantial money in each one.