CHAPTER 7

How to Build Mutual Fund Portfolios for Lifetime Profits

In Part One, I discussed the importance of determining your stock allocation and offered some general guidelines on your equity exposure. Working within these guidelines, you first need to decide how much of your equity allocation should go into index funds and how much into actively managed funds.

However, to make my asset allocation suggestions simpler to understand, and to provide an important overview, I have summarized them in an all-index fund portfolio. Later, I'll show you how to introduce some actively managed funds into your mix. All are long-term recommendations. The purpose of these models is to provide both insights and solutions. The insights are more important.