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Morningstar Guide to Mutual Funds -- Gems
Taylor Larimore 12-19-2006, 4:54 PM | Post #189957 | 
Hi Diehards:
I have been reading "Morningstar Guide to Mutual Funds" written by Christine Benz. Christine was a Morningstar analyst. She is now editor of "Morningstar Mutual Funds."

Christine shares these pearls of wisdom:

"Vanguard has not wavered noticeably from its modus operandi of placing shareholder interests front and center."

"Every investor should have an asset-allocation plan."

"Build a solid foundation for your portfolio by investing in reliable core funds."

"Saving for short-term goals can be one of the trickiest parts of investing."

"After 10 funds, a portfolio's standard deviation stays nearly the same regardless of how many funds you add."

"Buying hot funds is a bad idea. -- A fund that blazes in one market environment usually is as cold as ice in others."

"Market timing doesn't work. Whether you are in a bear or bull market, stick to your long-tem plan and rebalance accordingly."

"Simplify your investing life."

"By investing with one of the major fund families, you can easily transfer assets fron one fund to another. You'll also consolidate paperwork, getting one statement for all of your funds instead of a separate one for each fund you own."

"Consider all-in-one funds, particularly target-maturity funds."

"The star rating is a strictly quantitative measure. A high rating doesn't imply the approval or endorsement of a fund by a Morningstar analyst.

"We like total stock market funds as first funds."

"Put the bulk of your portfolio in low-turnover funds, which are generally less risky, more tax-efficient, and have lower trading costs."

"As hard as it might be to believe, a fund's past returns are not particularly predictive of its future returns. The best predictor of good returns? Low costs."

"Pay attention to a fund's aftertax returns if you're buying a fund for a taxable account."

"Be a cheapskate. When you look for funds, focus on low costs."

"If you're holding a fund in a taxable account -- tax managed funds, municipal bond funds, and ultralow-turnover funds all fit the bill."

"One of the most common myths about indexing is that all index funds are tax efficient."

"Another common assumption abut indexing is that all index funds are cheap."

"The expense advantage of ETFs may also prove to be more mirage than fact for many investors."

"For straightforward foreign-stock exposure, pick a fund that focuses on big companies in developed markets."

"No one needs a sector fund: They're costly, risky, and often redundant with other funds you already own."

"For the core portion of your bond portfolio, focus on intermediate-term funds that own both government and corporate bonds."

"Focus on a fund's total return, which reflects income return plus capital return."

"Inflation-indexed bond funds can be a useful addition to your portfolio."

"It is critical (in a taxable account) that you take taxes into account when deciding whether to sell."

"It's always important to rebalance."

"To limit taxes in a bull market, rebalance by investing new money and making the biggest shifts in tax-protected accounts."

"Today you can build a well-balanced portfoio made up entirely of index funds."

"Employ a buy-and-hold strategy instead of chasing hot-performing funds."
Thank you Christine and Morningstar.

Best wishes.

Originally posted in thread: 55527
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