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Finding a Fund Portfolio That’s Right For You

How do I know which funds to own?

“How do I know which funds to own?” an investor asked me recently. She was new to investing, and she worried this was a stupid question.

It’s actually a smart question and one all investors should think through, whether they’re just starting to invest or they’ve invested for years. It’s also question investors should revisit over time as their lives and circumstances change.

Some people start buying funds without a clear idea about how these funds might fit into a portfolio or if these funds can help them reach their goals. They might jump into aggressive stock funds because they’re trying to build wealth fast, and yet when they discover how volatile these funds are, they may end up selling out.

Other people worry they’ll make a ‘wrong’ move, so they stay in cash indefinitely and never start working toward their goals.

A better plan is to take some time to define what you’re trying to achieve, what kind of risk you can handle, and how much time you’ll be invested. Then find funds that meet this criteria.

The Upgrader Funds make it easy for you to own a full portfolio of funds that are designed to meet a wide range of investment goals. The equity Upgrader Funds seek growth, so they may be a good choice for long-term investors. The Flexible Income Fund (INCMX), on the other hand, seeks stability, which can be useful in or near retirement. (See a list of funds here.)

Upgrader Funds for three stages of life

Investing in your 30s: Focus on long-term growth

Investing early in your life can really help you build wealth since investment gains compound over time. If you’re investing for retirement in your 30s, you can focus solely on stock funds because you’ll likely have time to let your money grow and time to recover from losses along the way.

What funds to own?

  • The Upgrader Fund (FUNDX) is a portfolio of diversified stock funds that tend to have market-level risk.
  • If sustainable investing is important to you, as it is for many younger investors, you could invest entirely in the Sustainable Impact Fund (SRIFX).
  • If you can withstand more volatility, you could invest 70% in FUNDX (or SRIFX) and 30% in the Aggressive Upgrader Fund (HOTFX).
  • If taking market-level risk feels scary, then you could consider 80% in FUNDX and 20% in a bond fund like INCMX. But you’ll likely need to save more for retirement to make up for the potentially lower returns from bonds.

Investing in your 50s: Add Stability

In your 50s, you’ve hopefully made regular contributions to your accounts and have a sizeable nest egg by now. You should keep putting money aside and investing in stock funds for growth.

However, since retirement is getting closer, consider adding bond funds to the mix to try to preserve the wealth you’ve accumulated so far.

What funds to own?

  • Consider a mix of 70% in the Upgrader Fund (FUNDX) to try to keep growing your assets and 30% in the Flexible Income Fund (INCMX).
  • It may be easier (though a little more conservative) to invest in the Conservative Upgrader Fund (RELAX), which has 60% in core stock funds and 40% in our Flexible Income strategy.

Investing in your 70s: Look for Balance

In retirement, you’re likely withdrawing from your accounts to cover your living expenses, and you also have less time to be invested, so it makes sense to increase your bond fund investments. You still may need stock funds to potentially help your money last a lifetime.

According to the Trinity study, investors who had at least 50% invested in stocks could withdraw 4% from their accounts each year for 30 years without running out of money.

What funds to own?

  • You could seek to balance growth and stability by investing 50% in FUNDX and 50% INCMX. This approach is also consistent with the Trinity study.
  • If you want to keep things simple, consider the Conservative Upgrader Fund (RELAX), which has 60% in core stock funds and 40% in our Flexible Income strategy.
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About FundX

FundX Investment Group pioneered using noload mutual funds to manage client accounts in 1969. Today, the firm uses its evidence-based investment process to manage equity, sustainable and fixed income portfolios of funds for individuals, institutions and mutual funds.


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