How many mutual funds should i invest in?

incase any of you saw my last question in this category stocks and mutual funds are different

Really, you only need two mutual funds. Consider this Margaritaville portfolio made 13% in 2007:
50% Vanguard Inflation-Protected Securities
50% Vanguard Total International Stock Index VGTSX

Vanguard has the lowest fees. The first fund allows you to weather a 1970s environment like we have today. The second fund will outperform the US market as the boom days for the US are over (for the next 10 years) relative to the rest of the world.

Depends on how much money you have.

Seriously, if you only have $5k to invest, you're better off getting a single "lifestyle" mutual fund, which will balance stocks, bonds, and cash instruments for you.

If you have enough money to diversify, you could have a mutual fund in large cap growth, large cap value, a mid cap blend, a small cap blend, and a foreign exposure fund - that gives you some coverage in all of the major financial arenas.

The answer depends on your holdings & age.
Index funds, Overseas, small cap, and some in balanced or bond funds...

if you are trying for diversity.......................sometime... one is enough...............get a book called modern portfolio theory.............

Great Question! Your mutual fund portfolio should consist of the following 5 categories. Large Cap Value, Large Cap Growth, Small Cap Value, Small Cap Growth and International. I keep the percentages at about 20% each and I do not believe in owning bond funds at all. Please read my profile and send me an email if you would like to chat with me more about this.

There is no right answer. You have to judge based on your situation.

Mutual funds tend to follow the market, and have extra "managment" and other fees.

You can actually have less risk by by investing in stocks than mutual funds, since there are no management fees with investing in stocks.

The risk reduction with mutuals, is with diversification.

But if you are going to invest in mutual funds, you should have at least 2 opposing funds, one that goes tends to go up when the other tends to go down.

You puchase the funds on dollar cost averaging, to minimize risk.

One one goes way up, and the other goes way down, you sell the fund that goes way up, and buy the fund that went way down.

I always reinvest the dividends and capital gains distributions, and go by the dollar value of the total to determine which fund is up or down, because a fund always drops in share value when there is a dividend or capital gains payout.

as many as you can afford.