When Is Enough Enough?

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When Is Enough Enough?

There is a danger in becoming a collector of investments. Not only is it more difficult to keep tabs on a large number of investments, but oftentimes "collectors" make investments for the wrong reasons and lose sight of their goals.

Let your goals lead the way

So are investors with multiple portfolios prone to become collectors? Not necessarily. True, investors with multiple portfolios may have more investments than investors with one portfolio. But if their goals are the driving forces behind their portfolios, multi-portfolio investors will not become collectors, no matter how many investments they actually own.

Further, multi-portfolio investors don’t have to own dozens of investments across a variety of portfolios. They can choose a handful of securities that they like and understand and use these securities in their retirement, college-saving, and other portfolios.

An example

For example, you may like a growth & income fund for exposure to U.S. large companies, an international fund for foreign stocks, and a total bond market fund for bonds. You could plausibly use only these funds in all of your portfolios (if they’re available in your retirement plan, that is). You’d simply adjust your weighting in each depending on your time horizon.