S ENSIBLE I NVESTMENT S TRATEGIES

Sensible Investment Strategies is a free site specializing in asset allocation strategies with suitable recommendations from high-ranked 100% no-load mutual funds. In addition, you can easily find articles on various mutual fund topics, links to important independent sites and excellent glossaries — all located in the left border.

One of the cornerstones for a successful portfolio is an appropriate strategy. one that gives your plan a clear and precise blueprint to achieve your goals. A well-defined mutual fund asset allocation strategy provides effective diversification — i.e. the dispersion of assets over diverse and distinct fund categories to achieve: (1) specific risk/reward objectives and (2) a reduction of overall portfolio risk .

S uccessful asset allocation plans also eliminate the following pitfalls caused by haphazard fund selection . inappropriate strategies, over-weighted fund categories, duplication of catagories and unsuitable funds . For further insight, go to Three Common Mistakes in Mutual Fund Investing .

Whether you are in a particular stage of asset accumulation or desire capital preservation with income — or just need a second opinion — Sensible Investment Strategies can propose an effective plan that is tailored to precisely fit your investment objectives and specific risk tolerance.

A Three Step Process

The first essential step in establishing a good plan is to define investment objective s — including portfolio size, investment stage, time horizon, return objectives and risk tolerance. Go to Objectives & Risk for detailed information.

The second step is devising an appropriate strateg y — including detailed allocation by fund category — that best represents your objectives and risk tolerance. Sensible Investment Strategies emphasizes specific risk/reward mutual fund allocation strategies to achieve effective diversification — for details, go to The Role of Risk in Mutual Fund Strategies .

In the third and final step. suitable high-ranked 100% no-load mutual funds are recommended to match the category allocations. Attributes of recommended funds include:

above-average category performance

Parameters for Recommended Funds

No front-end loads (initial sales commissions)

No back-end loads (deferred sales charges)

No 12b-1 fees (annual marketing fees)

Below-average annual operating expenses

Minimum five-year performance history

Above average category rankings — Morningstar 4 or 5 stars

Allocation Strategies

Think of your investment stage in terms of a life cycle. During your working or accumulation years, growth-oriented strategies will likely attain higher total returns than balanced-oriented or income-oriented strategies. As you approach retirement, possibly a balanced-oriented strategy may be more appropriate to conserve your accumulated assets. Finally, in retirement, income and stability would most likely be your priorities, although some growth is also important to help protect against inflation. However, these are general guidelines — your portfolio size, time horizon, return objectives and risk tolerance should determine the strategy that best represent the goals that you want to achieve.

All of the following strategies depict conservative, moderate and aggressive risk tolerances. The primary differences in all three risk tolerances are (1) modification in allocations and (2) variation in fund categories.

Choose your strategy from the following — age ranges are guidelines only :

Just Starting (ages 25-40) — for very long-term, growth-oriented objectives

Established Earner (ages 41-55) — for long-term, growth-oriented objectives

Soon To Retire (ages 56-65) — for long-term, balanced-oriented objectives

In Retirement (ages 65+) — for long-term, income-oriented objectives

Intermediate and Short-Term — for balanced or income-oriented objectives only

Explore other sections for information on related topics. Have a question that is not covered in Question & Answers or elsewhere in this site? Do you need customized portfolio advice? An evaluation for your current mutual fund portfolio? Email seninvest@aol.com or telephone Jack Piazza at 630-606-6118.