How to Choose a Great Mutual Fund/ETF

Now as you know, Ive begun investing my Roth IRA money. I bought my first set of stocks and would like to have the bulk of my portfolio in nice, save and secure mutual funds. My goal is to achieve a well diversified portfolio.

Im looking to invest my portfolio like this:

80% Mutual Funds

10% International

5% Individual Stocks

As Im planning to invest a huge chunk into mutual funds for the long run, I want to make sure to be very selective. But quite honestly, theres hundreds of funds out there and I dont know where to start. Im not looking for someone to just point one out and buy it blindly; but I would like to get a little head start. Ive been comparing a few resources Money magazine. Smart Money magazine and Suze Ormans book for the YB&F .

Im not particularly interested in buying an actively managed mutual fund at this point. Im a little intimidated by the research involved and my strength in sizing up the fund manager and deciphering their fees. So for now, Im sticking to index funds and exchange traded funds (ETFs ), after all they tend to be less risky and offer competitive long range returns.

However, if youre interested in actively managed funds here is the list compiled by Money Magazine. along with their picks for Index Funds and ETFs. For SmartMoney s picks check out their list here .

When choosing an actively managed fund, be sure to research the fund manager, how long has he been managing, whats the funds track record, is he about to the leave fund, how does the fund compare to the fund category

Once youve selected one that interests you, you should do further research on that particular fund at Morningstar or Google Finance. noting how it rates compared to its fund category peers.

Here is a list of recommended index funds by Suze Orman:

Vanguard Total Stock Market Index contains large, mid and small-caps. Minimum investment $3,000.

Vanguard 500 Stock Index contains large-caps. Minimum investment $1,000.

T.Rowe Price Equity Index 500 contains large-caps. Minimum investment $1,000.

Vangaurd Total International Stock Index comprised of 30 countries. Minimum investment $1,000.

Here is a list of recommended ETFs by Suze Orman:

iShares MSCI-EAFE EFA contains international companies.

Recommended ETF by another one my mentors, my father:

SPY Top 500 S&Ps, a dividend earning fund