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How Mutual Funds can Affect Your Diversified Portfolio

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Before buying a mutual fund, assess how the fund will impact the diversification of your portfolio. Generally, the success of your investments over time will depend largely on how much money you have invested in each of the major asset classes -- stocks, bonds, and cash -- rather than on the particular securities you hold. When choosing a mutual fund, you should consider how your interest in that fund affects the overall diversification of your investment portfolio. Maintaining a diversified and balanced portfolio is key to maintaining an acceptable level of risk.

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