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6. Executing Trades > Build Your Own Mutual Funds

Build Your Own Mutual Funds

A few online brokerage services help you build a diversified portfolio of stocks that serves as a personalized mutual fund to reach your financial goals.

Building a diversified portfolio from scratch can take time and money. Academic research suggests that a properly diversified portfolio should include 15 to 20 stocks of varying sizes from disparate industries. Even if you have $10,000 to start with, that equates to less than $500 in each of those 20 stocks. Particularly with full-cost brokers, you could spend 10 percent or more just on broker’s commissions, which almost guarantees that you won’t keep up with the market. If you’re set on investing in individual stocks but want to diversify without the expense, you can take advantage of folio services offered by some online brokerages.


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