5 Funds for growing your stash
The best use of $5,000: Create a diversified fund portfolio.
NEW YORK (MONEY Magazine) - Once you graduate from one fund to a handful, it can be tough to figure out where to apply a fresh $5,000. Add to the funds you already have? Buy a new one? The solution is to follow this simple three-step plan.
1. Find a mix
First settle on a target allocation. You want stocks to drive your returns and bonds to add stability. You can use the portfolio at right. Most families that are more than 10 years from retiring can keep 80 percent in stocks and 20 percent in bonds.
Or make your own blend with the asset allocator at troweprice.com (you must register at the site).
2. Fit in your funds
Next look at how the funds you already own match up with your desired mix.
One cool tool for doing that: the Instant X-Ray at Morningstar.com. You plug in your funds' tickers and the X-Ray calculates your asset mix, making it easy to see, say, that you need to add small-cap stocks with your next $5,000.
3. Fill the gaps
The five funds here are excellent portfolio building blocks. All are in the MONEY 65, our recommended list of funds, and all will let you invest for $3,000 or less.