46. Consolidate Your Investments

Over the past fifteen years or so, mutual funds have become the investment haven for small investors. I have a friend who woke up one day and realized she had funds in more than a dozen different mutual fund accounts. Actually, of course, she’d known all along that she had a number of different accounts, she just hadn’t realized how much such diversity in her investments complicated her life. Dealing with the account statements and regular promotional mailings from each of the funds was a major headache, and tracking each of the accounts had finally become overwhelming. But it was the amount of time her accountant had to spend each year calculating the dividends and capital gains on all these accounts that was the nightmare.

Things had started out simply enough. When she started investing, she did some research, came up with a couple of funds she thought were good, and set up accounts in them. As time went on, she discovered other funds that sounded good, so she gradually started spreading out, both with her IRA funds and with her regular investments. Each time she heard of another stellar performance in a fund, she’d open another account.

Most investment advisers agree that as long as you pick a reputable family of funds, it almost doesn’t matter which one you invest in over the long haul. The important thing is to set aside funds and invest consistently, year in and year out. If you want to diversify, say among income funds, growth funds, and tax-free funds, do so within the family of the fund you choose.

My friend has started gradually to consolidate her investment funds. Her accountant has thanked her. Her mailman has thanked her. Even her trashman has noticed the lighter load.