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We are often asked questions like “What is a good stock to buy now?” Or “Which mutual fund would be right for me?” Or “How many stars has Morningstar awarded the funds you use?”

While they may be interesting, these questions are irrelevant to the mission of most investors. The meaningful question is “What should I do today in order to attain future investment goals?” The goal may be to ensure a secure, comfortable retirement, or to provide college educations for grandchildren, or something else. The question is the same for any investment goal.

We think there are 2 essential tasks that most investors need to accomplish in order to reach any investment objective. First or foremost is to save, save, save. All other investment issues are meaningless unless we put away money on a regular basis for the purpose of meeting that goal of a secure retirement or that goal of providing education for our grandchildren.

The next task is to build an appropriate diversified portfolio that includes a variety of asset classes designed to reduce portfolio risk and enhance returns. Owning 10 different mutual funds does not mean the portfolio is diversified. To do that each fund must represent a distinct segment of the market.

While we do spend considerable time reviewing and analyzing mutual funds and exchange-traded funds, we devote even more time and effort to building appropriate portfolios for our clients. Building diversified portfolios.

Next time we’ll talk about what we mean by “appropriate” portfolios. Steve Page December 14, 2011