<p>Momopi, </p>
<p>Diversification, and continued investments ( meaning don't try to time the market buy or sell) are time-proven ways of creating a good return. You probably already heard all the following from someone at some point, but it works:</p>
<p>a. make sure you have a 6 to 12 month of emergency fund that you can easily tap into. For this fund, I will just put in a money market fund like fidelity california AMT free money market fund", which is generating a 3.5% return withOUT fed and state income tax. </p>
<p>b. For additional savings (after tax saving or before tax ie 401K), you should diversify based on your age...For someone around 35, I will suggest:</p>
<p>50% large cap growth</p>
<p>15 % mid cap growth</p>
<p>10% small cap value, i.e. T. Rowe Price small cap</p>
<p>15% international , i.e. Fidelity Diversified international ( closed to new investor)</p>
<p>10% emerging markets, ie. T.Rowe Price emerging markets</p>
<p>This is a relatively aggressive diversification. You can turn down the aggresiveness by less international and emerging markets. Also, small caps has been doing really really well ( 20% / yr), it might be time for a plause. </p>
<p>c. lastly, you need to rebalace one or twice a year to make sure the diversification fits you need. </p>
<p>Check out the Money Mag"s top 70 mutual funds in every issue, they list some of the better funds out there. Also, I will only purchase funds that are rated a 4 star min by "morningstars"</p>
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