Careful Fund Picking

If your mutual fund–buying strategy isto pick whatever funds have the highestyields, you may want to rethink thatapproach. Financial gurus recommendlooking for funds that fill gaps in yourportfolio and don't duplicate what youalready have—buying a large cap fundwhen you already have one just addsanother layer of expenses. Also, it pays towatch those expenses. Yields can rise andfall with market conditions, but a tightwadfund will deliver low expense ratiosyear after year, which will pay off in thelong run. If you don't mind boredom,choose index funds, with their rock-bottomexpense ratios that go as low as0.18%. Other fund companies to considerare Vanguard (www.vanguard.com)and TIAA-CREF (www.tiaa-cref.com).