Picking winning stocks is easy, and much more profitable. Use no-load funds run by proven managers if you don t want to spend much time on your investments, or if you want to venture into the potentially most rewarding yet volatile areas of the market. A sound approach is to hold individual stocks of large, high-quality companies in regular accounts. Keeping these low-dividend growth stocks for the long haul pushes your tax bill down. Then use mutuals in tax-deferred retirement plans to focus on other types of stocks, such as smaller technology and foreign issues.
Funds generally make annual distributions that are currently taxable in a regular account.
And bonds don t generate long-term growth, which can increase the risk that you won t be able to enjoy your retirement. You might need few or no bonds, or you might want more than an age-based formula indicates. Hold some bonds or bond funds only if you require high current income now or within the next few years. If not, invest for growth in equities. They ll inevitably rebound because bear markets are temporary setbacks in a generally rising trend.