Buy a “Fund of Funds”

Think about traditional mutual funds. These invest in the specific areas outlined by the fund’s prospectus. Then there are “fund of funds”, which some companies now allow. With these, investors are allowed to purchase a variety of mutual funds, allowing for double the diversification.

Under the same umbrella, the money you could, say, use to buy a mutual fund will now be spread over several funds instead.

Let’s say you want to gain exposure to 10 different Vanguard funds but you’re worried that you simply do not have the capital for it, nor the time. Well, the Vanguard STAR fund allows you to do just that. That way, through a single no-load fund purchase, you’ll instantly diversify your portfolio.