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Is too much of a good thing messing up Raymond Herron's financial life?

The Gaithers- burg, Md., man has his money spread among 40 stock funds and spends 20 hours a week keeping up with the bunch. He wants to simplify things.Herron faces a dilemma: If 40 funds are too many to manage effectively, and one is too few, then how many are just right to reduce risk without sacrificing performance?

While there's no magic answer, most financial planners and money managers believe a portfolio should contain at least three but probably no more than a dozen funds. Of course, for an investor who's just starting out, a single fund makes a lot of sense.

If you have only $1,000, a perfect candidate is Seven Seas S&P 500 Index (1-800-647-7327).

Investors with as little as $5,000 have enough to open at least two accounts. One should be with a long-term-growth fund, which buys shares in well-established companies with a history of growth in sales and earnings. The other should be with a so-called value fund, which buys shares in out-of-favor companies.

Two funds that fill the bill are Janus (1-800-525-3713), an earnings-growth fund, and Neuberger & Berman Guardian (1-800-877-9700), whose focus is on large, undervalued companies.

If you have $10,000, you can divide your growth fund into two separate funds - one that invests in large-company stocks and another that concentrates on smaller companies.

You could hang on to Janus while putting an equal amount of money into Kaufmann (1-800-2370132). Then take half of your investment in Neuberger & Berman Guardian and buy Third Avenue Value (1-800-443-1021), which buys small, undervalued companies.

When your four-fund portfolio reaches about $20,000, take a slice from each of the four funds and invest in a broad international fund, such as Managers International Equity (1-800-835-3879).

Adventurous investors can also put about 5 percent in an emerging-markets fund such as Temple- ton Developing Markets, which has a 5.75 percent sales fee (1-800-354-9191).

You might still want to add a bond fund or two. For a municipal bond fund, you might try Vanguard Muni Intermediate (1-800-635-1511). A good high-yield "junk" bond fund is Northeast Investors Trust (1-800-225-6704).

Then, to keep life simple, open a money market in one of the fund families you've already invested in. So there you have it - nine funds and you own a bit of practically everything.