QUESTION: Instead of putting my money into a mutual fund, why can't I, in effect, set up my own fund by buying a few shares of a number of companies? The mutuals haven't been doing so great, and I can save the sales fee.

ANSWER: Although the fund industry as a whole has not put on a spectacular performance in recent years, some individual funds have done quite well for their shareholders. And even the fund averages have made a respectable showing when compared to the various market averages.

I should also point out that if your major concern is saving the sales fee, there are a number of no-load funds available that have good track records.

To answer your specific question, there is no technical bar to going that route. But you had better be prepared to do a substantial amount of research if you want to do the job properly.

And it's a continuing job. After the initial selection, you should review your holdings pretty regularly in the light of changing company and market conditions.

Most common stock mutual funds hold anywhere from 40 to 100 different issues in their portfolios. To come anywhere near comparable diversification you should select at least one leading company (and preferably two) in each of about 10 major industries.

And you should buy at least 100 shares of each stock you select. (Buy in 100-share increments if you want a larger holding.) For anything less than a "round lot" (100 shares) you'll pay a larger brokerage fee per share, and in addition you may have to accept a lower price when you sell.

If you don't have enough cash to handle this kind of portfolio, look into the share accumulation plans offered by some of the larger brokerage houses. These plans make it possible to buy small amounts of a number of exchange-listed stocks; and they provide dividend reinvestment as well, at lower-than-normal brokerage fees.

If you have substantial capital and both the time and desire to manage it yourself, then you should be able to handle your own portfolio.

But for most people of moderate means with no great amount of spare time, I think a properly selected mutual fund -- one whose investment goals match your own, and with a history of good performance -- is still the best way to go.

One final thought: Be careful not to get bogged down in paper work. The chance to make a few extra dollars may be outweighed by the burden of monitoring 60 or so dividend payments every year plus another 15 or 20 year-end tax statements.

Q: My 22-year-old son graduated from college at the end of May 1979 and started working in September. Can I still claim him as a dependent?

A: Of the five tests for dependence (for tax purposes), all but one are satisfied by the facts given in your question. The missing test: You must have paid more than half of his living expenses for the full year.

The test for income does not have to be met. The $1,000 ceiling on taxable income is waived for a child who was a full-time student during all or part of at least five months during the year.

So if the total of your contributions to his living expenses for the entire year was greater than the amount he spent of his own money, he can be claimed as a dependent on your tax return.

And in one of those rare cases where a double benefit is allowed, he can claim the exemption for himself on his own tax return for the same year. h

Q: We had a fire in our home last spring, and had to live in a motel for several weeks while repairs were made. Our agent said something about the insurance reimbursement being taxable. This doesn't seem reasonable -- was he right?

A: He was partly right. This is a rather complicated situation and requires some calculating to figure out.

The insurance reimbursement is taxable income to the extent that it covers what your normal living expenses would have been if you had continued to live in your home during those few weeks.

Insurance reimbursement in excess of those "normal" costs -- the extra expenses due to having to live in the motel -- is not taxable income and should not be reported on your tax income.