Mutual Funds/Index Funds



Is it a good idea to invest in both a S&P 500 index fund and a total equity market index fund?

I thank you for your reply.

Dear Kenneth:

Those two funds are very similar; you would be better off investing in a very different fund, to make your portfolio more diversified.

Those funds contain a blend of value and growth stocks, mostly large caps.

So, you might  look for funds that own small or mid-cap stocks--assuming you already have exposure to bonds. Or an international fund.

Dodge & Cox International is a fine fund, although it invests in large-cap stocks. Still. foreign stocks would be  good choice to diversify your portfolio.

Good luck!


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Warren Boroson


Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.


Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.

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