No. of Recommendations: 2
At this point I was thinking about the S&P 500 index fund for the TIRA and the Total Stock Market index fund for the Roth IRA.

I agree with RookieJoe's statement:

So the total of all your retirement accounts would be diversified as one

You should always look at your portfolio as a whole, not in account pieces. I don't know why you're choosing both the S&P500 index and the Total Stock Market index. Since the TSM index is cap-weighted it is weighted toward the S&P500 stocks anyway. Compare the performance of these two funds and you will see how closely they track to each other. I myself prefer the TSM index because it gives you at least some exposure to mid and small-caps.

Should I be diversifying more within my Roth IRA, like adding some bond funds or international index funds?

Like the other posters, I think you're too young for bonds, and IMHO they won't be doing too well in the near future anyway. As to the international index fund: Decide what percentage of your TOTAL portfolio, (i.e. 10%) you are willing to place in a higher risk/higher return category, then buy the corresponding dollar amount in an international index fund. It doesn't matter which account (Roth or TIRA) you buy it in--although the Roth might be better since that's the one you'll be adding to in the future and it will make rebalancing to 90% TSM index, 10% international index easier in the future. (The 90%/10% is just used as an example--decide on your own percentages.)

In summary, decide what percentage you want in international, and buy that in one of the accounts (probably the Roth). Then buy the TSM index fund with the remaining funds in that account, and also in the other account. Forget the S&P500 index fund--it's redundant.

You might also want to visit the Index Fund board and see what they have to say about the S&P500 and the TSM index:

That's my 2c...


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