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Couple of points to add.

#1--talk to your employer or who ever administers the 401k about adding options.

#2--IMHO, don't worry too much about diversity (i.e. foreign funds, etc.) until you get above the $50k level. Below that, commissions and fees tend to take away too much.

#3--I would not use different accounts to diversify, i.e. 401k in S&P500, wife's IRA in small cap, another IRA for foreign. Personal anecdote, I tried that once and didn't have a happy ending. Used one IRA account for foreign at a time when foreign was bad. Couldn't add money to it quick enough and turned into a pain trying to sell in other accounts to keep my overall balance. Best thing to do is keep same percentages in all accounts, i.e, if you want 50% S&P500 allocation, have all accounts with 50% S&P500.

#4--a common mistake people make is assuming they can tolerate volatility. People usually only see the good (up swings) of volatility and discount the bad. You won't know how you handle the bad until you've lived it. When diversifying, start out with small allocations until you see how things work and are interrelated.

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