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After reading the article, I am inclined to invest 100% of it into the BT Institutional Equity 500 Index Fund. I just wanted to hear from others if this would be the best thing for me to do.

There are two basic Foolish schools of thought here-

1) Standard Fool response: Throw everything into the S&P index fund. Index funds tend to have lower expenses and tend to outperform similar actively-managed funds.

2) Minority Fool response (a.k.a. (with deference) tony44 response) Diversify somewhat.

Over longish time periods (decades), the various market segments (i.e. large caps (S&P 500), small caps, and international stocks) tend have very similar returns. Depending on how you run the numbers, you can get any one of the three to outperform the other two, but it's a wash to my mind.
If you split your contributions into these 3 segments, you'd expect to have about as much after 30-40 years as if you were putting everything in the S&P 500. The benefit to this strategy is that you'll tend to get more consistent returns. When large caps are doing well, small caps are often not doing so well (i.e. the past few years), and vice versa. You won't see your balance climb at 20+%/year as the S&P 500 has done of late, but if the S&P goes flat, your small-caps and/or international stocks may take off and mitigate that downturn.
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