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My situation.

I am 31 years old.
Making $51,000
Began contributing this past Feb.
Contributing 15% of that (about $147/week) to a Transamerica S&P Index Fund (TEIF).
Presently have about $6800 in fund.

Should I diversify?
Some of my other options through Transamerica are:


*MINE* Transamerica Equity Index Fund (TEIF)

Transamerica Balanced Fund (TBAL)
Transamerica Bond Fund (TBF)
Transamerica Cash Management Fund (TCMF)
TA Janus Fund (JANUS)
TA Templeton Foreign Fund (TFORN)
TA Franklin Small Cap Growth Fund (FSCG)
TA INVESCO Technology Fund (ITECH)
Transamerica Equity Fund (TEF)



Thanks for your insight.
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No. of Recommendations: 1
Hello the donga, an S&P 500 fund is an excellent choice as the core holding in most anyone's portfolio. And once you have a solid amount in that holding, you may want to research whether or not to begin to diversify your portfolio with a mix of one of several other asset classes and styles, such as mid-caps, small caps, bonds (at a later age IMHO), international, etc. What you need to do is do some reading and come up with an asset allocation plan of your own that suits you. There are several sources on the web to give you a generic look at options, like asset allocation calculators (I believe Vanguard's website has one). You may also want to use www.morningstar.com mutual fund area as a place to research each of the mutual funds you mentioned. But, IMHO at your age, a healthy allocation to equities should be very important, if your can tolerate the risk of investing in equities.

You could also use the search feature at the top of the page for more insight on diversifying. Just type in diversify, of asset allocation, or something similar, on this or say the Index Funds message board, and you should have your self quite a bit of reading to go over to help you decide what's right for you.

HTH

Bookm
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What should I consider a "solid amount"?
10,000 20,000 30,000?

Can one also look at sector index funds? ie. biotech, health?
I understand health has outperformed s&p over the last 10-15 years and forsee biotech being one of the most promising new sectors emerging. Possibly merging to some extent with healthcare sector.

Roth IRA will be started possibly next year. Have too many expenses - school loan and car (among others) this year. 15% will have to do.

I guess I should continue to have at least 60-70% going into s&p500.

Thanks for your assistance.
Jon
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Hello again the donga:
What should I consider a "solid amount"?

This was the subject of a discussion some of us had on the IF message board several months ago. Once again it comes down to you level of comfort with the amount in one mutual fund. It may be a $2000, $5000, $10000, dependin on who you ask. You should make sure you keep in mind the added mutual fund expenses for an additional 2-4 funds to determine your total expense ratio.

Can one also look at sector index funds? ie. biotech, health?

As I stated in my initial post, being diversified continues to be a very useful strategy for reaching one's retirement goals. As Frank Armstrong of DirectInvestments stated: "Diversification is the primary investor safeguard against all the things that might go wrong in the equity markets. But its limits must be understood and respected." Just make sure any sector bets don't take up a large portion of your 401k money. Just look at what that would have done to your money if you had went in that direction using the tech sector, as a number of investors prolly did. Keeping that portion of your 401k down to a level you feel alright with (like 5-10% as an example) protects your 401k from steep drops that tend to lead investors to very rash and hasty decisions, like selling after the drop and moving money into safer funds after the damage is already done. That's a hard way to learn what one's risk tolerance really is.

I understand health has outperformed s&p over the last 10-15 years and forsee biotech being one of the most promising new sectors emerging

That is what data has indicated. However, keep in mind that the market does run in cycles, and each dog, or asset class, has its day. This is illustrated in the table at the following link:
http://64.224.33.203/periodictable.htm

Here's a post I found informative that relates to diversification:
http://boards.fool.com/Message.asp?mid=15983257

Hope I helped,

Bookm
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Bookm,
You helped bunches.

I guess besides the investment in my base s&p fund it is all pretty much common sense.
75% of my retirement fund (or more) will always be a s&p (or other) index fund.


1. Stay away from those high cost funds.
2. Whatever else I decide to invest in, make it a small portion of my investment portfolio.
3. Don't diversify TOO much, that just adds costs.
4. And don't overlap, as much as possible.


This is all pretty new and I love learning about my money and future.
Thanks to all those who take the time to answer all the questions, it makes a difference.

Jon
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