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Greetings jameyer23,

My employer offers two index funds (S&P 500 and Russell 2000). Would it be more Foolish to invest half in each or all in one?

I think the better question is whether you understand the differences between the two indices and how each covers a very different part of the market since S & P also has a Small-cap 600 and Russell has a Russell 1000 for their large-cap index.

Secondly, depending on your strategy and other holdings either may make sense. For example if you have a taxable account that holds a lot of large-cap exposure then it could well make sense to overweight the small-cap fund here or if the employer plan is everything then a more moderate approach of say 66/33 or 75/25 may make more sense. Remember, no one can say which mix is optimal before the returns are known, eg it is much easier to see what you should have held in the 1990s but not so easy for 2002-2012.

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