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Randolo1 writes:

I'm new to this board and somewhat new to this site. I want to reallocate my 401K. I've been unable to find an area of this site that suggests whether I put my entire 401K into an S&P 500 fund, or whether I should put a certain % into several indexes such as the S&P 500, S&P 400, Russell 2000, Nasdaq 100 trust, etc. I would greatly appreciate any assistance that points me to a page on this site that show's me a "Model Portfolio".

Just to add to jbking's excellent advice, some notes on the indexes that you mention:

S&P 500: large-cap US companies (there are a few foreign companies in the index, but the ones chosen correlate very highly with US companies). This is a great core holding, it represents about 75% of the US equity market as measured by market capitalization. Some indexers prefer the Wilshire 5000 or Russell 3000 which index the "Total Stock Market" and include the other 25% of small-cap and mid-cap stocks.

S&P 400 and Russell 2000: mid-cap and small-cap. My tendency would be to get these via a Total Stock Market index fund. You could use them in concert with an S&P 500 index fund if you don't have any Total Stock Market index funds to choose from. I would probably try to mimic the allocation of the Total Stock Market if you go with that route, but some people prefer to overweight small-cap stocks because they believe that small-caps outperform large-caps over the long run. I don't believe that (or at least, I'm not sure), so I guess there's some disagreement on that point.

Nasdaq 100: avoid like the plague in mutual fund form. Expenses are too high in all incarnations. If you feel the need to buy this, use QQQ, the Nasdaq 100 ETF that trades like a stock. QQQ also overlaps with the S&P 500 since both are large-cap, but QQQ ends up being (as you probably know) basically a technology fund and is therefore not as well-diversified as the S&P 500.

- BlueAdept
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