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My 401(k) plan is invested in the Vanguard 500 Index, Extended Market Index, and Total International Stock Index funds. My allocation is 60% S&P 500, 35% Extended Market, and 5% Total International Stock. I am married, in good health, and plan to retire around age 65 or 66 (more than 20 years off).

My question has to do with the international index fund. I like the idea of diversifying across firms, industries, and countries -- both for risk management and opportunity reasons. That's why I'm indexing the entire U.S. market with the first two funds. And while I would like some international exposure, I fear an undirected international index fund. Ideally, I'd like a much more focused fund, and one far less heavily invested in the UK, Germany and Japan. Unfortunately, this is the only one I have available to me in my plan.

However, I do have another option: I have a couple of IRAs that I could roll over into the international fund of my choice, and trade in all my Vanguard shares in for domestic indexes.

So I'm interested in hearing your comments, Fools: should I stick some serious money into the international index fund? Avoid it like the plague? Stand pat with my current allocation? Please give my your thoughts. And your reasons for holding them, please.


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