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Should I diversify my mutual fund holdings?
Posted on 1/6/14 at 5:47 pm
Posted on 1/6/14 at 5:47 pm
Currently have a fair chunk of money in Vanguard's VSMGX fund. I'm not unhappy with it's performance, but should I spread future investments around between different funds? Or is this diverse enough in it's own right?
To the extent it's relevant: aside from this account, my 401k is maxed and I don't qualify for Roth.
To the extent it's relevant: aside from this account, my 401k is maxed and I don't qualify for Roth.
Posted on 1/6/14 at 9:28 pm to Thomas Hudson
What exactly do you mean by "diversify"? Just spreading your investments around multiple funds isn't necessarily diversification.
In finance, "diversification" refers to investing in a variety of assets that have returns that tend not to move in synch with each other. So if you have one fund that invests mostly in US blue chips, buying a second fund that does essentially the same thing doesn't really do that much for you.
In finance, "diversification" refers to investing in a variety of assets that have returns that tend not to move in synch with each other. So if you have one fund that invests mostly in US blue chips, buying a second fund that does essentially the same thing doesn't really do that much for you.
Posted on 1/6/14 at 9:44 pm to foshizzle
Fair point, and I should have clarified. I mean should I move more into funds with international or bond positions, etc. based on the current holdings of the fund I'm in. To me it seems pretty darn spread out, but putting my eggs into one basket always gives me pause.
Posted on 1/6/14 at 9:44 pm to foshizzle
Double post.
This post was edited on 1/6/14 at 9:45 pm
Posted on 1/7/14 at 12:19 am to Thomas Hudson
Diversify your mutual fund holdings into a mix of mutual funds that have their primary investment in each of the following four areas:
Stocks - income producing
Bonds
Short -term money funds
International
Try to keep a balance in the mix, roughly 25% each.
Stocks - income producing
Bonds
Short -term money funds
International
Try to keep a balance in the mix, roughly 25% each.
This post was edited on 1/7/14 at 7:15 am
Posted on 1/7/14 at 12:54 am to Hoodatt
Mutual funds are diversified compared to stocks.
BUT
I put my money in a variety of mutual funds still.
BUT
I put my money in a variety of mutual funds still.
Posted on 1/7/14 at 9:47 am to Thomas Hudson
quote:
I don't qualify for Roth.
I need this problem
Posted on 1/7/14 at 10:22 am to yellowhammer2098
quote:
Mutual funds are diversified compared to stocks.
BUT
I put my money in a variety of mutual funds still.
Posted on 1/7/14 at 10:22 am to Thomas Hudson
quote:
I don't qualify for Roth.
Research back door Roth IRA conversion strategy
Posted on 1/7/14 at 11:03 am to LSUTexan78
quote:
Research back door Roth IRA conversion strategy
I looked into this a few years ago. Is that option still available?
This post was edited on 1/7/14 at 11:03 am
Posted on 1/7/14 at 10:12 pm to Thomas Hudson
quote:
I mean should I move more into funds with international or bond positions, etc. based on the current holdings of the fund I'm in. To me it seems pretty darn spread out, but putting my eggs into one basket always gives me pause.
According to the marketing snapshot, the fund holdings on 11/30 were:
Vanguard Total Stock Market Index Fund Investor Shares - 42.4%
Vanguard Total Bond Market II Index Fund Investor Shares - 31.9%
Vanguard Total International Stock Index Fund Investor Shares - 17.7%
Vanguard Total International Bond Index Fund Investor Shares - 8.0%
So you have exposure to a big US stock market index, a big US bond market index, and the non-US equivalents of both. This is plenty diversified for most with respect to stock vs. bond and US vs. non-US holdings.
The only nondiversified part here is that everything is Vanguard. There's more complexity there but if you are concerned about international and/or bond positions, it looks like you got 'em already.
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