- quote -

Another option to consider would be to buy enough of a mid-cap and
small-cap index fund that it balances out your S&P500 holding,
essentially piecing together a total-market fund. If you read up on
the total market funds you'll be able to decode how much of each you'd
need to have roughly the same holdings.

There may even be a long-term benefit to this approach over a
total-market kind of fund because it gives you the opportunity to
rebalance from time to time among the different categories.
Small-caps, for example, are somewhat cyclical, meaning they sometimes
do better than large-caps, sometimes worse. If you hold them only
through a total-market fund the percentages are kept more or less
constant by the fund company. If you hold your small-caps separately,
though, you would have the opportunity to, say, add to your small-cap
holding when they had lagged, and sell from your small-cap holding
when they had rallied. This has the potential to raise your returns a
bit though of course it takes a bit more work and isn't pure "buy the
market" indexing.

-Tad

In article <d6572fc7.0401171321.3c30d46e[at]posting.google.com> , lek
<pretrip8[at]hotmail.com> wrote:

- quote -

In general, you can move money between funds that are in the same
fund family without paying any fees. There is no harm in having
two similar funds, as long as they are part of the same account.
If they are not, you might be paying an annual fee twice where
you could normally get away with paying the fees only once.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

I'm a beginning investor (though late middle-age) with a large chunk
of money to invest (i'm not working now, and thinking of trying to
retire now, but that's another story...my chunk isn't large enough for
that, unless i lived at povery level). Most of it is sitting in 2%
money market accounts waiting for me to learn more about investing and
deciding where to put it. As my first step to an ultimate plan of
diversification, I invested about 10% of my money in vanguard s&p500
index fund a few weeks ago. I guess I jumped into it too quickly
because further reading this week convinced me I really prefer a total
stock market index fund. Now, my question: I have at least another 20%
of my money ready to go into a stock mutual fund right now (or maybe
gradually over the next year). Although I planned to add it into the
s&p500 index fund, I think what I"ll do now instead is start a total
stock market index account (probably vanguard). So, yes there will be
overlap with the two funds (about 70% of the former is contained in
the latter). But so what??...is there any problem having 2 very
similar funds?....I can eventually sell the former, but seems like
there's no reason to do it anytime soon. I would just feel better
putting my future money into the latter fund rather than the former
(by the way, the only other significant investment I have is an
equity-income fund, with about 6% of my assets). Thanks.