The Index Card: Why Personal Finance Doesn't Have to Be Complicated by Helaine Olen & Harold Pollack

Author:Helaine Olen & Harold Pollack
Language: eng
Format: mobi, azw
Tags: Investing, Personal Finance, Retirement Planning, Business & Economics, General
ISBN: 9780698186651
Publisher: Penguin
Published: 2016-01-05T05:00:00+00:00

For your stock investments, we suggest:

Seventy percent: A good S&P 500 index fund. This fund will provide domestic and international (more on that later) exposure to large-cap companies based in the United States. The S&P 500 represents industries that include technology, banking, and health care so you are assured quick diversification.

Fifteen percent: A small-cap index fund such as the Russell 2000 Index. While large-cap companies tend to drive headlines, you also want to make sure your portfolio contains exposure to small-cap funds. Why? Small-cap funds have generally outperformed large-cap funds. Before we get too excited about outperformance, remember that it comes with greater risk. Think of small-cap companies as small and agile. Some companies will be poised for growth and may even evolve into large-cap companies, while others may go bust. You will see this in the slightly more volatile returns of small-cap companies.

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