Author Topic: Total Stock Market -Or- SP500 + Small  (Read 1287 times)

heybro

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Total Stock Market -Or- SP500 + Small
« on: April 28, 2016, 03:21:26 PM »
I found out that Total Stock Market is 70% Large, 20% Mid, and 10% Small.

If I want a portfolio that is 75% Large and 25% Small, is it better to have one fund of SP 500 and one fund of Small Cap -or- to do Total Stock Market and a Small Cap.  It just seems confusing to keep it all in 'balance' but I just love the Total Stock Market. hehe

*International Funds not included in this topic for clarity sake.

nereo

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Re: Total Stock Market -Or- SP500 + Small
« Reply #1 on: April 28, 2016, 03:45:44 PM »
I found out that Total Stock Market is 70% Large, 20% Mid, and 10% Small.

If I want a portfolio that is 75% Large and 25% Small, is it better to have one fund of SP 500 and one fund of Small Cap -or- to do Total Stock Market and a Small Cap.  It just seems confusing to keep it all in 'balance' but I just love the Total Stock Market. hehe

*International Funds not included in this topic for clarity sake.

You answered your own question above (in bold). 
The only way to have a portfolio that is 75% large and 25% small (while sticking with index funds) is to own an SP500 fund (or similar) and a small cap fund. 
It isn't confusing to keep them in 'balance'.  In fact, that's what 're-balancing' is all about.  Select a frequency (e.g. once-per-year or once-per-quarter) and then sell off enough of one fund and purchase enough of the other fund to get back to the 75/25 ratio.

When contributing, for every $100 you put in $75 goes to the SP500 fund and $25 goes to small-cap.
Easy.