The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: heybro 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.
-
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.