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I want to invest in index funds but only have 200 per month to invest. How do I properly diversify/allocate?

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  • I want to invest in index funds but only have 200 per month to invest. How do I properly diversify/allocate?


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Answer #1 | 19/12 2013 11:54
I think you should investigate mutual funds. You may be able to find one that is balanced the way you want. How did you come up with your allocation?
Answer #2 | 19/12 2013 12:55
I'd probably choose one of the target date retirement funds. Or maybe a balanced fund. They have everything in one pkg - domestic stocks, international & bonds. Then once you build your account up to a few thousand, then you can start buying individual funds - total market index, international index, bond index, etc.
Answer #3 | 19/12 2013 13:04
At 20 years old you should not have anything in bonds. Also with the current state of the economy bond funds in general are a bad choice. The purchase of a broad based index fund automatically helps you diversify. (You are over thinking this.) Hopefully you are looking at a mutual fund and not an exchange traded fund if you will be making monthly contributions. You do not need to break up your $200 into each and every fund ($140 here, 60 there.) If you are starting with $200 at this point you do not need to really worry about being diversified (the index fund does that for you.) Start to build up some savings $5000 ~ $10,000 and then start to worry about diversifying into several funds. Keep in mind many U.S. Companies already have international exposure. You can look for a fund that focuses on that to get you started. A nice S&P 500 index would be a good choice also.

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