What percentage of my portfolio should be allocated in index mutual funds?

Question

I am in my early 30s. Up until now my portfolio consisted entirely of domestic and foreign mutual funds and my other jobs' 401k plans. Now a have a government job and a Thrift Savings Plan (a government employee 401k). The TSP accounts I have are the C Fund, S Fund, and I Fund, and each of these is an index fund. Right now the TSP makes up less than 1% of my retirement portfolio. What I'm wondering is "What is the ideal range (percentage-wise) for an investor to have in index funds?"

I have searched a number of sites and none of them have any suggestions about how much to put in index funds. This is important because I continue to make deposits into my other mutual fund accounts that are not the TSP. So if I need to have more in the index funds, I need to know soon. Thanks.

Answer 1

Best is to fund the TSP up to the match and more if you want.

Rollover your old 401K to a mutual fund company of your choice.

You can also invest up to $5,000 a year in a Roth IRA.

The index funds in the TSP have very little cost as compared

to managed funds, that's what makes them attractive.

From what you provided, you are in a very high risk allocation.

Advise you to come down a bit to some bonds and cash as you

get older.

Answer 2

The Oakmark Equity and Income Fund is one of the few mutual funds I would recommend (simply because an index fund will beat almost all mutual funds in the long haul). The market is certainly struggling right now, but if you've got a few (or maybe more) years to wait, then I would buy this with confidence. Or perhaps consider an index fund such as: VFINX, VTSMX, or SPY. Best Wishes! Disclosure : I do not own any of the funds mentioned above.

Answer 3

This is because it's really up to you. I do about 5% in index funds at various times. I prefer managed funds over index funds.



The statistics show that S&P500 Index Funds outperform 80% of all managed funds. However I know and understand the world of managed funds. I don't chase performance but I've managed (over many years) to outperform the indexes with my managed funds.



If you develop a good "asset allocation" model, index funds can do well for you. If you learn & understand managed Mutual Funds.... you can do better.