How Much of Your Portfolio Should Be in Index Funds?
Most investors understand all the reasons to own them. What's not as clear is the degree to which you should own these super-simple investments.
Overview
If you're reading this, then you obviously have at least some interest in owning index funds like the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) or the Vanguard S&P 500 ETF (NYSEMKT: VOO), which are meant to mirror the performance of S&P 500 index (SNPINDEX: ^GSPC). Smart choice. You likely realize that beating the market is not only difficult (to the point of being unlikely), but time-consuming as well. Simply owning a sizable slice of the broad market solves both problems.
The question is, how much of your portfolio should be allocated to these super-simple holdings?
Details
The answer, unfortunately, is a resounding "it depends." It depends on your investment goals, your interest in also holding individual stocks, and often, your risk tolerance.
Source
Originally published at www.fool.com.