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JT1906

Need Help Figuring Things Out

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Tony and Krow36 thank you again for pointing me in the right direction last year. Here is how I faired after following the index funds you recommended. Teachers in our district received a raise so I will be adding that to my monthly contributions. If you have any more suggestions please let me know. If you are a new teacher and you’re reading this please adhere to the suggestions on this board. D04205ED-0261-4F72-A881-30CF97E0844D.thumb.png.a5b8d5298a35f35590ad8f724b2a7c31.png286921F6-2A0E-4E1C-B726-B8D987A26072.thumb.png.3d1f1cff7c09a4e414275ac3ab7c363e.png

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Thanks for the update! The stock market ended up doing amazingly well in 2020. The Fed is keeping interest rates down so Total Bond Mkt is not expected to do much for a while. But TBM does provide some balance to your stock funds. If the stock market takes a dive (like it did in March, 2020) you could rebalance by exchanging some bond fund for some stock funds.  There have been years when TBM outperforms TSM!

You so have some duplication by using both the 500 Index and the Total Mkt Index funds. About 80% of Total Mkt Index contains the stocks of 500 Index. The rest (20%) of Total Mkt Index is made up of mid and small cap stocks. In effect you are making a bet that large caps will outperform mid and small caps, and that's OK if that's what you intended. The rate of return of 500 Index and Total Mkt Index over time is almost the same, and it's not unusual to use one as the substitute for the other.

However in 2020, the Extended Mkt Index fund, which covers the mid and small caps that 500 Index is missing, has done significantly better than 500 Index! Which means that Total Mkt has outperformed 500 Index. You might consider moving your 500 Index balance into your Total Mkt Index.

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Jt

It feels good knowing we helped. I appreciate you coming back to let us know we are making a difference in your decision making .  I agree 100% with what Krow just wrote so I don't need to add anything else.

Regards

Tony

 

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