I'm new to investing and I recently opened a Roth IRA. I know that index funds are a good choice for investing because they have low expense ratios and are diversified. Also, because track a whole industry, they cannot crash to zero value (unless the whole industry crashes to zero).

When I opened my IRA I was faced with a long list of index funds to choose from. I read this question on what to consider when choosing an index fund, but it isn't clear to me if I should pick one index fund for all* my investments or if I should be splitting my money between two, or three, or ten index funds.

How many index funds should I invest in? Since an index fund is already diversified, is it still beneficial to invest in more than one index fund?

*I will of course hold some money in fixed income like bonds

3 Answers 3


As many as you need for global coverage.

It is a big mistake to invest in one market, e.g. just US stocks (recently, US stocks have become so expensive that I might even recommend smaller than ordinary weight for US stocks). Many index funds do precisely that, and are intended not to be your full portfolio, but rather be a part of a well-diversified portfolio.

An example: you could have 30% USA, 30% Europe, 20% Developed Asia/Pacific, 20% Emerging Markets.

If the index fund is a truly global one and invests too in emerging markets, you could have a good portfolio with just one fund. Do keep an eye on the costs, though. Sometimes, global coverage built from individual funds is less expensive than an all-in-one solution.

If the index fund you're planning to invest to seems global, do remember to check whether being "global" means it invests a large enough percentage to emerging markets.

If the index fund is already diversified, an attempt to diversify more is not needed and will just make your portfolio harder to understand. Generally, it doesn't make sense to invest into two index funds investing to the same market: just select the cheapest one.

I also recommend checking how large the index is. Something like Dow Jones Industrial Average or Euro STOXX 50 would be way too small as an index, because they contain only the biggest of the big companies.

Finally, avoid synthetic funds that track their index through derivatives. Derivatives have a counterparty risk that may be invisible most of the time, but will become visible in a true crisis. Select only funds that genuinely own the shares.


The standard Keep It Simple recommendation is a Total Stock Market Index Fund, a Total International Stock Index Fund and a Total Bond Market Fund.


If your brokerage doesn't offer them, or don't trust the volatility of emerging market stocks, etc, etc, then an S&P 500 index fund and a high grade corporate bond fund can't be a wrong answer.

  • Yes, it can. S&P 500 contains only US stocks. See my answer why I don't recommend investing in only US stocks. Also, corporate bond takes unnecessary corporate risk where you don't want them (the risk-free assets). Why not take the risk where rewards are high (stocks), and keep the fixed income part of the portfolio as risk-free as possible by selecting a government bond fund instead of a high grade corporate bond fund?
    – juhist
    Sep 26, 2019 at 18:22
  • Also, your link contains this image: bogleheads.org/wiki/File:8020threefund-150x150.png ...which is poor advice because the "international" part of the portfolio is too small.
    – juhist
    Sep 26, 2019 at 18:23
  • @juhist you completely ignore the other four sample portfolio mixes, one of which is 33% international.
    – RonJohn
    Sep 26, 2019 at 18:27

I agree with @RonJohn would also just add that there are a lot of brokerages out there that offer various MERs on funds that track the same underlying index. Vanguard and iShares are probably the best and offer MERs as low as 0.03% in some cases.

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