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Originally Posted by midnight
I don't know anything about investing, but I would like to be a millionaire. This may be a stupid question so if it is, I'm sorry. If the S&P 500 fund averages more than 10% a year, why would I want to diversify? Will diversification earn me more than 10% a year?
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A lot of people just invest in the S&P 500. I personally like the Dow Jones Total Market Index better because it includes the total market (including small and midcap stocks).
The point of diversification is that it "smooths" out your returns, which gives you less chance of losing a lot of money on one idea.
JLP