With S&P 500 near record highs, it's time to reconsider the set-it-and-forget-it strategy, some experts say

Core Insights - The S&P 500 index reached a new all-time high, rising nearly 90% since the bull market began three years ago, driven by advancements in AI [1] - Experts suggest reconsidering the traditional S&P 500-focused investment strategy, indicating that the index may not provide the expected diversification [2][4] Investment Strategy Concerns - The S&P 500's market capitalization-weighted structure can lead to risks, as larger companies can negatively impact overall performance [4] - Historical data shows that the S&P 500 experienced a decline of over 30% from 2000 to 2008, highlighting potential long periods of underperformance [5] Alternative Investment Approaches - Investors are encouraged to consider total market index funds, which include small- and mid-cap stocks, providing broader exposure compared to S&P 500 funds [7] - Another option is to invest in funds that track total market indices excluding S&P 500 stocks, or to use the Vanguard Extended Market ETF for diversification [8] Portfolio Management Strategies - Equal-weighted S&P 500 index funds are recommended by some experts, although they may incur higher transaction costs due to rebalancing [10] - A balanced portfolio should include allocations to small-cap, value, international stocks, and bonds, especially during periods when the S&P 500 underperforms [10][11] Importance of Fund Holdings - Investors should carefully analyze the holdings of their funds to avoid excessive exposure to large-cap technology stocks, which can increase risk [11][12]