Does an index fund count as diversifying?
RobGR: I don't think it is a good idea for a individual to put money in the stock market, whether as you are doing now (via your 401k) or through some other method.In theory, the stock market should be a place where companies can raise money to carry out enterprises that return more money to the stock holders.  In order to be able to raise money from more people, rules are applied that make sure the powerful and rich don't rip off the weak; this is how the original stock markets, certain coffee houses in London and Amsterdam, fell upon the idea of only admitting members who agreed to record all of their transactions upon a chalk board on the wall, open for all to see.In the current reality, companies don't pay dividends, when you buy the stock the money you pay is not going to go to the company to fund any enterprise, and well connected people at Goldman Sachs employ "high frequency trading" which is essentially shill bidding in an open-outcry auction.The people who thought "high frequency trading" was OK are still in charge of the stock market; I'm not sure if they currently claim that is stopped or not, but it doesn't matter, the people who failed the test of allowing it in the first place are still in charge.  Had they been selling cattle as a licensed auctioneer, and allowed that sort of thing to go on, they could go to jail.Other places to put your money could include government bonds; you might look at the inflation protected series of bonds.  You could simply keep your money in an FDIC insured savings account.   As long as you are thinking you might need the money in 3 to 6 years, anything else seems foolish.