Another major drawback of investing in indexes like the S&P 500 is that you get far less diversification than you think.

Sure, that index includes shares of 500 companies, but due to its capitalization weighting the top 10 stocks account for over 30% of your investment, with just the top 4 accounting for over 20%!

Worse, unless you divide your portfolio between different indexes, including ones that concentrate on small- and mid-cap stocks, you'll miss on the long term excess return of those non-large-cap stocks.