Help me with my 401K?

[Unoriginalname]

[edit]Wow, didn't realize I revived a 9 month old thread[/edit]

So far I'm seeing a few different pieces of advice about how to allocate your 401k funds in this thread. I'm still not convinced though.

Currently I have all of my 401k money going into an S&P 500 index fund. Here's my reasoning:

1. It's my understanding that a very small percentage of mutual funds actually beat the S&P 500 index.

2. Non-index funds generally have larger expense ratios and aren't as tax efficient because they generally have larger turnover percentages.

Basically, it seems most actively managed funds have about the same or less of a return than the S&P 500 AND have more fees to boot.

I'm still pretty new to the investment world, so please feel free to point out any fallacies in my logic. So far I've yet to encounter a convincing argument about why I shouldn't go 100% index funds.