I haven't touched my 401K in quite some time and am wondering what the best mix of stock/bonds might be. Currently I have a much bigger chunk invested in stocks and am thinking about tinkering with that. What are your thoughts on 401K's right now?
I know there are plenty of folks here who know more about this than me, but my 401K is doing pretty well right now. I contribute 10% and my company matches 6%. I have about 40% going into the S&P Stock Index fund and the other 60% going into 3 other semi-aggressive funds. I basically picked 3 funds that my company offered with the 3 lowest expense ratios. I plan on keeping the contributions flowing and maybe even upping them a little bit. If I leave this company, I'll probably roll it over to an IRA and start a new 401K with the new company. Even though my plan allows for loans and hardship withdrawals, I'm not going to TOUCH this money until it's time to retire.
i have the same question, though i have some idea about it i'd always welcome the advice. i'm 24 and a million years from retirement. we have: Stable Value Fund Braod Market Bond Index Fund S&P 500 Indexed Equity Fund Investment Co of America Vanguard Windsor Fund American Century Growth Fund Small/Mid Cap Index Eq Fund New Perspective Fund MSCI EAFE Indexed Equity Conservative Asset Alloc Fund Moderate Asset Allocation Fund Aggressive Asset Allocation Fd Company Common Stock Fund ESOP Fund (the last 2--obviously linked somewhat--have done very well lately and in the last couple of years. Small/Mid Cap Index and MSCI are at about half the gains of the Company since January 1st)
i'm in the same boat as you - 24 and forever away from retirement. i invested in several different funds ranging from large growth, to mid-cap value, to emerging markets..... i'm on the more aggressive side, which is something i wanted. one thing i'd love to invest in, but my employer doesn't offer, is an index fund. that'd be the first thing i'd choose, like the S&P. over the longterm, that fund will beat most any other fund hands down. at least that's what i've gathered from the research i've down.
I had read (and followed) that for those of us in our 20's, the allocation (in general, not just 401k) should be: 40% - large-cap, split among two funds 40% - small-cap, split among two funds 15% - international (this was the best move I could have made 6 years ago, wish I had put in more ;o)) 5% - bonds Looking back on it, the idea that since we're young and a "million years" from retirement we should invest aggressively seems correct. I'd probably eliminate the bonds next time around. Go 20% in international. As for investing in your own company... that counts against your 401k allocation???? Don't put too much money in the company - you already depend on it for your cash flow and income... if you get fired or the company tanks, do you really want your retirement to go down with it, too? (I didn't follow this advice as well -- I had a lot of money in my employer through Employee Stock Purchase and options.)
Rule of thumb is 100% less your age would be in equities--in your case 74% equities, 26% FI. At 24, you can prob. be comfortable going 80/20 or 85/15 depending on your tolerance of risk. Not knowing what company you work for(ESOP), a fair allocation would look something like this: 40% S&P Index 15% Stable Value 5% Bond Index 20% ESOP/Company stock 10% MSCI EAFE The other 10% you could split up between small cap, managed funds, addtl. S&P Index or MSCI EAFE. I'm not big on managed funds(although Invst. Co. of Amer. runs a pretty tight ship), so I'd probably go 5 in the S&P Index and 5 MSCI. Something to consider is that alot of people dont adjust/pay attention to Fixed Income a whole lot after initial allocation. Example, when(if) rates finally pause in the next couple of months a good move(IMO) in the above example allocation would be to shift 10% from Stable Value to the Bond Index.
You shouldn't eliminate bonds completely. One reason why is you're making your decison on "looking back". You say you should've put more into international funds. International stocks and funds a few years ago were definitely not the place to be and their volatility can be all over the map. Had you been "looking back" to around 2001, you'd be saying, "man, I wish I hadn't bought up all those tech stocks". Had you been "looking back" to the 90's until 2001, you'd be saying "man, I wish I had sold my house, my first born, the dog, and the wife and bought some more AOL, MSFT, and XLA". Or as the babble goes - "past performance does not guarantee future results". You should be more aggressive when you're young, but you also need to know how much risk you're willing to accept before investing.
I have over 35% in international stock and I had an overall return last year of 17%. The rest in mid cap aggressive funds. I'm in my 40s and started late (mid 30s). But I'm happy with how it's going. You guys in your 20s should go full bore aggressive funds for the next 10 - 15 years. I wish I would have done it.
i think i've got about 25%-30% international. i agree, at this age i'm willing to take a lot more risk.
I agree. Personally, if I were 24, I wouldn't have any money in fixed funds. At least not in my company 401K. IMO it's way too early in your work life for that.
i am in the market and i have no clue what aggressive even means for these funds. its like they just threw these terms on there to make them sound cooler. more risk doesn't equal making more money.
I am 46 and here is asset mix for my IRA (4 rolled-over 401Ks): 25% Domestic Bonds 5% Junk Bonds 5% Intl Bonds 20% Domestic Large Cap Stock 10% Domestic Small Cap Stock 10% Domestic Micro Cap Stock 10% Intl Stock 5% Emerging Market Stock 10% Real Estate I am consider myself above average educated in investing and that this is an aggressive portfolio for my age. I have 25% in investment grade US bonds. By the time I retire at 66 that will transition to the 40-45% range. My hope is that I willl be able to live off the bond income plus SS at retirement and keep 50+% invested in stocks to keep pace with inflation and maintain the overall portfolio value. Your 401K likely does not have all of the above asset classes like junk bonds, international bonds, US micro-cap, emerging market or real estate (almost criminal). For my current plane jane 401K here is my asset mix: 25% SP500 Index 10% US Extended Market Index 20% International Index 15% Real Estate 30% US Bond Index
my company got 401k's going about 2 years ago. to be honest, i just kind of set it up low-risk and dont really pay attention to it, except when the quarterly statement comes around. i put in $100 every paycheck. i think my rate of return is about 11%. alls i know is i have put in about $5,200 and after 2 years my account is around $7,000 so whoo-hoo for me!
When you're younger, they say to be really aggressive, but as you get older, you become more risk averse, meaning lowering your risk... I'm somewhere in the middle as Im' still recovering from the Dot com burst and Enron...
