So my company's enrollment period has just started. I'm finally going to start a 401K. My company matches the first 3% and then half for the next 3%. So if you contribute 6%, it's more like 10.5% (I think). I was thinking of going 60% aggressive and 40% conservative. Do you think this is a good plan? Are you saving and if so, when did you start? What does your profile look like? This is all pretty new to me so any advice or words of wisdom would be greatly appreciated.
If you're in your early 30s I would suggest going balls-out agressive, which means lots of growth funds. You have 30-35 years to save, and historically growth stocks have outperformed value stocks. I have 40% of mine in an S&P index fund, 20% in a US mid-cap growth fund, 20% in an OTC fund, and 20% in an international growth fund.
At your age I would personally put is all in growth type funds. This is assuming that you will not freak out when the value goes down. Only 2 prices matter. The price you bought in at and the price you sell at. It does not matter what happens in between the 2. You are plenty young enough to weather any market downturns.
No kidding, I have friends who you have to beat over the head to get them to participate in their company's 401K program. I don't understand how anyone not strapped for cash doesn't.
ima, Not only should you contribute to your 401(k), you should also look into investing into a mutual fund and/or Roth IRA. Also, if the company has some kind of employee stock ownership/purchase plan, that might be worth checking out. A guy I used to work with before he got transferred to a different office within the company was always reading a thing called "The Motley Fool". I think it has its own website; you should be able to find it through a google search. It would have good advice for someone like you.
Motley Fool This is a really good website. A good book to read if you are just starting to learn about money and investing is Personal Finance for Dummies. It gets you to understand all of the basics including planning, setting goals, saving, spending, investing, and insurance. It really helped me a lot.
I agree 100% The first few paychecks will hurt but then you wont even notice it and next thing you know you will have a nice little nest egg. DO NOT freak out if you lose money over the short term, I lost $3500+ last year and have doubled it back this year. Be agressive and be in it for the long haul...........Good Luck!!
As they've said - Max out - You will have an adjustment period but it will be worth it. Also, your percentages sounds about right for your age - maybe a little conservative but about right.
given your age I would probably go 80/20 and I agree that a roth ira would be another good idea. Especially if you aren't putting too much of a strain on your budget. If you can, the best investment out there is buying a home. You quit throwing money away on rent, increase value in your asset, and get the tax break.
One more thing, don't put all your money in your company's stocks. I swear, I used to think people who worked for Enron were smart.
Always max your employer matched 401K's. The part your company matches is like making 100% return the first year. It's pre-tax money so that's like making 15%+ on it before you even invest it. If you have kids that will go to college you need to fund 529 plans for them also. Remember, thanks to the improvements in medical science you young people will be old for a very long time. Social security was never meant to maintain your lifestyle but just merely be a safety net so the old don't become indigent. It will probably not exist in it's present form by the time you reach 70 1/2. Your company pension plan is probably very under funded and designed around unreasonable rates of return (like 9 1/2 %). You have to provide for yourself. You probably will want to choose index funds for your long term investments. They will earn better than average returns and more importantly, they have costs under 1% per year. That can really effect your total return when applied to 30 years growth.
I think the people who worked for Enron HAD to have their 401K in Enron stock...that's how Enron matched your contribution.
They weren't forced to have it there. You can still have $$ in a 401k if the employer doesn't match it.
