401k - Where to put the funds?

I have an old 401k from a previous job and I have all of that in an aggresive growth fund -- it has ups and downs but over the years has performed very well.

In my current job (all new contributions and matches) I have going into a Fidelity Account that they call "Fidelity Freedom yyyyy" Where YYYY represents your approx retirement year. They automatically move the funds from higher to lower risk as you approach retirement.

My overall growth last year was over 20%

 

lol. I did the exact same thing. My old 401k is all in an international aggressive fund.

My IRAs are in the freedom funds you refer to.

My current 401k is at the moment all "conservative" until the market gets unwhack.

 

I am 25 and I have only 5 funds 20% in each fund with ranges in the large cap to small cap funds. Since I am going to be aggressive right now(it is a small amount of money) I went for the top half and stayed away from bonds and balanced funds for now. I would try to pick the top 4-6 funds in the middle between balanced, large cap and mid-cap, maybe a small or foreign fund that you like. Unfortunately the funds that my company has are not doing very well in the past couple months but nothing is right now. You need to find how aggressive you want to be but since you are still young. Anyways, the fact that your company matches well is like getting a really good rate of return anyway.

 

If you're 27 and this is a retirement account, you're looking at 35+ yrs. There's no reason to have anything in conservative investments or cash at this point. Everything should be in more aggressive stuff. Think of this way - barring a massive global economic collapse (in which case, the whole world is going to be in the same boat as you), the stock market is going to be substantially higher 35 years from now than it is today. In that scenario, you want things that are going to trend with or faster than the market in general. As you get older, you can move more and more of the investments from aggressive stuff to more conservative stuff.

As for your 2007 returns - the 2007 stock market was pretty selective. Certain sectors like tech and energy went nuts. But others like financials and real estate tanked. The net S&P 500 only went up 3.5% in 2007.

 

If you had American Century Strategic Allocation: Agressive, I would recommend that one.

 

^like others said, you're in this market for the long, long, haul with a 401k so I wouldn't really worry about it that much, other than tomake sure you have it invested in a place with a low expense ratio because that too adds up over 30 years. I have a couple of 401 k's and I haven't checked them over the last few months, it would justbe a downer, and if I were smart enough to short time my way out of a down market, I'd be running a hedge fund or something. But I'm not so I just let it be.

 

I think you have your money too spread out. There is no reason to own that many different funds.

I personally do not own any mutual funds, I prefer individual stocks. I believe in Alpha.

You are in this for the long haul and you should not focus on the short-term. Here is a link to a great site on creating a long-term buy and hold portfolio. It also gives you different portfolios based upon the fund families from which you can purchase.

 

I think the freedom funds automatically invest between high and low risk depending on your age.

They are great for people who are not savvy enough (me) to pick the right funds theirselves.

 

Yeah, but my freedom fund got totally pwned in January. I dumped to cash after losing 10%. Lucky I did, since it fell another 10% after that.

As always, YMMV.

 

For the record, 3.16% is a fine return for last year. 2008 may not be any better. I am not suggesting that you should change your portfolio, just your expectations.

 

That is not a high risk portfolio. You should be able to sleep comfortably at night with that program on autopilot. When you reach your 40s, then you should start thinking about adding bonds.

I do think you might want to increase your percentages of foreign (especially emerging markets) and small cap stocks.

You have over 30 years to retirement. I am 16 years older than you and I have 90% of my retirement savings in stocks. Most of the remainder is in cash waiting for a good buying opportunity. I only this year added a very small portion of bonds.

 

It's funny, kind of a blessing in disguise...We switched 401K providers and we were all b*tching about how there was a blackout period and we couldn't transfer money out of a low interest account...'

Well, thank god we had that as we all would have lost lots of $$ given the performance this month...I'm usually big on foreign funds (50%) as they performed reallly reallly well this past year...