I need advice on 401k

[jim1174]

The company I work for recently changed from a pension to 401k. my company does not match what I put in. I decided to put in 10 percent of what I make. When I signed up the person asked me what I wanted to invest the money in. I told I didn't know and asked for advice. she said she is not allowed to give that kind of advice. She also said that most people who don't know what to invest in pick target stocks. I choose the target stocks. Is that a good choice? Should I change it if so what? I would appreciate any advice you can give as i am new to this

[netwrangler]

The company I work for recently changed from a pension to 401k. my company does not match what I put in. I decided to put in 10 percent of what I make. When I signed up the person asked me what I wanted to invest the money in. I told I didn't know and asked for advice. she said she is not allowed to give that kind of advice. She also said that most people who don't know what to invest in pick target stocks. I choose the target stocks. Is that a good choice? Should I change it if so what? I would appreciate any advice you can give as i am new to thisMy thoughts:
In general, stocks are a good long term investment. Not sure what you mean by the phrase, "target stocks." Is that a group of pre-selected stocks, or do you have to pick out the "target stocks" yourself?

Either way....

Is there a "mutual fund" choice? For most people just starting out in investing, mutual funds make more sense than individual stocks — at least until you gain a little experience and have some time to figure out what stocks to pick.

How old are you? Asking the question another way, how many years do you have before retirement? If you are 40-years away, you'll get one set of answers. If you are only 4-years away, the advice should be quite different.

BTW: Changing from a pension [defined benefits] plan to a 401K is usually a good thing in the long run — especially if you take the time [as you are doing] to get started on the right track. No company matching contributions is a bummer. Oh well, if you change companies to one with a more enlightened benefits plan, you should be able to take your 401K bucks with you. That is often harder to do with pension plans. :)

[aiki14]

The company I work for recently changed from a pension to 401k. my company does not match what I put in. I decided to put in 10 percent of what I make. When I signed up the person asked me what I wanted to invest the money in. I told I didn't know and asked for advice. she said she is not allowed to give that kind of advice. She also said that most people who don't know what to invest in pick target stocks. I choose the target stocks. Is that a good choice? Should I change it if so what? I would appreciate any advice you can give as i am new to this

Jim somebody associated with the plan MUST be a registered rep and will be able to give you advice. The pension protection act requires it. The quality of that advice is of course unknown. Go out and get a copy of Money magazine or Smart Money magazine, The last issue of Money had an article on retiring rich, it's worth a read. Go to your local borders and read everything over a coffee. Learn about asset allocation strategies and find one that fits your stage of life.
I would household the assets in a large cap value fund if your under 50 or a bond fund if you're over 50, and learn what you need to know to get a proper allocation ASAP. Target stocks, whatever that means, is crazy , and individual equities are not even allowed in 401k's except for the company you work for's stock.
I clipped the following from about.com and while I don't necessarily endorse the exact allocations it is a good start:

How should a 401k be balanced?

According to Money magazine, the suggested allocations at three life stages are:

Aggressive--for those with 35 or more years until retirement

50%--large cap stocks

15%--mid cap stocks

15%--bonds

10%--small cap stocks

10%--international stocks


Moderate--for those with 20 years until retirement

35%--large cap stocks

35%--bonds

10%--mid cap stocks

10%--small cap stocks

10%--international stocks


Conservative--for those within 10 years of retirement

40%--bonds

30%--large cap stocks

10%--mid cap stocks

10%--international stocks

10%--cash


401k plans are very popular and an excellent way to plan for your retirement. As with any other investment, you do need to carefully watch your portfolio and make wise investment choices.

[netwrangler]

Jim somebody associated with the plan MUST be a registered rep and will be able to give you advice. The pension protection act requires it. The quality of that advice is of course unknown. Go out and get a copy of Money magazine or Smart Money magazine, The last issue of Money had an article on retiring rich, it's worth a read. Go to your local borders and read everything over a coffee. Learn about asset allocation strategies and find one that fits your stage of life.
I would household the assets in a large cap value fund if your under 50 or a bond fund if you're over 50, and learn what you need to know to get a proper allocation ASAP. Target stocks, whatever that means, is crazy , and individual equities are not even allowed in 401k's except for the company you work for's stock.
I clipped the following from about.com and while I don't necessarily endorse the exact allocations it is a good start:

How should a 401k be balanced?

According to Money magazine, the suggested allocations at three life stages are:

Aggressive--for those with 35 or more years until retirement

50%--large cap stocks

15%--mid cap stocks

15%--bonds

10%--small cap stocks

10%--international stocks


Moderate--for those with 20 years until retirement

35%--large cap stocks

35%--bonds

10%--mid cap stocks

10%--small cap stocks

10%--international stocks


Conservative--for those within 10 years of retirement

40%--bonds

30%--large cap stocks

10%--mid cap stocks

10%--international stocks

10%--cash


401k plans are very popular and an excellent way to plan for your retirement. As with any other investment, you do need to carefully watch your portfolio and make wise investment choices.I'm glad I posted first, because you are a tough act to follow!

What a great reply!

[primer]

I know this if offtopic but wow, netwrangler I live in the same city as you. 8O

[madcowdisease]

Hi guys and gals:

I figured I'd resurrect an old thread rather than create a new on in order to keep the place clean and tidy. I was wondering if you all would be willing to advise me real quick in my establishing a 401K. I never thought I'd be at my current job for long enough to become vested but at this juncture I can take 20% of my employers contributions and it seems I may be here longer than I can imagine. Ergo, I might as well stop ignoring the 401K for a Roth and just do both together and take the free money. At worst, I can just roll it over when I switch employers.

I am starting from scratch and haven't made any selections. I have done my research and feel the offering through Fidelity my employer setup leaves more to be desired (wish I had access to FCNTX). But, I'm in my mid-20s, likely 40 yrs from retirement, and wish to take an aggressive approach. I'm contributing 10% of gross with a 3% match from my employer.

My options are (ticker and manager tenure):

Large Cap Growth
- RGAEX, 22 yrs

Large Cap Blend
- FUSEX, 3 yrs

Large Cap Value
- VWNAX, 22 yrs

Mid Cap Blend
- VMCIX, 10 yrs

Small Cap Growth
- LACAX, 13 yrs

Small Cap Blend
- ICSCX, 19 yrs
- NAESX, 16 yrs

Foreign Funds
- REREX, 24 yrs
- FSIIX, ? Jeffrey Adams

Blended Fund Investment
- VGSTX (fund of funds)

Bond Investment
- FBIDX, 6 yrs
- PTRAX, 21 yrs

And a bunch of targeted date investments I feel are worthless like BGI Lifepath 2030 S.

Again, I'm willing to take a highly aggressive strategy to maximize my gains e.g. heavy foreign exposure and limited bond exposure. I feel the options I have to choose from don't give me much though the fees seem low, relatively speaking, if memory serves me correctly. There's a ton of small cap stuff with nothing domestic that is really all that appealing. Given my penchant for reward and therefore tolerance to risk, can you throw out a quick snapshot of a combination of the above funds that would likely suit my desire, please?

[Pinguin]

I had one philosophy while I was in my 20's and trying to get my hands around my 401k, and that was to have $100k in it by the time I was 30. Most of my funds (Vanguard offerings at my previous company) were indexed based. While these did not generate the highest returns the risk ratio is relatively low.

As far as a mix I think the last time I spoke with a rep the recommendation was 100 - age as far as stock based fund percentage in your 401k.

[wallstreetsedge]

if your company is not matching at least 30%, i recommend liquidating it and moving it into an traditional ira or roth ira

there are plenty of products that you can put into your ira's that your 401k maanger cant access

[aiki14]

if your company is not matching at least 30%, i recommend liquidating it and moving it into an traditional ira or roth ira

there are plenty of products that you can put into your ira's that your 401k maanger cant access

30%? I would love to hear of a company doing that.
If your company is matching ANY of your contributions you would be giving up risk free money and you should think twice before doing that. And taking a 401k and moving it into a Roth would have a taxable event in the year you do it. Then there is the fact that you can put a lot more money into a 401K than an IRA, and depending on your income you may not get the benefits of both.
I would make the case to max out your 401k and put any additional money available into a Roth, up to the limit.

[AJLightning]

if your company is not matching at least 30%, i recommend liquidating it and moving it into an traditional ira or roth ira

there are plenty of products that you can put into your ira's that your 401k maanger cant access



Can't close 401k account unless I'm terminated. Loans are ok.

My company matches 1.75% to your 4%...1.50% to your 3%, etc...

Five years ago they matched even up to 5%...

[wallstreetsedge]

actually youd be shocked about how much companys actually match. arby's match 100% on max contributions into a 401k for all of their franchise managers :P

[madcowdisease]

I had one philosophy while I was in my 20's and trying to get my hands around my 401k, and that was to have $100k in it by the time I was 30. Most of my funds (Vanguard offerings at my previous company) were indexed based. While these did not generate the highest returns the risk ratio is relatively low.

As far as a mix I think the last time I spoke with a rep the recommendation was 100 - age as far as stock based fund percentage in your 401k.

Agreed. I'm not interested in anything bonds or short term fixed income. However, given the funds listed in my previous post which fund mix do you feel should yield the highest return for an aggressive growth strategy.

BTW, 100K in my 401K is not going to be an option by the time I am 30 years old unless these things double every year. Not that I think that is ralistic and therefor a practical goal.

[Luc1Grunt]

if your company is not matching at least 30%, i recommend liquidating it and moving it into an traditional ira or roth ira

there are plenty of products that you can put into your ira's that your 401k maanger cant access

That may be the worst advice ever given on this forum. Dumping a match for an IRA?

And that includes such comical posts as "dow 11,500 by end of 2007" posted in February/March 2007.

And anything to do with the stockturd robot.

comedycentral.com

[aiki14]

actually youd be shocked about how much companys actually match. arby's match 100% on max contributions into a 401k for all of their franchise managers :P

I would love to see evidence of that. I remember Visa being touted as the best 401k in the country because they matched 4 to 1 up to 6%, they reduced to 2 to 1 but that is still pretty good.
If Arby's gave their managers 100% of the max contribution they would have to give lower paid employees a better deal, and I doubt that's happening. Again I would love to see evidence.

[Luc1Grunt]

I would love to see evidence of that. I remember Visa being touted as the best 401k in the country because they matched 4 to 1 up to 6%, they reduced to 2 to 1 but that is still pretty good.
If Arby's gave their managers 100% of the max contribution they would have to give lower paid employees a better deal, and I doubt that's happening. Again I would love to see evidence.


Careful Aiki, asking for proof may get you in trouble.

[aiki14]

Careful Aiki, asking for proof may get you in trouble.

I keep my requests more realistic, all I seek is evidence, and that'll probably bring me trouble enough.
Either way it doesn't matter, I am heading to Nadi in the morning and don't know if I'll have internet for a few days.

[Luc1Grunt]

I keep my requests more realistic, all I seek is evidence, and that'll probably bring me trouble enough.
Either way it doesn't matter, I am heading to Nadi in the morning and don't know if I'll have internet for a few days.


Everytime I ask for proof, I get a ration of shat. Still did not get any "proof" from the last several 1-post wonders. Maybe I'm paranoid?

[wallstreetsedge]

i dont think the manager at arby'swould give that to me but i know someone at a marketing co who also gets a 100% match and would probably hand that over

[madcowdisease]

So with a very aggressive strategy in mind and a selection that is less than desirable t choose from the following is how I elected to divvy my 401k allocation:

20% VMCIX

20% LACAX

20% ICSCX

40% REREX

As you can see from my previous post I am predomnantly given the choice of large cap domestic funds and a handful of index funds. I am not necessarily interested in benchmarking an index but would rather shoot for outperforming the indices. Also, it is my belief that the developed economies of the world will underperform lesser developed areas and I would not like to waste time and money benchmarking the American economy.

Ergo, I chose to eschew NAESX and went with ISCSX instead. Again keeping with the theme of an aggressive approach I needed midcap exposure due to their relative outperformance and being in the "sweetspot" in company timelines and could only get it with an index fund in VMCIX. Smallcaps historically outperform their largecap brethren and I feel with the economic slowdown they will get pounded the hardest making them an extreme value heading in to 2009 as the economy turns around. I am getting smallcap growth exposure with LACAX. Lastly, foreign stocks and emerging markets are where the money is going and these markets should continue to outperform their developed economy counterparts. I have access to an index fund of foreign stocks but rather opted for REREX with the opportunity to outperform and a great, though short lived, track record to boot. I wish my foreign exposure was not so geared toward large caps but it seems the best I can do with the options before me.

I am aware this is an extremely aggressive approach and that is my intention. Feel free to grade these selections within this context. Also, if any of you have advice regarding fees/sales fees in any of my selections versus those available to me I am eager to listen to your response.

Thanks in advance.

[Pinguin]

My last two companies have matched a 100% of the first 5-6%, but that is not the same as a 100% match.

[madcowdisease]

My last two companies have matched a 100% of the first 5-6%, but that is not the same as a 100% match.
Not bad, I only get 100% up to the first 3% I put in. I was initially only going to put in 3% to take advantage of essentially a 100% return (employer's money) but I do not plan to stick around for 6 yrs to become fully vested. I can currently take 20% of their money with me if I leave and given it is pretax I allocated 10% of my gross to the 401(k) and also max out my Roth along with having a trading account I can withdraw from and a DRIP with P&G I throw about 900 dollars a year at. If I had a larger income I would contribute more but this is about all I can swing at the moment.