Starting a 401k, but what should my investments be like?

Question

Actually, I've had it started for quite a bit now. I'm 23 years old, and I'm contributing 8% of my pay, and my explorer is contributing 100% of the first 3% and 50% of the next 2%. Someone suggested that I might want to start with agressive investments, so right now they're all stock based, no bonds. But is this the bes thing to do? I understand they said it as an option since i'm young still, but .... any help would be appreciated.

Er, I meant emplorer, not explorer.

Answer 1

Hello --

This is a great question.
As far as the investments, you can do a risk tolerance test online here http://mutualfunds.about.com/library/personalitytests/blrisktolerance.htm

The best thing to do is be diversified. Large caps, mid/small caps, Growth, value, Global/international, and bonds. Try to allocate your money in all of these areas. The amount depends on the risk tolerance. don't put your eggs only in one basket.

As a side note. I recommend that you do not invest 8%. Only invest 5% into the 401K. Since your employer only matches to some extent the first 5%, you would be in a good position to invest the remaining or more into a Roth IRA. Though it is an after tax investment, over the long run you will accrue much more money because you will not have to pay taxes when you withdraw in in retirement.

Answer 2

Ryan, i'm basically 30 years previous and that i've got been doing a 401K for 6 years now. I misplaced funds each 12 months i grew to become into in inventory funds. in case you pick my opinion the inventory funds are a suckers game. you will do no longer something yet lose earnings shares. 3 years in the past I made my 401K a hundred% funds industry and that i've got made nice returns ever considering. Plus i'm able to sleep at night. it truly is important the two improve AND preserve you funds. considering it truly is retirement funds, protection is a procedures extra important than strengthen. in case you should make funds by using the years, positioned all you earnings a conservative funds industry fund. you will no longer remorseful approximately it. The inventory industry is corrupt and particularly volatile. With the inventory industry you get no protection in any respect.

Answer 3

You can afford to go high risk with some of the money but not all... you can pick any percentage to any area you choose. Diversification is the key. If you stick with this plan for the next 30-40 years, you will be a millionaire by retirement age. Don't put all your eggs in one basket. Go with high return mutual funds on some and stick some in safe funds but do whatever is comfortable for YOU. Don't listen to what others think you should do with your money unless they can show you that they have millions... and that includes the experts!!!

Answer 4

Stick it all in a nice broad based stock index fund, perhaps based on the S&P 500. Then read a few investing books in the next couple of years and the rest will take care of itself.

Answer 5

before using Aggressive term, start using how to invest the right way
Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

At the age of 32. my 401k is amassed 73,000.00 and 30000.00 in taxble account. by follow simple rule

Answer 6

in 40years from now, you'll be ripped off by new regulations as social security will be broken and the govt will raise taxes on withdrawals at that time to 'cover' the poor folk that havent planned..They are eliminating pension plans today, and they'll skrew the 401k holders tomorrow.STOP contributing now and save your money in other asset classes , like gold.

Answer 7

Yes.