I am in my 20's and will be starting a new job that offers a 401k. How do I find out what to invest in, and how much of a percentage to contribute.
2007-02-18 03:24:29 · 7 answers · asked by mommy 3 2 in Business & Finance ➔ Investing
You should try to invest the most you can. It the company offers a match, you should at least invest the amount the company matches. A person in his 20's should invest in stock mutual funds, but not all people can stand the ups and downs of stocks, and prefer bond funds and money market funds. Other people invest in a mix. Vanguard has an on-line "risk tolerance" quiz that can give you an idea of what percent you want to put in stocks vs other investments.
Read some of these links to better understand investing.
2007-02-18 04:48:35 · answer #1 · answered by Anonymous · 1⤊ 0⤋
You want to at least contribute enough to get the company match. That is usually around 6%. To start with I would go with an index mutual fund. Most 401k plans offer at least one Index fund that tracks the total market. This will allow you to get started with a solid investment vehicle while you learn about investing. Also, look into a lifestyle type of fund. These funds are designed to adjust it's asset allocation based on when you plan to retire. A plan designed for a person retireing in 30 years will be different than one designed for someone retireing in 10. For example Fidelity has the Freedom line of funds. Example..2010. 2030, 2040 etc. Bottom line..just start now.
2007-02-18 11:45:42 · answer #2 · answered by Chris W. 3 · 1⤊ 0⤋
Two books may be of some help: What to invest in? "Mutual Funds for Dummies" by Eric Tyson may be useful.
What percentage to contribute: Will you soon (before retirement) need some money to buy a house or new car or get married, kids schooling? Then contribute the minimum needed to get a company match. 401k choices bad, then again just the minimum. Don't need the money until retirement and with good choices, invest more. "The Intelligent Asset Allocator" by William Bernstein may help.
2007-02-18 11:51:52 · answer #3 · answered by gosh137 6 · 0⤊ 0⤋
Take a look at what mutual funds they are offering to invest in. They should give you a list of what is available to you.
If they have index funds, then you are in good shape. Go for the Fortune 500 index to start and then start researching the other offerings using Yahoo finance.
Try to put 10% of your income in it or more if you can. Check what your employer will contribute. Make sure that the company that manages the fund is financially strong and has a good reputation.
The 401k industry is not well regulated so it is important that your company is going a good job.
Good luck!
2007-02-18 11:38:00 · answer #4 · answered by PeaceNow 2 · 1⤊ 0⤋
You'll get some great suggestions here. But in general it depends upon your age, outside debt 9especially credit card debt), tax statusetc. If everything else is equal, you should put as much into the plan as your employer will match. That means you have an immediate gain. Then which investment options you choose depends upon things like age, risk tolerance and how long you plan to leave the money in the plan.
Many of the investment websites have great beginner's articles. Try the Motley Fool (www.fool.com) or the American Association of Independent Investors (www.aaii.com) and check out the education tabs.
2007-02-18 11:32:01 · answer #5 · answered by Bill W 3 · 0⤊ 0⤋
Contribute as much as you can afford especially if they match contributions. Go to Smartmoney.com and the library and read some smartmoney and money magazines.
Depending on how may options your 401k has....diversify your contributions to include a s/p 500 index fund...small cap fund...foreign stock fund ..and emerging market fund....
Somthing like 50% s/p 500 index/20% small cap...20% foreign and 10 % emerging market would be a starting point.
2007-02-18 11:39:30 · answer #6 · answered by missourim43 6 · 1⤊ 0⤋
I can help you for FREE.
Top 4 Answerer.
2007-02-19 16:05:56 · answer #7 · answered by Anonymous · 0⤊ 1⤋