about 401k?

Question

my boss gave me a bunch of sheet to fill out about 401k. this is my first time doing this so i need help. whats best to do..on one sheet it says fixed income and equities prior and future contributions... which is the best to choose from

Answer 1

Give it a mix. At the place I work, we have some good choices. I have a general fraction going to stocks, bonds, real estate, and their cash annuity program. Of the stocks, some goes to the general stock fund, and some to international. Of the bonds, some to their general bond fund, and some to TIPS, the treasury bonds that adjust rates to compensate for inflation. Normally, one might think real estate is a sorry place to be, but my fund invests mostly in office buildings and shopping centers across the country and they've been doing quite well.

Spread your money in ways that make sense to you. This is called diversification. If you are concerned about the risk of the stock market, then slightly favor bonds, but bad economic news affects them too. If you have a cash annuity-type of investment, include a piece for it if you can, especially if you are worried about the economy. That money is handled differently. Diversification helps in that when one thing suffers, something else may be doing very well. This is not to say you buy a bit of everything, but zero in on a few that make sense to you. When I worked at a certain oil company, I was heavy in that company's stock, but still had some in the annuity program. Had I worked at Enron instead, an "all stock" particularly the company stock, and my retirement fund would be empty.

Especially if the company is matching your contribution to any degree, participate to the fullest that they match. That is free money. You like free money, don't you? Relax, you'll do fine.

Answer 2

If you can afford it put in the maximum allowed. You said this is your first time so I assume you're relatively young. If you aren't risk adverse go 100% stocks. I can't give much more specific advise because I don't know what funds are being offered. I went heavily into Euro stocks 10 years ago and I made bukko bucks. Right now I'm big on Indian funds and American. If you have absolutely no interest in stocks and investing ask if there's an Index fund. International Index Fund. Whatever you do make sure you allocate the investments and don't leave them wasting away in the Money Market account.