401k help

[Sixguns]

Last year I started my 401k with my company after being there 5 years before starting it. I know I know, I should have started it a long time ago. Well, I dont really know what the hell I should be looking for with the stocks that are offered for it. So I am hoping to maybe get some pointers on what I should look for or maybe someone could PM me an I can give you the choices I have and you could maybe give me your thoughts on it.

 

[nickbits]

Look for an index fund with a low MER

 

[Dr. Detroit]

Are you allowed to pick any stock? Usually they give you a choice of 15- 20 funds to pick from.

May want to talk to your HR 401K administrator to determine what your choices are - if they are unlimited - wow!

 

[Sixguns]

Are you allowed to pick any stock? Usually they give you a choice of 15- 20 funds to pick from.

May want to talk to your HR 401K administrator to determine what your choices are - if they are unlimited - wow!

My HR person is um.... a little slow so I will not take advice from her. I believe when I started it up, there was about 10-15. I looked at the history of them all and kind of picked off of that. Well than the summer came and they all took a crap so I figured might want to get some real help to regain my lost funds and start getting ahead if at all possible with the way the economy is right now.

 

[Dr. Detroit]

My HR person is um.... a little slow so I will not take advice from her. I believe when I started it up, there was about 10-15. I looked at the history of them all and kind of picked off of that. Well than the summer came and they all took a crap so I figured might want to get some real help to regain my lost funds and start getting ahead if at all possible with the way the economy is right now.

OK - so you need to list out the funds you have access to. They all should have ticker symbols associated with them.

 

[stargazr]

I wouldn't use that approach. Either take the time to properly educate yourself and do your own homework, or pay a professional to manage it for you. To just take someone's list is a recipe for disaster.

Even if you buy stocks that are basically good companies with an apparent good future, you have to understand the stock enough to know when it drops unexpectedly, or rises for that matter, to sell, hold or even buy more. You have to stay in tune with changes in a company, or in the company's sector as well as the broader market.

I would suggest starting out with mutual funds.

 

[ichy]

Go to the bogleheads forum.

 

[Doppel]

You have no business at all picking individual stocks for your 401k. The good news is that many won't allow you to anyway. The first response in this thread was dead on. Just get an index fund to S&P 500 or similar, put in at least as much as you need each year to maximize company match (the fact you skipped out on this for five years is unforgivable, truly) and forget it. You can also do, probably, funds like "Retire 2030" and they are actively managed over time, though the operating costs may be a touch higher.

 

[slayer202]

I only participate because the company matches a portion and I'd be throwing away free money otherwise. I just pick an option at random, based on past and current performance. Probably unlikely that any of them will lose much money as long as the market is doing alright. Of course, that's what you have to worry about, the market in general doing poorly. Picking your 401k option shouldn't be too affecting

 

[Wyndru]

I've always gone semi/conservative, half money market and half mutual funds. I've always had horrible gains though, and during a few years some heavy losses because the mutual funds took a dive.

My wife saw me losing all that money through those bad years and she decided to just do conservative (basically just money market). She doesn't make much but she doesn't lose any either which is good.

I figure if you are young it really doesn't matter unless for some reason the market goes 20+years without growth which is very doubtful.

 

[Sixguns]

The good thing I have going for me is that I just turned 25 so I am rather young. I will get the list choices and do a few things everyone has suggested. Thanks.

 

[edro]

Both companies I have worked for had 10-20 funds and 1 fund for company stock.
Anyone know the actual government rules on this?
It seems like they would limit the amount you could allocate to company stock (since Enron).

 

[Hugo Drax]

last year i started my 401k with my company after being there 5 years before starting it. I know i know, i should have started it a long time ago. Well, i dont really know what the hell i should be looking for with the stocks that are offered for it. So i am hoping to maybe get some pointers on what i should look for or maybe someone could pm me an i can give you the choices i have and you could maybe give me your thoughts on it.

vfinx

 

[Blackjack200]

Both companies I have worked for had 10-20 funds and 1 fund for company stock.
Anyone know the actual government rules on this?
It seems like they would limit the amount you could allocate to company stock (since Enron).

It's a holdover. When 401(k) plans first came out company stock was the only investment option many of them offered. Generally, the government doesn't regulate what the investment options or limit allocations.

 

[KB]

Who manages your 401K? Fidelity for example has the Spartan S&P 500 index fund, which has a management fee of only .10% and was actually slightly positive for 2011. This compares to their target date retirement fund which has a .76% management fee and was -5% for 2011. The index fund wins. See if your provider has one too.

 

[overst33r]

index funds. go to bogleheads.org and read a LOT.

you want to look at a total market stock fund (VTSMX), intl fund (VGTSX), and a bond fund (VTBIX).

Example is using Vanguard funds.

 

[Blackjack200]

Who manages your 401K? Fidelity for example has the Spartan S&P 500 index fund, which has a management fee of only .10% and was actually slightly positive for 2011. This compares to their target date retirement fund which has a .76% management fee and was -5% for 2011. The index fund wins. See if your provider has one too.

Why would the performance of fund A vs. fund B in 2011 influence where he's going to put his money for the next 30 years?

Index funds are fine, I like them (and use them) too. But if you just dump 100% of your allocations into the 500 index offering in your plan, you're missing the growth potential of small and mid cap stocks, and the growth/diversification of foreign markets.

If you're really going to spend the time every year to go over your investments and rebalance based on performance, fine. My experience is that most people won't do this, and a well managed target date product should serve quite well.

Also, while fund expenses are important the impact of 66 basis points, even over a long period, should be fairly negligible. It's far more important to consistently contribute to the plan.

 

[bucwylde23]

I'm a federal employee and we have life cycle funds that supposedly manage everything for you. You just choose the fund with a date close to when you will be retiring.

I'd look into something like this if you can.

I currently contribute as much as they will match because its basically free money.