YA401KT... Paychex 401k

[Storm]

Right now the company I work for has a 401k with Paychex based on the following Fidelity funds...

Fidelity Advisor Mid Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Balanced Fund
Fidelity Cash Management Funds Prime Fund- Daily Money Class

Now the company allows low teens contributions but matches very little compared to everyone else on the board...

After looking over the prospectus on these funds... the fees are noticeably higher than the funds I chose in my roth ira, obviously VFINX has a real low operating expense.

My question is.... should I hold off contributing until the switch over? Are Schwab or Merrill Lynch funds better than the ones above? Does anyone have any experience with Paychex 401k with funds other than Fidelity?

I will at least contribute so that I get the match, maxing out my roth ira contribution like I usually do, and with the extra funds I would have put into the 401k either getting a short term cd or saving up the funds to open a regular brokerage account.

Btw I am single, early 20s, not house or condo yet.

Any other suggestions?

Btw I think we should make a thread about good financial books everyone should read? Any suggestions on that?

 

[Taggart]

Contribute to the 401k in the lowest fee index fund up to the match only, most likely Schwab or Fidelity. Put the rest in a Roth with VFINX.

Put any leftover in Emigrant-Direct money market.

 

[Taggart]

As far as books, One Up on Wall Street by Lynch and Common Stocks and Uncommon Profits by Philip Fisher are good.

 

[Storm]

Originally posted by: Taggart
As far as books, One Up on Wall Street by Lynch and Common Stocks and Uncommon Profits by Philip Fisher are good.

Neat thanks... any other suggestions?

Damn ppl must be at the beach .

 

[DaveSimmons]

>> My question is.... should I hold off contributing until the switch over?

You'll miss the matching, and if you've already maxed your IRA you'll miss the tax savings. The money market fund should be a safe place to pile up money until the switch takes place

>> Are Schwab or Merrill Lynch funds better than the ones above?

Schwab's S&P500 fund has double the mgmt fee of VFINX, but it's still going to be a better choice than most actively managed funds. The other funds of theirs I've looked at are OK, but I'd still rather have the Vanguard equivalents given a choice.

My employer has an even worse choice of funds than yours, but I'm getting the matching and tax deferral, and can eventually rollover the money to Vanguard.

 

[Storm]

My employer has an even worse choice of funds than yours, but I'm getting the matching and tax deferral, and can eventually rollover the money to Vanguard.

What do you mean by rollover? If I changed jobs down the future? 401k into my roth ira?

 

[DaveSimmons]

Originally posted by: Storm
What do you mean by rollover? If I changed jobs down the future? 401k into my roth ira?

Yes when you change jobs. No, you will rollover to a traditional IRA rather than Roth, since 401k is pre-tax money / tax-deferred like trad not after-tax money like Roth.