Skyline - you are SO smart to begin at such a young age. Investments need TIME to grow!You should definitely contribute at least enough to get the full company match---it's free money, so don't leave it on the table.
Find out which firm/brokerage house your 401k is managed by (Edward Jones, Schwab, Fidelity, Met Life are a few of the biggies), and see if your company has a rep that would be willing to meet with you to teach you some of the basics and make some suggestions. If your parents have a broker they have used a long time, he or she might be willing to take a look at the options you have in your plan and give some advice.
I'd also educate yourself. Dave Ramsey's web site has some great advice; Sound Mind Investing is another; I think there's an "Investing for Dummies" too. Your employer might hold seminars occasionally, so keep an eye out for those.
My general philosophy is almost all mutual funds, with just a dabble in bonds. I try to allocate it approximately 25% growth, 25% growth and income, 25% aggressive growth, and 25% international. As an earlier poster mentioned, I do look closely at the fees, as those can vary quite a bit. I'm getting near the age where I'll have to pull back on the aggressiveness somewhat, but I'm enjoying the increases right now
Fitness Minutes: (1,256)
665 5/13/14 10:03 A
Great thanks everyone! I am not planning on touching this till I retire... who knows what life will throw at me but thats my plan. I do want to keep a certain percentage in the Guaranteed Income Fund just in case. I am contributing the same amount my company is matching which is great! Thanks for the link LEC, I will have to check that out before I make any changes right now. I'm glad I can re-visit this and change it later, but as of now I want to be smart about my investments
Edited by: NSKYLINE115 at: 5/13/2014 (10:04)
Fitness Minutes: (6,555)
5/13/14 9:57 A
Look at the fee percentage for each fund to make sure that any gains you get aren't being wiped out by the brokerage firm taking it's cut. Anything over 1-1.5% isn't worth it. Vanguard funds have very low fees (under 0.8%) and generally track the market. Here's Vanguard's site: https://investor.vanguard.com/mutual-funds /index-funds?WT.srch=1
Nix the small cap and head towards mid-cap/growth. Small cap is untested companies that have a healthy chance of going bust within 5 years of their IPO.
Yes we can be relatively risky (I'm 26), but there's no reason not to be smart and give away more money to fees than is necessary. Seriously, pay attention to the fees on the funds you choose to invest in.
Depending on how much you make, it's definitely worth also setting up an IRA and socking money away in there. If you're under a certain AGI ($69k annual, I think) at the end of the year, you can stick $7500 in an IRA account and get that amount exempted from your taxes. You can make 2014 contributions until April 15, 2015. So it's best to do this after you've started your taxes so you can maximize the deduction you get.You can do this every year that your income is below the threshold and when you withdraw it during retirement, it's tax free.
I'm not an expert in this, just sharing the advice that's helped me. It might be helpful to set up an appointment with a financial adviser (one time thing) to help you figure out the best strategy going forward.
Just don't sell it all to invest in one thing then have the economy go bust at 55 Y.o... In vest for the long haul and invest with the worst in mind.
Fitness Minutes: (9,224)
5/13/14 9:54 A
I'm in my 20's and I am lucky enough to be able to split my funds how I want. I have about 50% invested in higher risk funds, then about 30% in moderate, then the last 20% in stable funds. While you are young and have time to recoup losses, it's nice to have something stable in case you end up pulling out early. I also set up a private Roth account as well and contribute $600 per year, and that account is all moderate risk. As I get older and start having children, I will most likely adjust my investments accordingly.
Fitness Minutes: (1,256)
665 5/13/14 9:49 A
Good morning, I have a 401k set up through my job for over a year now and am still trying to understand how it all works. So far I have put in 6%, which is what my company matches so I am comfortable keeping it at that rate. However, I have invested it all in the Guaranteed Income Fund, which is a Stable Value, doesnt grow, doesnt go down. I am 25, and lots of people are telling me I can afford to be risky at this age, so I am looking at my account but dont know what I should invest in. I read online, "Being young you have to take on more risk then an older person. That being said here are 5 funds from TR Price that I would pick giving 20% to each fund. 1.International Stock fund 2. Growth fund 3. New Era fund 4.Small Cap Value fund 5. Balanced fund These picks will give you a somewhat aggressive stance. Expected return over time should be more then 10%"
Does that sound smart? I want to make sure I'm doing this in a smart way, any advice would be great! Thanks!
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