401k allocation advice

[bhayes1]

Hello,

I just graduated college and am now starting my career. Along with that comes planning for the future and investing in my 401k. All of this is a foregin language to me, so if any suggestions please keep them simple. EX. what fund and the percent amount....


I am 24yrs of age.

Risk: Not sure. At my age probably moderate to somewhat aggressive.

Also, I wold prefer an option that will only require minor adjustments throughout the year.

Here are my options:

Hotchkis & Wiley Diversified Val
Principal large cap growth fund
SSgA S+P 500 index SL series Fund II
Dreyfus/The Boston CO small cap value I
RVST Long-term horizon (65:35)
RVST long-term (80:20)
RVST medium-term horizon (50:50)
RVST short term (25:75)
PIMCO total return fund (inst)
RUST stable capital fund II
Morgan Stanley small co growth
American funds Euro Pacific Growth (R5)

Thanks!

[Petunia 100]

If you have a Target Retirement fund available, I would suggest you use that. But you don't, so I will suggest a simple 4 fund portfolio:

25% S & P 500 Index
25% Dreyfus small cap value
25% Pimco total return
25% American Funds EuroPacific growth

I also suggest:

1. Invest in 401k only enough to get the full match.
2. Open a Roth IRA. (Choose a quality low-cost custodian such as Vanguard and go with a Target Retirement Fund.)
3. Contribute as much as you can to your Roth, up to the maximum (currently 5k per year).
4. If you still have money to invest, contribute more to your 401k.

[jpg7n16]

Well before you start investing, you should consider whether you're in a position to start investing.

• Does your employer offer a match? (if so, always take the match)
• Do you have any debt charging you over 5% interest? (credit cards, car loan, student loans, etc.)
• How much cash do you have saved up and available in case of an emergency?
• What is your monthly income? Monthly expenses?

Ideally, to invest beyond the company match, you should have only low-interest debt, 3-6 months expenses held in cash, and a large enough gap between income and expenses to afford the investment.

As far as how to allocate, consider the following.

Simple option: 100% in RVST long-term (80/20)

-- requires no maintenance for several years, as they auto adjust for you

[Nightfly]

The other posters give pretty solid advice. At your age, you should be more aggressive in stocks vs. being too conservative. Go to the Morningtar website and plug in the ticker symbols for all of these funds to check up on their performances. While past returns are not an indicator of future performance, seeing how these funds have done in the turmoil of recent years will be valuable.

Small cap funds tend to be more aggressive. Also, you want some percentage of your portfolio invested in overseas companies, not just domestic (U.S.) companies.

Once you set up your automatic withdrawals - forget about your funds/401k. Make yourself a note in a calendar program to automatically e-mail yourself to check on your allocations and the funds that you picked in say, six months - just to keep an eye on things.