401k advice -24 yrs old

[sii1123]

Hi,

I just started to invest in 401k (5% of my salary as of right now). The default plan that the company chose for me is the FID FREEDOM K 2050. I have no idea how to invest...should I just stick with this default plan or should I invest in other listed below? Thanks!!!

Blended Fund Investments Large Cap FID FREEDOM K INCOME %
Blended Fund Investments -- FID FREEDOM K 2005 %
Blended Fund Investments -- FID FREEDOM K 2010 %
Blended Fund Investments -- FID FREEDOM K 2015 %
Blended Fund Investments -- FID FREEDOM K 2020 %
Blended Fund Investments -- FID FREEDOM K 2025 %
Blended Fund Investments -- FID FREEDOM K 2030 %
Blended Fund Investments -- FID FREEDOM K 2035 %
Blended Fund Investments -- FID FREEDOM K 2040 %
Blended Fund Investments -- FID FREEDOM K 2045 %
Blended Fund Investments -- FID FREEDOM K 2050 %
Bond/Managed Income Stable Value FID MGD INC PORT II %
Bond/Managed Income Income PIM TOTAL RT INST %
Bond/Managed Income Income VANG TOT BD MKT INST %
Bond/Managed Income Other VANG INFL PROT ADM %
Stock Investments Large Cap AF GRTH FUND AMER R6 %
Stock Investments Large Cap FID CONTRAFUND K %
Stock Investments Large Cap TRP EQUITY INCOME %
Stock Investments Large Cap VANGUARD INST INDEX %
Stock Investments Mid-Cap ARTISAN MID CAP INV %
Stock Investments Mid-Cap FID SMALL CAP STOCK
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Stock Investments Mid-Cap H & W MID CAP VAL I %
Stock Investments Mid-Cap SPTN EXT MKT IDX INV
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Stock Investments Small Cap ABF SM CAP VAL INST %
Stock Investments International AF NEW PERSPECT R6 %
Stock Investments International FID DIVERSIFD INTL K
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Stock Investments International SPTN INTL INDEX INV
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[Mr Nice Guy]

You should probably stick with the default plan...

[snshijuptr]

Stick with the default plan for now. Try to educate yourself about asset allocation and risk. Your ultimate goal should be to put yourself into a asset allocation that makes YOU comfortable while reducing your expense ratios and other fees. This will highly depend on your risk tolerance which is dependent on both your time until retirement and your own emotional tolerance. Since you are young, you can go riskier (which means more stocks and foreign investments than bonds or cash), but if you would pull out of the market entirely at the next great recession, you really shouldn't be there. The more educated and confident you are about investments and your personal portfolio the less likely you are to make a bad move like buying high or selling low.

[jpg7n16]

Agreed with the above. Given your level of investment knowledge, I would stick with the asset allocation fund until you know enough to know why you'd consciously deviate from it.

For many people, they may even find that after learning about asset allocation and diversification, they are perfectly happy with the fund as is - and need no changes. But for some, they learn there are some changes they'd like to make (little bit more risky, little less risk)

I'd watch a couple videos on those type of funds 1st:
https://personal.vanguard.com/us/fun...t#targetAnchor (there's a video in a small box on the upper right side of the screen that says "You can invest wisely for retirement")

Fundamentals of Investing - Fidelity


Do you have any concerns about the default plan?
How much time can you devote to monitoring your investments?

[Mr Tipps]

I would probably stick with the default plan as well for now. But, just monitor it to see how it is comparing to other options you may have to choose from.

The fact that you are starting to save at a young age is great!!

[Philck]

From my own experience..............I would go with an aggresive fund like Fidelity Contrafund. It has done well over the years. My daughter asked the same question 10 years ago and I gave her the same advice. Read all you can about investing as it will benefit you in the long run.

You are only 24 and have decades left to weather the ups and downs of the stock market.

If you can't stomach the possible wild swings of your account balance then I would stick with the default fund. The performance, of this default fund, will probably not be as good as something more aggresive.

Good Luck

[sii1123]

thank you so much everyone. I think I will stick with the default plan for now. Once I learn more about investing, I will probably move to something that's more aggressive. Thanks again!!!

[Corrections]

I have a Fidelity Plan as well, and after checking the expense ratios, you would be better off picking index funds and a bond fund, expensewise, and just copy the percentages that the 2050 target fund invests in. I'm a little bit older than you, but I'm invested about 55% in the Spartan 500 Index, 25% in the Spartan International fund, and then 20% in the Vanguard Bond Fund.

[dczech09]

My strategy with my Roth IRA is that I am accumulating money in default plan for the time being. Once I have a good chunk of money, I will take the money out of the default plan and spread out amongst five categories:

-Real Estate Investment Trusts (REITs) (15%)
-Large Cap/Blue Chip (30%)
-Small Cap (20%)
-Emerging Markets (15%)
-International/Foreign (20%)

I myself am 24 as well, so I can afford to take on some risk.

I think that you have to do too things when it comes to risk:
-Invest within your risk tolerence, wherever it is
-Develop a higher tolerence for risk by educating yourself on the market