401k investment choices?

**Broken Arrow** · 09-03-2009, 05:40 AM

Well, my current 401(k) is also with Fidelity, and if it means anything, my allocation is as follows:

Freedom 2040 (FFFFX) - 100%

That one fund alone already invests in 20 some odd other funds, spread out among the different caps and investment styles, and I am basically fine with the pre-set allocation of 85% stock / 15% bonds.

I don't know if you would be happy with that, and there are always ways to tweak it. But for me personally, I don't see why I need to go beyond that... But then, I should also qualify that I have money elsewhere to pursue other investment ideas.

**investingnoob** · 09-03-2009, 07:14 AM

Wow, by default it actually had mine 100% freedom 2050.
Back then I had no interest or idea about investing, then the market crashed and I thought I'd check my 401k. I lost thousands from the crash, and tried diversifying my portfolio.

But now that I learned the target fund invests in different stocks and bonds, it kind of defeats the purpose of choosing other ones.

**amedvedovski** · 09-03-2009, 01:34 PM

I presume that you are in your 20s or 30s. So you have a very long time horizon.
If you have a Target fund and also put money into other funds you overweight with certain asset classes. For example, in your case you have Mid cap, International, and some others on the top of your target fund. A Target fund has all those asset classes anyway. So I don't see any reason to buy extra funds unless you feel that by overweighting you will have better results.

My personal preference to do asset allocation myself. If you feel that you will have fun doing so and potentially get better results then I might advice you invest for retirement without purchasing Target funds.
Make sure that you have all major classes in your portfolio: Large/Small/Mid-cap equities, Domestic/International, REITs, Bonds (Domestic/International), Commodities, etc. Because you have a very long time to invest, first put more in stocks and then later in other classes.

Alex Medvedovski
alexfacts.blogspot.com
Twitter: @alexfacts

**investingnoob** · 09-03-2009, 07:43 PM

So should I just do target fund.
But would I sell all my other Elections and put it in my target

**Broken Arrow** · 09-04-2009, 05:19 AM

In my opinion, yes, you can and probably should sell all of your funds and go 100% into the Freedom fund.

Target retirement type funds are basically an all-or-nothing type of deal. Unless you have specific objections or interest in mind, and you deliberately want to tilt it somehow, there is a possibility that you could also be exposing your portfolio to unnecessary risk. At the very least, it unnecessarily complicates your fund choices.

Either that, or I would not take the Freedom fund at all and go for manual slice and dice.

**kv968** · 09-08-2009, 07:22 AM

Assuming you have more in your 401k than your Roth (or will eventually due to company matches and contributions), I'd look and see if your 401k offers a decent emerging markets fund also. If so, my suggestion would be to stick with the Target Funds in both accounts if you don't want to manually set your asset allocation but "slice and dice" it a bit as BA said with a little extra emerging markets (i.e. China, Latin America, etc.). The Fidelity Fund holds less than 2% of that market and, although more violatile, if you're that far away from retirement it might add a nice little boost overall. Granted don't put TOO much in such a fund but I'd add a little extra in that area.

401k investment choices?