401K newbie question

**kork13** · 10-09-2008, 03:49 PM

Originally posted by jsk View Post

Hi
I am 32 yr old and just starting to setup my 401k. These are the options i've for asset allocation. I need help to figure out best option

. Appreciate help.

Hello and welcome! I don't know much about researching funds right now, but I do know that if you can provide ticker symbols, that will make it alot easier for the people who can help you out.

**jIM_Ohio** · 10-09-2008, 04:13 PM

Step 1 know how much risk you want to take
Step 2 create an asset allocation which mimics that risk profile and stick to it
Step 3 choose funds which fit into the asset allocation

Step 1 detail:
If market drops 40% will you
a) buy more
b) do nothing
c) sell everything
d) you won't even watch the market

If market goes up 20% will you
a) buy more
b) do nothing
c) sell everything
d) not even watch the market

If market goes down 40% one day, then up 20% the next, then down 30% the next then up 10% the next, what will you do?
a) change what you invest in
b) the same thing you were doing before
c) stop watching the market
d) come here and ask for help again

The answers for an aggressive investor are probably a-b-b

If you did not pick a-b-b you are probably a conservative investor and need to define conservative.

Aggressive is probably 80% stocks and 20% bonds
Conservative is somewhere between 40% stocks and 60% bonds and 60% stocks and 40% bonds

If you do 80-20 look at these funds
30% SSgA S&P� 500 Index Fund
10% SSgA S&P� MidCap 400 Index Strategy Fund
10% Alger SmallCap Growth Institutional Fund - Class I
30% Janus Adviser International Growth Fund - Class S
20% DWS High Income Plus Fund - Class S

If you chose 60-40, I would consider this
30% SSgA S&P� 500 Index Fund
15% SSgA Russell� 2000 Index Strategy Fund
15% Janus Adviser International Growth Fund - Class S
20% DWS High Income Plus Fund - Class S
20% SSgA Government Money Market Fund

**jsk** · 10-09-2008, 04:26 PM

I've picked up the stock symbols to the best of knowledge.

SSgA Government Money Market Fund --> SSGXX
PIMCO Total Return Fund - Class A --> PTTAX
DWS High Income Plus Fund - Class S --> SGHSX
SSgA Life SolutionsSM Income & Growth Fund --> SSLIX
SSgA Life SolutionsSM Balanced Growth Fund --> SSLBX
SSgA Life SolutionsSM Growth Fund --> SSLGX
AllianceBernstein Growth and Income Fund - Class A --> CABDX
DWS Large Cap Value Fund - Class A --> KDCAX
SSgA S&P� 500 Index Fund --> GSPC
Oppenheimer Capital Appreciation Fund - Class A --> OPTFX
Fidelity� Advisor Equity Growth Fund - Class T --> FAEGX
Franklin Rising Dividends Fund - Class A --> FRDPX
SSgA S&P� MidCap 400 Index Strategy Fund
Alger MidCap Growth Institutional Fund - Class I --> ALMRX
Janus Adviser International Growth Fund - Class S --> JIGRX
Templeton Growth Fund, Inc. - Class R --> TEGRX
Allianz NFJ Small-Cap Value Fund - Class A --> PCVAX
SSgA Russell� 2000 Index Strategy Fund
Alger SmallCap Growth Institutional Fund - Class I

I am willing to take risk considering the factor i've been too laid back.. so i will have to keep changing the allocation frequently depending on how the market is doing ?
thanks for the help.

**jIM_Ohio** · 10-09-2008, 05:46 PM

Originally posted by jsk View Post

I am willing to take risk considering the factor i've been too laid back.. so i will have to keep changing the allocation frequently depending on how the market is doing ?
thanks for the help.

If you look at this allocation

If you do 80-20 look at these funds
30% SSgA S&P� 500 Index Fund
10% SSgA S&P� MidCap 400 Index Strategy Fund
10% Alger SmallCap Growth Institutional Fund - Class I
30% Janus Adviser International Growth Fund - Class S
20% DWS High Income Plus Fund - Class S

Any time the High Income plus is more than 25% or less than 15%, you need to at minimum re-direct contributions so it is back to 20% within 6-12 months. If it is 15% you send more to the bond fund, if it 25%, you send more to other funds which are slightly behind their targets.

If the deviation was 10% HIGHER than needed, I would sell some of that asset and buy the others, but if only 5% off, that can be easily adjusted with new contributions and no need to sell the other holdings.

That above all else will improve performance over long term.

Other ideas
If any of the stock funds listed is more than 5% off (so if a fund with a 30% target is either more than 35% or less than 25%, do same thing)- add more contributions to that fund.

One hint- I create allocations so it's easy to "look and see"

The S&P 500 fund should be 3X the other two domestic stock funds.
The international fund should be the same as the S&P 500 fund and 3X the mid and small cap funds.
The bond fund should be 2X the size of the mid cap and small cap funds.

meaning no calculator needed, just look at the small and mid cap and see if bonds are 2X the size and the S&P 500 and international fund are 3X the size and you will know if portfolio is aligned correctly.

Check this 2X per year (look in June and December). No need to constantly monitor. Just pay enough attention once every 6 months to see if contributions need to be adjusted.

**jsk** · 10-10-2008, 09:44 AM

Originally posted by jIM_Ohio View Post

If you look at this allocation

Any time the High Income plus is more than 25% or less than 15%, you need to at minimum re-direct contributions so it is back to 20% within 6-12 months. If it is 15% you send more to the bond fund, if it 25%, you send more to other funds which are slightly behind their targets.

If the deviation was 10% HIGHER than needed, I would sell some of that asset and buy the others, but if only 5% off, that can be easily adjusted with new contributions and no need to sell the other holdings.

That above all else will improve performance over long term.

Other ideas
If any of the stock funds listed is more than 5% off (so if a fund with a 30% target is either more than 35% or less than 25%, do same thing)- add more contributions to that fund.

One hint- I create allocations so it's easy to "look and see"

The S&P 500 fund should be 3X the other two domestic stock funds.
The international fund should be the same as the S&P 500 fund and 3X the mid and small cap funds.
The bond fund should be 2X the size of the mid cap and small cap funds.

meaning no calculator needed, just look at the small and mid cap and see if bonds are 2X the size and the S&P 500 and international fund are 3X the size and you will know if portfolio is aligned correctly.

Check this 2X per year (look in June and December). No need to constantly monitor. Just pay enough attention once every 6 months to see if contributions need to be adjusted.

Thank you very much for helping me out. i keep this points in mind.

401K newbie question