So, when I took my new job, I had the opportunity to invest in 401K. I didn't have that at my previous employers. So, I've elected to contribute 4%, which is fully matched by my employer. I just was notified I'll be receiving 4% of my salary as a profit sharing contribution. Now, I am looking to increase my contribution, but I wonder if I should evaluate my plan investments before I do. Right now, I'm in the plan they selected for me, and YTD, the return is 7.1%. Should I be looking at shifting that to get a higher rate of return? Or is that pretty good? I'm not an investor, and frankly it makes me nervous. So, I see a % on the positive, and I'm pretty happy. But, given that I'm 46 and just now starting my retirement planning, I'm way behind. I can contribute more, but can I also make more by investing better?

 

Any help would be appreciated.

You really have two questions; 1. should you contribute more? and 2. should you reevaluate the distribution of the investment?

 

I will answer the first one. If you can afford it, yes, contribute as much as possible to your 401k. Max it out if possible.

You really have two questions; 1. should you contribute more? and 2. should you reevaluate the distribution of the investment?

 

I will answer the first one. If you can afford it, yes, contribute as much as possible to your 401k. Max it out if possible.

 

Thanks...should I do one before the other?

Go ahead and increase your contribution. You can always meet with a financial planner type to tweak the investment.

Go ahead and increase your contribution. You can always meet with a financial planner type to tweak the investment.

 

So...about the financial planner....:lol:

Definitely not in my wheelhouse. There are a lot of savy investors on BGP, maybe one of them can steer you in the right direction or towards the right person.

Definitely not in my wheelhouse. There are a lot of savy investors on BGP, maybe one of them can steer you in the right direction or towards the right person.

 

:lol: I was just teasing. But, I do trust your advice. Thank you!

RM, usually a 401k has different types of investments you can choose from. They range from very conservative ie money market accounts to high growth funds which carry more risk in exchange for higher returns (if successful).

 

A couple of factors will determine how you allocate your funds.

 

Age ie how many years until you need to tap into the 401k.

Risk tolerance

 

Many people IMO make the mistake of being way too conservative in the name of safety. Safety = low returns. Guessing based on the fact you have a son who is out of college then I'd say you're in your 40s maybe 50. You still have maybe 15 years of working ahead of you.

 

My advice to anyone with many years ahead of them before retirement is to invest a good portion of your funds in a growth fund of some sort. While the stock market will go down history says it returns a solid return. The challenge is (and this is why people often go "safe") is that there are different types of growth/equity funds to choose from.

 

Your second challenge is to find someone who is in the business of investing that actually knows what they're talking about. You'd be surprised.

I would max out your 401K for sure. I would also see if they offer a Roth IRA option.

 

As far as a mix, I would go with what Clyde suggested. I am pretty aggressive in mine but also have a couple conservative funds.

Is a 457 an option, RM? I'm guessing not, as they are pretty much restricted to "state/local government employers".

Personally, I'm really aggressive with about a third of my retirement & the rest of it is a little more conservative. For the last 5 years or so, I've been putting back 15% of income for retirement. So I would most definitely increase as much as you can.

 

And Clizzy makes a good point about there being all kinds of funds in which you can invest. What I have typically done is selected funds that have been around for at least 7-10 years & have done well during that time.

Edit. The dreaded double post.

I have a number of my guy you can give him a call if you want.

Personally, I'm really aggressive with about a third of my retirement & the rest of it is a little more conservative. For the last 5 years or so, I've been putting back 15% of income for retirement. So I would most definitely increase as much as you can.

 

And Clizzy makes a good point about there being all kinds of funds in which you can invest. What I have typically done is selected funds that have been around for at least 7-10 years & have done well during that time.

 

You are too young for that mix. Flip it.

You are too young for that mix. Flip it.

 

You're not the first person to tell me that. But I'm a real pantywaist when it comes to being overly aggressive. I thought about bumping it to half & half, but about had a nervous breakdown.