Definitely getting the match. I'll have to check the funds access. the 401K is with Fidelity...if that helps.

 

Honestly, I feel really, really stupid asking these questions. But personal investing and retirement planning is not something I've had the opportunity to really learn about, or concern myself about up until this point. The only 401K I've ever had prior to this was with Starbucks. And as part time employee, you can guess that my account there really amounted to nothing. :lol: I do still have some SBUX stock, though.....but I don't really know what to do with it.

 

Smart for asking. Too many people do not take full advantage of their investing options due to bad info, ignorance (literal meaning), and fear of looking stupid when asking for help.

Definitely getting the match. I'll have to check the funds access. the 401K is with Fidelity...if that helps.

 

Honestly, I feel really, really stupid asking these questions. But personal investing and retirement planning is not something I've had the opportunity to really learn about, or concern myself about up until this point. The only 401K I've ever had prior to this was with Starbucks. And as part time employee, you can guess that my account there really amounted to nothing. :lol: I do still have some SBUX stock, though.....but I don't really know what to do with it.

 

Well the Fidelity family has lots of options and starting out in Freedom funds is certainly reasonable. These will have some volatility - investment speak for "will lose money during some periods".

 

Depending on your 'horizon' of accessing the money balancing any of the stock funds with lower volatility bond funds is good. Fidelity total bond fund looks real dull right now at only .733% YTD or so (FTBFX). But will likely show a gain for the year.

 

In 2011 most stock funds were down for the year around 3-5%. In 2008 the single year lose was around 40-50% for most. It recovered mostly - but you had to stay in the funds. Just as last years loss has been corrected already in the first 2 months. Key thing - don't bail during down turns.

 

Having tracked these things for years almost any generalized stock fund will track very similar to the DJIA or S&P500 over time. The specialized funds like small, medium, large funds or international funds require much more attention and strategic timing since they run in cycles and big guys rotate in and out of those sectors more. So of them have 'popped' more than the general funds like the 2030. But they will unpop faster as well. A mix of the 2030 and Total Bond Fund is a good start. With matching 401K Nike says it best - 'Just Do It'.

I'm 36 soon to be 37 this month. I have mine spread across 3 different fairly aggressive funds. I've made as much as 30% in a year but also lost double digit % in a year. The trick is don't look too much and just trust it.

 

Stay on top of your funds though to confirm they are still meeting your expectations. I'm not saying to go chasing the current hot fund, that often leads to disaster. Just stay informed about the funds you're in and know what's going on with their management vs other fund options.

"Max it out" pretty much means investing as follows:

1. put into a 401K every penny that your employer will match (you make 100% on your money the moment you invest it!).

2. fund a Roth IRA (up to $5000 per year per spouse after taxes)

3. go back to the 401k if there is anything left to invest.

 

As to how aggressive you want to be that is a personal call; I go about 1/4 each in small cap, large cap, growth, & foreign. Love to see 12% over a 10-15 yr.

Using the "rule of 72" a 12% annual return means your money would double in six years.

Good luck getting 12% a year on your 401k.

Good luck getting 12% a year on your 401k.

 

A good equity fund will.

A good equity fund will.

I'd say 6-9 is a more realistic goal long term.

Before 911, I was riding a wave on a lot of high gain high risk investments. 911 hit and I practically got wiped out. I adjusted, but stayed in less risky, but still high growth funds and regained about half of the loss by 2008, then 2008 happened. Although the hit was not as severe, it coerced me into my current strategy. In 2008 I moved 48% of my money into a fixed asset account, 25% into small to mid cap funds and lower risk technology funds, 14% into low risk large cap, and 13% into low risk international funds. I've realized a 53% return on what I started out with before the 2008 restructure.

In your 401k plan, you probably have funds available to you that are based on your retirement year, probably called something like Freedom Fund 2015, Freedom Fund 2020, etc., etc..

 

What's nice with these type of funds is that the closer you get to that year, the more conservative the fund manager manages the fund. So, a Freedom Fund 2015, since it is right around the corner would be invested in more conservative, money market type funds. Freedom Fund 2040 would be invested in more aggressive, stock oriented mutual funds with a higher risk/reward. The closer we get to 2040, the fund manager will change the investment to be more conservative in nature.

 

The further you are away from retirement, generally the more aggressive you can invest since you can ride out the market peaks and valleys.

 

I'm not providing advice or anything, however, if you give them a call, the reps would be able to assist you in helping you make the right decision based on your retirement age, lifestyle, etc..

 

Just my two cents......

I'd say 6-9 is a more realistic goal long term.

 

Long term you should be able to do much better in a good stock fund.

 

This is from an finance blog I follow:

 

Since 1900 (end-of-year 1899), through 2011, I estimate the average total return/year of the DJIA (Dow Jones Industrial Average) was approximately 9.4% -- 4.8% in price appreciation, plus approx 4.6% in dividends. (Some numbers won't add up due to rounding.)

Since 1929 (year-end 1928 -- i.e., before the crash), thru 2011, the return was 8.8% (4.6%, plus 4.3%) [note: see The 1929 Stock Market Crash]

Since end-of-year 1932 (i.e., after the crash): 11.1% (7.0%, plus 4.2%)

The average annual stock market return for the past twenty-five calendar years, was 10.5% (7.7%, plus 2.7%)

Stock market returns for the last 20 years: 9.4% (7.0%, plus 2.4%)

Returns for the last 10 years, 4.5% (2.0%, plus 2.5%)

For the last 5 years, 2.3% (-0.4%, plus 2.7%)

For 2011 the stock market (Dow/DJIA) total return was 8.3% (5.5% plus 2.7%)

That's how the funds that we are automatically enrolled in are. But, considering this is 2012, and my fund is 2030, I'm afraid it may be a tad bit too conservative to get the maximum benefit out of whatever amount I'm contributing. At first I liked it because I didn't have to think about it. But now, I'm looking at the fact that I have a lot of catching up to do, and contributing the maximum allowed by the IRS isn't feasible at this point. I can definitely increase...but I don't want to take away from saving in a more accessible account, which I use for emergencies.

 

I would save as much as you possibly can. FYI, most 401k programs allow you to borrow up to half of the total value (in case of emergencies) so I would put as much as you can into that account so that it can have a chance to grow. I would not have much more than 3-6 months of expenses in a liquid account. That's just what I would do. I wish you all the best in your investing.

I have another question. I had a 401K through an employer (Nextel Communications) that no longer exists. I don't think I have a large amount in there, but I would still like to locate this money and get it into another account. I do not have any means to contact the former employer or any of my supervisors there. So far, I have come up short when looking for it.

 

Do you know who the plan administrator is....ie. Mercer...they may have a website.

I would save as much as you possibly can. FYI, most 401k programs allow you to borrow up to half of the total value (in case of emergencies) so I would put as much as you can into that account so that it can have a chance to grow. I would not have much more than 3-6 months of expenses in a liquid account. That's just what I would do. I wish you all the best in your investing.

 

The only issue I have is that it's so difficult to borrow against your 401K, relative to having the liquidity of a savings account that's accessible. I am trying to get at least 12 months of expenses saved. I am secure in my job, and the company I work for is equal to Starbucks as far as being a good company to work for....actually in some respects better. But I have never had any significant savings, and I've faced many situations where savings would have been a God-send. I'm reluctant to tie up the majority of my savings in a place where my emergency may not match the criteria set forth in a 401K.

The only issue I have is that it's so difficult to borrow against your 401K, relative to having the liquidity of a savings account that's accessible. I am trying to get at least 12 months of expenses saved. I am secure in my job, and the company I work for is equal to Starbucks as far as being a good company to work for....actually in some respects better. But I have never had any significant savings, and I've faced many situations where savings would have been a God-send. I'm reluctant to tie up the majority of my savings in a place where my emergency may not match the criteria set forth in a 401K.

 

Smart to think about your liquid funds. Savings are very important.