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questionable | New 401k plan. i have questions? |
ok so i know squat about 401k but i have a new plan thru employer and just recieved my first quarterly statement. it makes no sense to me as i really am ignorant to financial and investment matters. based on the following info can someone please tell me if there are changes that should be made as to where i should be putting my money.
current assest mix of account balance
balance ----% assets---- assest class
0.00 ----0% ----short term income
0.00----0% ----fixed income
643.98---- 100%---- balanced/asset allocation
0----0---- large us equity
0----0----small/mid us equity
0 ----0----international equity
assest class
balanced/asset allocation employer 100% elect deferral 100%
fees 0
gains/loss -2.52
personalized rate of return -0.68%
contribution made by me 587.71 employer 58.78
does it seem like i filled papers out right or perhaps wrong? like i said i don't know squat so i filled in the blanks blinded.
i also want to have more taken from my checks |
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sh.1959
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The balanced account it's in now is probably the best place to leave it until you learn more about how to handle it.
If you want to be very aggressive with it, i.e. take a lot of risk to in order to potentially make a higher return, put it in the small/mid US equity and International categories. If you want to be very conservative, i.e. take less risk and settle for smaller returns, put it in the short term and fixed income categories. |
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Bryan A
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Questionable, make sure you educate yourself as much as you can about your employer's plan. The more you know, the more you can be in control of what you're saving for your future retirement and how much risk is present in your portfolio.
Basically, it looks like you have invested 100% of your money (and will in the future) in the company's "balanced/asset allocation" fund. What fund exactly is that? You can find out by checking. This could be important depending on the mix of investments inside this fund you are buying (i.e., how much is in stocks? bonds? cash? other investments?) Generally, these funds have a mix of different investments, which all good financial planners would tell you is a good thing.
BUT not all "balanced funds" are that terrific sometimes. If you have a lousy manager with a lousy mix of investments in a lousy market, it may NOT be the best thing. You might be better off creating your OWN mix using the other options your plan offers (i.e., some in "short term income," some in "large US equity", some in "small/mid us equity" and so on). This essentially creates your OWN "balanced fund". But then you need to know what exact mutual funds THESE are in your plan too before you venture off and make that choice.
The best way to analyze mutual funds is to look at an independent rating source. Yahoo, for example, provides information from Morningstar and other independent research so you can look at the fund your company uses for each investment option and you can see whether the fund is rated well compared to other funds out there. Don't worry too much about bad returns IF (a) they are close to what other similar funds are doing or (b) the markets are generally not doing well. DO worry if it does that for a sustained period of time (you're too early in the game yet to know...)
Finally, if you want more taken from your checks, just tell your HR person and they will rpovide the forms to authorize more to be put into your 401(k) (which is cool, because your employer may add to THAT too!)
Good luck |
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teresathegreat
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If you want to learn more about retirement savings, read "The Automatic Millionaire" by David Bach. It's simple to understand and is a really good introduction to the whole world of managing your money. It will also teach you how to diversify your portfolio (ie, not keep all your eggs in one basket) and what sort of investment stratefy in appropriate for your age and means.
Check through the packet they gave you - you should have an HR rep at your company, or a rep at the financial company, that you can call. Tell the HR rep that you want to increase your contribution - you should be putting about 10-15% of your pre-tax income into your retirement savings.
If you're young, I'd suggest considering a mix of international and U.S. stock mutual funds. As long as it's a reputable company, you should be fine going for more aggressive funds. But do a little reading before you make any decisions (you can always change your allocations later), you'll feel much better about it. Keep it mind that retirement investing is for the long haul - how it performs in one month doesn't really matter. |
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Atash
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It appears to me that 100% of your contributions (and your employer's) are going into a balanced fund and/or an asset allocation fund.
In theory, a balanced fund contains a mix of common stock, preferred stock, bonds, and short-term bonds. An asset allocation fund is one where the portfolio is rebalanced from time to time, in order to sell what has gotten expensive and buy what has gotten cheap. The ratios of different asset classes might be fixed, or they might vary according to economic conditions.
The quality of the assets is unknown. "Balanced junk" won't help.
Hard to tell what the risk is with each asset class, because there is not enough information. International equity for example could be quite risky, or fairly safe, depending on which markets were being invested in. China for example has had a huge runup in its stock market, and by any historical measure is overpriced and speculative.
Short term income is the safest in most situations, at least in the sense of not crashing, but it will have trouble keeping up with inflation.
>>i also want to have more taken from my checks
Ask your benefits coordinator about this. There is a maximum annual contribution for 2007 of $15,500.
These explanations are probably confusing, so have a look at the websites I list as sources.
>>can someone please tell me if there are changes that should be made as to where i should be putting my money.
Impossible to tell without more information. You could try contacting the owner of the last website listed and telling him what your investment options are, your age, your income level, and some life goals that you might be getting ready for, which will determine an appropriate risk profile for you. Comments provided for your information only and do not constitute investment advise. |
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Andy
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If benchmark performance isn't included on your participant statement or your plan's webpage, then tell your HR department you want it (demand it). A benchmark is an index that every fund picks as a measure of its performance. A firm called Lipper also provides average mutual fund performance, so you could see how your balanced fund stacks up against the average of all balanced funds.
A key question is whether your balanced fund only invests in domestic stocks and bonds. If so, you should add an allocation to the international stock fund, up to 20% (I'm assuming you're young). An alternative would be to create your own balanced fund: invest 10% in fixed income, 30% in large US equity, 15% in small/mid US equity, 45% in international equity. A 90%-10% equity-fixed income portfolio outperforms a 100% equity portfolio over longer time periods. |
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K M
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would suggest you take 30 to 50 dollars go to the book store and buy some books that will help you understand your 401 as well as inventing. You will make more money off that money and time spent reading them than almost anything legal. |
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danielgoodrich
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You are invested in nothing but a cash holding account. There must have been an expense ratio for the company handling the account that is why you have a loss of $2.52.
Your employer is contributing 10% of your match which is really good.
Tell your money manager to get you into something and start building your retirement. Put in as much as you can afford and your employer will match more. Law allows you to contribute up $15,000 per year.
Good Luck |
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