Quote:
Originally Posted by solidblack
Awesome. I forgot to mention. I have about $20k in my 401k. I put in 6% of my paycheck and the company matches half of that.
Couple more questions if you don't mind:
1. Why do you like Vanguard 500 and total stock market index as opposed to the VFIFX fund?
2. How should I allocate my 401k funds if i'd like to be aggressive? My 401k allows me to put money in the following funds:
Morley Stable Value Adv
Goldman Sachs Govt Inc A
American Funds Bd Fd Am R3
Franklin Income R
T.Rowe Price Retiremnt 2020 R
T.Rowe Price Retiremnt 2030 R
T.Rowe Price Retiremnt 2040 R
Pax World Balanced Indiv Inv
American Funds Am Bal R3
Eaton Vance Lg Cap Value A
Davis NY Venture A
Calvert Social Invmt Eq A
American Funds Gr Fd R3
Riversource Mid Cap Value A
Oppenheimer Sm & Md Cp Val A
Brandywine Fund
Allianz NFJ Sm Cap Value A
Oppenheimer MainStrSmCp A
BlackRock Sm Cap Gr Eq Instl
American Funds EuroPacifc R3
Seligman Communs & Info A
Ok,
1) I like the vanguar d500 and total stock market index because they give you good all around exposure in a low cost index fund. The costs are extremely cheap compared to other funds. I just like them, and recommend them in general, they are something you just can't go wrong with. Note : when i say don't go wrong, I dont' mean you can't lose money. VFIFX is a target retirement fund. I believe these funds start out something like 90% stocks, 10% bonds, and over time they will move the stock investments over to bond investments. Its a good idea as a "set it and forget it" type of investment. I just don't believe in that strategy, there is no such thing as a "one size fits all". Every person has different situations in their life. My real issue is that 10% that is in bonds. With a 40 year timeframe, I see very little reason to have 10% of your retirement money in bonds. You have the time to ride out the variance, you should be aggressive and let that 10% help you along the way. Every dollar counts, why give up any advantage you have?
Remember, this is my view. If you went 100% in VFIFX and never made 1 change, that will wind up being fine. I just never like leaving money on the table.
2) The general rule of "aggressive" is taking 100, subtracting your age, and that is the % of your overall retirement portfolio that should be in stocks. I say if you have a long term timeframe, especially if you are under 35, to go 100% stock.
As for the other fund choices, I would recommend finding a large cap and a small cap and maybe some sort of international (70/20/10 % allocation sounds about right) and invest it that way. I would recommend nothing in bonds, unless you are over 50 years old. I might get attacked for that view, but thats ok. Like I said, everyone needs growth, and if you have the timeframe, go with it. Maximize your money.
I do NOT advise you to go with my recommendations if you do not feel comfortable. Talk to people, do some research, do some searches on the allocations and do something you feel comfortable with. As with anything, never just blindly follow anyone. I'm just telling you how I would do it.
(If anyone disagrees, please speak up, I'd like to hear different points of view on asset allocations)
Hope this helps.