I'm putting in 6% of my paycheck ($110 a month) and decided on how I should allocate the funds that are put in there. After thinking for about 5 min, I came up with this strategy... (look at attachment) I decided i'm only 18, so why not?
I gotta give it to you.. that's really awesome that you're doing this so early.. you won't regret it, trust me. I started mine at age 22,, 7 years later it is now the largest asset I have ever owned
Mor- First, CONGRATS on taking this step. You will be happy you did later. Second, while you are young, I would not put everything in one basket. I would suggest using the Aggressive, Growth and Growth/Income areas. As a broker previously, I sold quite a few 401k plans and while it's so tempting b/c you are young, the wild swings are simply not worth it. Many times, in the long run, you actually make MORE by being just a little better balanced. If you want to stay aggressive, consider: AGGRESSIVE: 25%+ GROWTH: 20 - 50% G/I: 5 - 20% There are times where the only area making money is the G/I and the only reason it does is the "I" part - the income or dividends from the stocks it holds. And with those dividends, you reinvest and buy even more shares with no out-of-pocket cost to you. Right now, accumulating shares should be one of the primary goals and if it's all in aggressive, you will only gain what you put in.
dont change a thing maybe you could be a little conservative when you hit 25 (hahahhahahhahah) but your 18 man screw it balls out go aggresive
Thanks a lot brownsfan on your input. I'm definitely going to keep that post to mind and apply it to my strategy.
I started a ROTH when I turned 14. Good ol' dad made me a deal. If I worked all summer and made the maximum to put in it, he'd match it. So basically, all I had to do was make the money (legal purposes) and he'd put in the max for me out of his own pocket. I'm 25 now and it's by far the largest asset I have.
Very intelligent move. You are well ahead of the game at your age. I personally stopped contributing to my 401k recently. I took a loan for half of it back in March because I was nervous about the market...I knew this subprime shit wouldn't hold...so I took the max loan of half, and put it in my trading account.....that way I took out my exposure to this bullshit meltdown.....and I am paying myself back the interest in the meantime, while the proceeds of the loan are being used to trade actively. P.S. I am in the process of leaving my full time job, so that is another reason I quit contributing to my 401K....I need maximum capital going into my account. I had my reasons and they worked out fine. The fact that you are already concerned with this sort of thing speaks a lot of you. Good on you.
No, as you are younger you should take more chances. As you get older diversify. Hey don't forget to save some money for beer.
No, you are wrong. HAVING ALL YOUR EGGS IN ONE BASKET IS FOOLISH, NO MATTER THE AGE. Ever seen an aggressive fund lose 90% in ONE year? I have plenty of times. How good do you think our friend here will feel when he sees he is putting money into something that lost 90% of it's value in ONE year? Any guesses? He very well may STOP. So, investing long term is much more than 'put it on red and hope' and then 'go buy beer'. That's complete and utter rubbish. Spoken like a true amateur with no real assets. Mor, hopefully you can see who might know just a little it about this area. You are on a trading (or for some, gambling) website, so bear that in mind. I sold these plans for 4.5 years and saw what your plan here is too often and most of the time it just blew up in people's faces. The biggest reason is this - many in mutual funds will BUY HIGH AND SELL LOW (VERY LOW USUALLY). Just terrible for being 100% aggressive. If anything, WAIT for the aggressive fund(s) to lose 50%+ (and they will) AND then go balls out in those funds for a few months to a few years. You just need to keep in mind that it's very hard for someone your age to plow some money into something that just seems to lose money each month. And with aggressive funds, that WILL happen. Not if, but when. And when that happens, many will walk away from them never to return. Some just stop with 401k's all together. You've taken a very admirable step here at your age. Now have some 'fun' with your RETIREMENT money, but don't do as some have suggested here. You WANT to see your account MAKING MONEY. To do so, you cannot be in 100% aggressive. It will not happen and you will have so many ups/downs it won't even be funny. One very important component here that some of these amateurs do not understand Mor is that your fund choices are probably LONG ONLY funds as mutual funds are structured as such. I doubt you have any hedge funds or short bias funds there, so what that means to you is that when the market is going down, there is a VERY good chance your aggressive selection is going to be down and down hard. Again, it's a mental battle when you check your statements and see your account down... and down next month and down the following month. Very few can stick to the long-term plan when each month they just lose money, esp. at your age. Factor in that many aggressive funds never recoup substantial losses and you are stuck with a loser. As you put your feet into the water, do not dive head first into the deep end. And please rate and others spare me the 'screw you' or 'let it ride and buy beer' useless posts. Unless you can rebuttal with something of substance, take your wanna-be advice over to chit chat or yahoo.