Depends on if he is looking to buy that aggressive fund before or after the 90% drop, right? (Referring to your advice of buying after a 50%+ drop) Mor, Not a big fan of advisory services, etc....but maybe do some research and find something with a long term view based on something you're comfortable with and trade your 401K on a long term timeframe. Zweig's book comes to mind..... It depends on how much time you're wanting to put into it man. It's just a good start that you've already figured out the fact that having a financial plan is important. Learn everything you can about it and reap the rewards of using your brain while others are lazy.
I was actually planning to keep it pretty risky for the next 3 or 4 years until I graduate from college. Also I chose that the max I was willing to lose in an investment was 15% (they had a question for how much I was willing to lose). Of course I know I can still lose more than 15%, but wouldn't the fund put a stop loss or something so that I wouldn't lose 90%? Also the place I got the 401k from told me of the best 4 years and the worst 4 years it had since 1970 on a $1,000 investment. The best was a $3,900 return and the worst was a $850 return. Honestly, I know i'm being reckless in my strategy (or lack thereof). Though I feel that if I wipe out in the next 4 years, I have another 43 to go and if I don't wipe out, what a head start! Also these are not my only assets. I also invest in stocks with a portion of my paycheck. I am going to put a large percentage of my portfolio in the aggressive fund, but I understand that I will still need to protect a good percentage (20-25%) so that I won't just be throwing money away. Thanks for the advice.
I am going to catch shit I am sure for not touting the virtues of "safe" investing... but remember- who dares, wins. Definitely do your homework. You will probably feel better about managing your 401K if you can become more comfortable with the concepts. Knowledge mitigates fearfulness in trading/investing.
All knowledgeable brownsfan019 is getting little bit hasty. If you believe that a 401k account labelled aggressive is going to lose 50% at a time you are a fool. An "aggressive" 401K account, will look something similar. 60% stock, 30% bonds, and 10% treasuries. Yeah very aggressive. They are just labeling that, but they approach is nothing more than a decent portfolio. The only difference between more and less aggressive accounts is the percentage invested into the equity (stocks). I can assure you that this is not that aggressive, as they do not invest into any futures of any kind, no arbitrage, nothing but small amount of stocks, bonds, and treasuries. This is not a hedge fund!!!! So genius, next time you want to insult someone; you should really think if you are making sense.
HAVING ALL YOUR EGGS IN ONE BASKET IS FOOLISH, NO MATTER THE AGE ------------------------------------------- Most people's largest asset is their home. Ta da, all eggs in one basket. Start a business = all eggs in one basket, sometimes + house for collateral. Expand your business? Once again the risk may be as high as double or nothing = all eggs in once basket. Great wealth is achieved through calculated high risk. You diversify to maintain wealth. Conservative = plow horse. Aggressive = thoroughbred.
You are so wrong here it's not even funny. You think the aggressive funds have TREASURIES and bonds??? Wow. Enough said. Anyone that knows anything about how 401k funds are actually structured will know that you are completely clueless here. And if you find 'aggressive' funds in treasuries, then it's time to dump those 'aggressive' funds b/c they are not... This board never ceases to amaze with the amount of amateur advice floating around here. This is a trading board, and it's quite apparent that many posting in this thread have never INVESTED into a 401k before. But since you seem to know more about this topic, please show some empirical evidence that AGGRESSIVE 401k funds hold treasuries on average. I'm not talking about that one fund you might know about, I'm talking about research that shows an overwhelming majority of aggressive 401k funds hold treasuries. Perhaps I am wrong and the game has changed, so I'd love to see where aggressive funds are holding treasuries. If it's true what you say, I may need to adjust a few things for my retirement funds. Wow... treasuries... are you serious? Or was that a joke I just missed?
Exactly right - if the OP is willing to become an active manager of his funds and not a set it and forget it participant, then looking for those large drops are key to some quick success. Mor - if you can only stomach a 15% loss, then I hope you are ready to pull the trigger and get out QUICK on your aggressive fund(s). It will happen, it's just a matter of when. If your goal is to make money, 100% aggressive will not work with the majority of people. The human psyche is a wonderful and detrimental thing. I do have a question - in your snapshot, I did not see actual funds listed. When you put it into aggressive, do you pick the fund(s) or is it what's called a Fund of Funds where the 401k vendor gets to decide where your money goes? Perhaps we can nail down a few possible fund choices if you are allowed do that. The snapshot you provide looks like a fund of funds type deal however. Great advice IF the OP is willing to do the work in actively managing the funds. You are assuming a business owner does not own a home or a 401k... Most successful business owners are going to own at least one home, own their business, have a substantial 401k and have plenty of other liquid assets. And to assume that anyone with any wealth has their largest asset in their house is a BIG mistake. Yes, the average American only has a home and small 401k (if at all) but I think the goal of the OP at his age is to make money. He's one of the ones that later in life could like brilliant for starting so early. So, again, having all your eggs in one basket remains foolish. Conservative may equal plow horse, but Aggressive may also equal dead horse. And by no means is a few % in G/I and G considered conservative. I simply suggested the OP put SOMETHING into the G/I and G areas to spread his risk out somewhat. Just 5% into G/I and G can make a difference. That would then mean 80% of the funds are in the aggressive portion. ------------ mor - there's some good advice here and some real shitty advice as well. Anyone that suggests put 100% of your money into one fund or area has obviously never invested themselves and/or never seen a fund take a big hit. It happens all the time so you should prepare for it. If by chance your 401k vendor found the next great money manager, then you lucked out. Odds are however that you just have some average to below average funds available and they will lose money, esp in the Aggressive category. And to say you don't want to lose more than 15% says enough to me. You cannot go 100% Aggressive AND maintain a 15% loss strategy. Those two do not and cannot go hand-in-hand.
Oh yeah smarty - just b/c the funds are not leveraged like many traders here, does not mean they do not take some substantial risk in aggressive funds. To be labeled aggressive, the funds MUST take on quite a bit of risk. Many accomplish this by investing in foreign securities/debts. You don't believe aggressive funds can lose 50% + in one year? Again, you haven't been in the 401k game long (or ever) so you would make a statement like that. Just hop over to morningstar and do a search for funds with losses over 50%. Not hard to find unfortunately. rate, I suggest you actually do some homework before posting this nonsense or simply keep over in the chit chat area. To come on here and state that aggressive funds hold treasuries AND also cannot lose 50%+ in one year is showing some real ignorance here. It's obvious to those that have a 401k and/or actually know how these operate that your opinion here is totally off base and w/o any substance. All you have to do is a Morningstar Xray to see what's really tucked away in these aggressive funds and to see that while it may be a 100% stock portfolio, that does NOT equate to less risk. I realize this is a trading forum where pikers are trading e-mini's for $500 margins, but outside of this little trading world, aggressive is defined differently. Again, you would know this if you actually had any funds invested in a 401k or retirement program. Like I said, amateurs trying to provide investment advice...
1. Learn the most basic signals Technical Analysis... like 200 day moving average, and maybe 50 day moving average. 2. Make AGGRESSIVE investments... like technology, emerging markets, gold, oil, etc. 3. Once a week, check to make sure your plays are on the correct side of the big moving averages. The MAs won't help you much with conservative investments, but they can help you greatly with the big movers. Emerging markets can easily lose 50% and sometimes 90%. You don't want to be taking those kind of hits. However, these big movers can also gain 300% or more while the conservative stuff is moving 50%. It's CRUCIAL that somebody be watching your money over your lifetime. If you're not going to learn, pay someone else. (Actually, it's not crucial right now because of your age and it being a small amount... but you've got 50-60 years to go on this project, and it WILL become crucial later.)