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how'd u go about picking which funds your 401k invests into?
At my work, you have to choose how your money is divided. Of course there are like 1,000 funds to pick from and I would have no idea how to split it up!
Is there where a financial advisor generally comes in (and you pay them a fee to do it?)
I didn't know what to pick so 100% of my 401k is currently invested in the"default" fund called Fidelity Freedom K 2045.
Does anyone recommend I change this or just leave it as is?
Which says:
Performance
1Performance
Average Annual Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Life of fund figures are reported as of the commencement date to the period indicated. Total returns do not reflect the fund?s (%) sales charge. If sales charges were included, total returns would have been lower.
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| YTD (Daily)* | 1 Yr | 3 Yr | 5 Yr | Life of Fund |
|---|---|---|---|---|
| YTD (Daily)* +8.35% | 1 Yr +21.88% | 3 Yr +11.99% | 5 Yr -- | Life of Fund +14.71% |
Re: how'd u go about picking which funds your 401k invests into?
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
I have a target date and an emerging markets fund.
H has a target date and a science and tech fund.
We both wanted something safe, hence the TD funds, and something we were interested in. I also play with individual stocks for both of us.
You've been given great answers above.
The 2045 fund is set up for someone who will be retiring around then. It's a pre-mixed fund meant to provide the greatest growth over time based on the makeup of the mixture. Generally they invest in more aggressive/more risky items early on, then change over to less agressive/less risky later in your work life, when you want to "protect" your total amount.
Even though I have less than 10 years until full retirement age, I've been more of a risk taker because the rewards are sweet, LOL. I lost quite a bit in the downturn that started in 2008, but have made that up quickly.
Most 401K funds have websites that you can go into and view the returns for any given investment option over the past 3 months, year, 3 years and 5 years. This is generally something good to look at because you want to look for consistent performers that are in the "plus" percentage, not the "minus" percentage. It will be deceiving because 5 years ago pretty much everything tanked.
If you don't want to learn a lot and watch your money on a regular basis, the default fund is probably your best bet. Your earnings or losses could be higher early on, but over time they end up being winners. This is a fairly new option, only been around for about 10 years based on my experience, so how well it works for people may not be known. But it IS based on wise long term advice.
The best advice my dad ever gave me (and he reads the stock market pages 3-4 times a week), is "set it and forget it". Constantly monitoring your 401K returns can drive you to sell low when something isn't performing well, then you lose out on the gains it will get back. I only look at my account balance and returns a couple of times a year because I've chosen safe, middle of the road, and risky options. I listen to how the market is doing, but don't run to my 401K to check it out.
He also told me that if on an annual basis you are averaging above 6% growth, you are doing pretty well. I use that as my guideline.
In theory those target date funds have their assets distributed according to the conventional wisdom a financial adviser would share with you or anyone one else with your target retirement date. So I think it's a pretty solid choice.
That said, we wanted more risk and we want to be more invested in international funds. We've chosen a variety of funds that are mostly bench marked to one major index or another, and are therefore low fee. We have a lot more in small caps and emerging markets than most advisers recommend. This is also more in line with our values, since we would rather the capital we provide be invested in smaller businesses and businesses in the developing world, than in giant American firms. The reason we feel we can tolerate more risk is that we are young and while we are saving aggressively with the goal to retire early, we don't foresee any actual need to retire early. We're saving for a luxury, so we have the luxury of taking risks. That said, we aren't as young as we used to be; we're now 30 and hopefully only 20-odd years from retirement, and I'm starting to think about options for some less risky investments, maybe muni bonds, but I haven't made up my mind yet.