401k
401k Information

401k Investment Options

You have signed up for your employer’s 401K plan and are very proud of yourself because you are not only getting tax benefits, but your employer matches a portion of your investment (can you say free money?). Congratulations to you. You have taken the first step to becoming an investor and building your portfolio for a wealthier life.

But – if you are like the majority of Americans, you take a look at the selection of investme 00004000 nt choices and all of a sudden, you are lost! Here are a few tips on how to best diversify investments in your company-sponsored 401K plan, even if you are a complete newbie to the investment scene.

Check out employee stock.

Some companies match their employee’s contribution by giving out their own stock. Other companies may give stock options. If you are somebody who is already somehow investing in company stock, it may not be a good idea to purchase additional company stock through your 401K plan.

One of the main goals of a 401K plan is to provide financial stability for you in the future, which means having a well-proportioned investment strategy. Make sure your company stock does not overwhelm your portfolio.

Risk assessment

Many financial companies have risk tolerance quizzes and assessment tools and these may be extremely helpful to help you understand just how much risk you are willing to take on.

A good rule of thumb is that if you are younger, you can generally carry more risk because you have the time to wait out any market. If you are approaching retirement, you may wish for a more conservative blend of assets.

Check out the information related to how the investment is rated. Words like an aggressive growth mean a higher risk, but also a chance for higher returns; while words like stable or income usually indicate a more conservative investment.

Mix and Match

Do not be afraid to mix and match. Look at your investment choices and start to blend. Mix and match stock and bond investments. Blend large-cap and small-cap funds. Blend industries or foreign/domestic choices.

The goal of an investment portfolio is to become diversified, so review your choices and use the information given to you to create a great mix and match end result. Be proud of yourself for taking that first step. These tips should help you diversify investments in your 401k plan.

Frequently Asked Questions

  1. QUESTION:
    401a (gov’t 401k) Investment Options, ICMARC, what are my best options for my investment?
    I have a 401k from my employer. I am a government employee. I am 23 yoa. I make a 5% contribution pre-tax from my biweekly pay and my employer matches that 5%. I will increase the amount I contribute as I continue my career and can afford to do so. The plan holder is ICMARC. Here are the following options:

    1) These are all Vantage Trust Options:
    *Stable Value/Money Market Funds
    -Vantage Trust (VT) PLUS
    -VT Cash Management

    *Bond Funds
    -VT Vantagepoint Core Bond Index Class II
    -VT PIMCO Total Return, Class Administrative
    -VT Inflation Protected Securities
    -VT PIMCO High Yield, Class Administrative

    *Balanced/Asset Allocation Funds
    -VT Milestone Retirement Income
    -VT Milestone 2010-2045 (5 year increment options)
    -VT Model Portfolio Savings Oriented
    -VT Model Portfolio Conservative Growth
    -VT Model Portfolio Traditional Growth
    -VT Model Portfolio Long-term Growth
    -VT Model Portfolio All-Equity Growth
    -VT Fidelity Puritan

    *U.S. Stock Funds
    -VT Vantagepoint Equity Income Fund
    -VT Eaton Vance Large Cap Value, Class A
    -VT Allianz NFJ Dividend Value, Class Admin.
    -VT Vantagepoint 500 Stock Index, Class II
    -VT Vantagepoint Growth and Income
    -VT Vantagepoint Broad Market Index, Class II
    -VT BlackRock Large Cap Core Retirement, Class K
    -VT Legg Mason Value Trust, Class FI
    -VT Vntageoint Growth Fund
    -VT Fidelity Contrafund
    -VT Calvert Social Investment Fund Equity Portfolio, Class A
    -VT T.Rowe Price Growth Stock Fund, Class Advisor
    -VT Vantagepoint Select Value
    -VT Columbia Mid Cap Value, Class Z
    -VT Vantagepoint Mid/Small Company Index, Class II
    -VT Royce Premier Fund, Class Service
    -VT Vantagepoint Aggressive Opportunities Fund
    -VT Harbor Mid Cap Growth, Class Admin.
    -VT Rainier Small/Mid Cap Equity Fund
    -VT Vantagepoint Discovery Fund
    -VT T.Rowe Price Small Cap Value Fund, Class Advisor
    -VT Royce Value Plus, Class Service
    -VT Nuveen Real Estate Securities Fund, Class Y

    *International Stock Funds
    -VT Vantagepoint International Fund
    -VT Vantagepoint Overseas Equity Index Fund, Class II
    -VT Fidelity Diversified International Fund

    I know these are a lot of options, but I would like to know the best options to go with to start out. I have many of the same options with my 457 Deferred Compensation Plan from my employer also held thru ICMARC. Once again I am 23 yoa and would like to start off on the right foot.
    I can have my employers 5% contribution placed into 6 different options totaling 100% and I also have 6 options for my contribution totaling 100%.

    • ANSWER:
      You of course have to make your own decision based on your risk tolerance and ability to stick with a plan. If you’re prone to panic if your balance drops a lot during a stock market selloff, then you might want to avoid stock funds since one of the surest ways to do poorly is to panic and sell when the market is way down.

      If you can remember that you are investing for the long term and that stock market ups and downs are normal, then I personally at that age would put most of it into some type of stock fund since stocks historically have outperformed all other asset classes over long periods of time. If I were that young, what I would do is put something like 15-20% in one of the international funds and split the rest among two or three domestic stock funds. I’d probably put more in small cap funds than large cap funds since small cap stocks on average outperform large cap funds by a small amount.

      To pick which funds, I’d look at the information for each and choose one with low expense ratios and good historical results.

      But let me stress again that if you go with stocks, you do not want to sell when the value of your account has dropped by a lot. If you feel tempted to, go look at what happened between March 2009 (when the market was down big) and spring 2011 when the market had basically doubled from the lows and remind yourself that if you sell low and lock in your losses, you’ll likely miss that big recovery that’s almost sure to follow.

  2. QUESTION:
    Is it a good idea to enroll in your company’s 401k plan if the investment options are mediocre?
    In addition, there is no employer matching contributions.

    I understand you get a tax benefit for enrolling, but is it really worth it if the investment options aren’t that great? I’d rather contribute the money into my traditional IRA and get the tax benefit there (although it maxes out at k).

    • ANSWER:
      you should start by putting your shirt on, then talking business

  3. QUESTION:
    401k investment options?
    havent looked at my 401k in years and want it to perform better. 1/1/08 to date return was 16.5%. financially not able to up my contributions now, gas prices. want some suggestions on what types of investments to move my money into. 401k is with fidelity. looking at Sentinel Small Company CL A. 30 years til ret, would like early in 20. dont want an exceedingly high risk level but better returns on the non company match, which returned 31.25% last year. cannot put it all in the comp stock besides it is foolish to put all of my eggs in one basket. obvious concern is the potential for the market to go farther south.
    is it better to go with a lower potential ret by moving my money to an index fund that has a lower load? one option is the Vanguard Institutional Index Fund Institutional Shares
    thanks

    • ANSWER:
      Small caps are okay, but better yet…look to whatever ” international” fund is being offered and go for AT LEAST 20%… stay away from index funds..you are just asking to do ” as well” as the market…if you want to work at it and move some things around, then you are trying to ” outperform” the market. (… and it’s NOT as hard as it sounds .. depending on the funds offered )
      Most 401s offer mostly conservative funds… but international is one way of TRYING to get ahead… they may rise and fall and scare you, but overall in this market, for the next few years, it’s where to be.

  4. QUESTION:
    Need help choosing 401k investment options?
    These are my options at my new employer. They’ll match dollar for dollar the first 5% (not too shabby). I just turned 26.

    1. Fidelity Cash Management Prime Fund: Daily Money Class
    2. FA Stable Value Portfolio II
    3. FA Government Income Fund Class T
    4. FA Strategic Income Fund Class T
    5. Legg Mason Partners Global High Yield Bond Fund Class T
    6. FA Equity Income Fund Class T
    7. Evergreen Special Values Fund Class A
    8. Dreyfus S&P 500 Index Fund
    9. FA Leveraged Company Stock Fund Class T
    10. FA New Insights Fund Class T
    11. Van Kampen Capital Growth Fund Class A
    12. FA Mid Cap II Fund Class T
    13. FA Small Cap II Fund Class T
    14. FA Diversified International Fund Class T
    15. FA Energy Fund Class T
    16. FA Freedom Income Fund Class T
    17. FA Freedom 2050 Class T (my target year)

    • ANSWER:
      I disagree with Judy. Depending on your risk tolerance, with 40+ years of investing in front of you, you have plenty of time to recover if the markets “tank” “next year.” Since this not living money, you don’t need it “next year” (the time period Judy mentioned) it should be “in the market, especially if the market drops, as the best time to buy stocks is while they are “on sale.”
      As to the choices – you didn’t tell if you know anything about investing or not (I assume not since you are asking for help). If not, a Target retirement fund type (as the Freedom 2050 is) is usually a good choice because it covers the entire world of investing, both domestic and internationally. But this fund, does not have a good Morningstar rating although a 52% one year return (as reported on msn.com) is nothing to ignore. So I suggest you choose that one for 100% of your investment (I includes a stable value fund and a bond fund.) as a START. Once you learn about investing, and can tell when a good fund is about to go bad, you can adjust your investments to other (both within this 401K and in IRAs), individual funds to cover large cap US, small cap US, large cap foreign, small cap foreign, sectors, bonds, etc. in an allocation you can sleep soundly with.

  5. QUESTION:
    Question about Changing my 401K Investment Options?
    for the past 2.5 years I have invested in a plan that was based on my retirement date and lost a LOT of money. So I have recently switched my NEW allocations to a bond and here are the stats for it.

    Cur Nav 3 mos YTD 1 YR 5 YR 10YR Inception Retn As of
    .01 6.50% 0.59% 1.76% 4.82% 5.89% 6.18% 1/31/2009

    My “old” fund stats are here:
    .86 -11.92% -7.93% -41.66% NA NA -9.54% 1/31/2009

    I’m no financial expert but since I have upped my contributions to 10% seems like the “bond” is ganing VS losing.

    Was this a good move?

    • ANSWER:
      Stocks are at their lowest prices right now. I would have kept my allocation the same, especially if you have a while before retirement.

      Now if you’re closer to retirement, this was as good move.

  6. QUESTION:
    Investment Options other than 401K, Roth IRA and Traditional IRA?
    Here is my dilemna: I make the maximum legal contributions to my 401k, I earn too much to open a Roth IRA, and therefore would not be able to deduct contributions to a Traditional IRA either. What other retirement investments are a good option for me?

    • ANSWER:
      Log on to Fidelity and talk to a rep…get the info on a brokerage account….invest in mainly ” dividend paying” stocks, Reits, trusts…. and tax free municipal bonds….
      Your returns won’t be 13-15%, more in the neighborhood of 8-11%. ( Better than cd’s or the bank)
      You will still end up with some ” taxable” income, but paying taxes means you are making money….that’s a good thing, right?
      Fidelity usually doesn’t har-sell, so give it a shot …at least request pertinent info you can read any old time.

  7. QUESTION:
    What does the SA, R-6, letters and numbers mean at the end of a investment options on my 401K?

    • ANSWER:
      Without SEEING the statement, It could mean anything. It could be a FORM number your 401(k) trustee uses for statements. Ask the trustee what ANYTHING you don’t understand means.

  8. QUESTION:
    I need to choose investment options for my 401k?
    I am 23 years old and I just graduated college and got a job.

    I need to choose investment options for my 401K, which I know very little about. I plan on being with this company for at least a few years.

    There are 5 investment models and 10 individual funds to choose from… I need to put a percentage for each

    1. Short-Horizon Investor
    2. Short-to-Mid Horizon Investor
    3. Mid Horizon Investor
    4. Long Horizon Investor
    5. Extended Horizon Investor

    10 individual funds
    1. Gov’t Money Market
    2. Stable Asset Fund
    3. Fixed Income II
    4. High Yield Bonds
    5. S&P 500 Index Fund
    6. Large Capitalization Value Equity
    7. Large Capitalization Growth Equity
    8. Small Capitalization Equity
    9. International Developed Markets Equity
    10. Emerging Markets Equity

    • ANSWER:
      First, understand the length of time you plan to spend with this company is not particularly relevant to your 401(k) investment decisions.

      Also, any money you put into the plan will be subject to taxes plus penalties if you take it out before age 59.5. This occurs even when if your employment ends and you choose to take the disbursement early (as opposed to rolling it over to a qualified plan).

      Also, you should ensure that any contribution amount is feasible within your budget, goals and financial plan. (Meaning don’t contribute so much that you can’t cover bills and rack up debt).

      You should also try to contribute an amount that maximizes any employer contribution, as this is like free money.

      Given the listed horizon options, you are most likely an Extended Horizon Investor. This means your retirement is at some point in the very far future: ~40 years. Such a profile will put more of your money in stocks in general (as opposed to bonds). Additionally, the types of stock will include a higher allocation of more aggressive types (emerging markets, international etc).

      Because of the long time period until retirement your portfolio will be able to better adjust to the volatility of this type of mix. However, it is not appropriate to a person retiring in a year. Their portfolio couldn’t handle a 30% drop that recovers in two years, for example.

      You need to develop an understanding of what your risk tolerance is, because even if you are an “extended horizon” investor, you may not be comfortable with large swings in your portfolio.

      Having said that, if it were me (and I am moderately aggressive) I would do this, based on my own risk tolerances…remember…you need to get a feel for what your tolerance is:

      1. 5%
      2. 0
      3. 0
      4. 15%
      5. 40%
      6. 0%
      7. 0%
      8. 10%
      9. 15%
      10. 15%

  9. QUESTION:
    What are other options of investment if I close my 401K?
    I have been in it for eight years and would have more if it was in a savings account. It may be better to close while there is still something there. I have now put in more than whats left.

    • ANSWER:
      If you close it out, a 10% penalty plus federal and state income tax will be due. I’d leave it there.

  10. QUESTION:
    are these good investment options for a 401k?
    - Mid and Small Cap Stock Fund
    - Large Cap Stock Fund
    - Global Equity Fund
    - International Stock Fund
    - Bond Fund

    there is also a interest income fund which i don’t use..

    • ANSWER:
      Yes, that’s pretty good. Fees however should also be factored in. Anything over a 1% operating fee for each fund is too much in my opinion.

  11. QUESTION:
    I justed signed up for 401K. Are these good investment options?
    Capital World Gr & Inc R2 30%
    Fundamental Investors R2 25%
    Growth Fund of America R2 25%
    Invest Co of America R2 20%

    should I change something?
    I am 26 and wife is 30…

    • ANSWER:
      if that capital world growth is from American funds YOU GOT A TOTAL WINNER!!!!!!!!! I own the CWGFX version of it.

      Now then I typed in the ticker symbols, put it on http://www.morningstar.com tools then x-ray and this is what i got

      56% US Stock 35% Foreign. .44 bonds (from your capital world growth) and 8% cash eh…

      You are large cap heavy with 28% value, 31% core and 32% growth. Not bad but You should consider some mid to small caps.

      Stock sector 21.23 to and S&P rating of 20 not bad at all tech is good. 37.67 to 45.66 service you are weak in financials with your growth funds and you may miss out when the financials rally. Manfacturing 41.10 to 34.42 Overweight in Energy and Industrial materials. Careful.

      You got a 38% classic growth not bad its safe.

      Expense ratio 1.45% this is too high (and in all actuality my only beef) My CWGFX is .75%

      Country Region 65.23% North america, 22.69 UK/western Europe, 3.28 japan 1.15 latin america, 6.62 asix-ex japan. and 1.04 listed as other. Nice balance I like it.

      With the exception of the expense ratio you got some winners on here. American Funds is one of the better fund families to own and they didn’t have any spitzer issues. I’ll bless it not bad at all keep the money going into it and let it ride. But do consider a mid or small cap.

  12. QUESTION:
    Investment options for my 401k. Should I change my where my future contributions are invested?
    I am 24 years old and have about ,000.00 in my 401k. It is currently set-up as follows:
    33% Washington Mutual Investors Fund R3
    32% New Perspective Fund R3
    35% American Balanced Fund R3

    I have options to also invest money in the following:
    The Growth Fund of America R3
    Europacific Grown Fund R3
    U.S. Government Securities Fund R3
    Capital World Bond Fund R3
    Capital Worth Grown and Income R3
    Smallcap World Fund R3
    U.S. Treasury Money Fund of America R3

    I had lost about 20% this year but in the last quarter have earned all of my money back so as of right now things seem to be okay but I want to invest my money wisely. I understand I’m young and can afford more “risk” but still want to be educated and make a smart decision. Since I first set-up this account about 4 years ago I haven’t changed where my money is invested and just want opinions if I should. Thank you in advance.

    • ANSWER:
      Washington Mutual R3 has a Morningstar rating of 3 out of 5.
      New Perspective a 4.
      American Balance a 3.

      All three are large cap stocks. Meaning a 24 year old will not see much gain. The diversity between growth and value is good.

      Growth Fund is 4 star but a large growth
      Europacific is a 5 star the best performing, a large blend
      US Govt. 3 stars and at an all time high(not always a good thing)
      Capital World Bond 4 stars, great diversity from stocks
      Capital G/I is 5 stars with Large cap value
      Smallcap 3 stars, would prefer mid cap myself
      Last one RUCXX showed no data so be careful

      Out of your choices Europacific, Capital World Bond and Capital G/I are the best performing and would provide some diversity to your portfolio.

      http://www.google.com/finance?q=NASDAQ:RWICX

      Look at the chart to see Morningstar rating, study the chart and you might want to get a mid/small cap fund. They perform much better than large cap because those are the companies yet to take over.

      Stay curious about your portfolio and stick with it.

  13. QUESTION:
    Which would best investment options for my 401k?
    I have the following options and they have to equal to 100%…

    Maxim Aggressive Profile II
    Maxim Moderate Profile II
    Maxim Conservative Profile II
    Oakmark International II
    American Funds EuroPacific R3
    Oppenheimer Global A
    Maxim Ariel Small-Cap Value
    Maxim Index 600
    STI Classic Small Cap Growth Fund I
    MainStay Small Cap Opportunity A
    Lord Abbett Mid-Cap Value A
    Ariel Appreciation
    Fidelity Advisor Mid Cap T
    Maxim T. Rowe Price Equity Income
    American Funds Wash Mutual R3
    Maxim S & P 500 Index
    STI Classic Capital Appreciation I
    Marsico Focus
    Oppenheimer Capital Appreciation A
    American Funds Growth Fund R3
    Maxim Bond Index
    Maxim US Government Securities Fund
    PIMCO Total Return Admin
    Maxim Loomis Sayles Bond Portfolio
    Guaranteed Portfolio Fund
    Davis NY Venture R
    Van Kampen Comstock – R

    • ANSWER:
      go to your 401k website and research your options yourself. take 100 and subtract out your age, this will give you the % of your investment to put into stocks.the rest put into bonds and stable funds.

  14. QUESTION:
    Which is the best investment option my 401K offers?
    I can distribute my contributions between:
    -Met Life Stable Value
    -Vanguard LifeStrategy Conservative Growth Fund
    -Vanguard LifeStrategy Moderate Growth Fund
    -Vanguard LifeStrategy Growth Fund
    -Fidelity Equity-Income Fund
    -Vanguard Institutional Index Fund -Institutional shares
    -American Century Ultra Fund – Institutional class
    -American Century Value Fund – Institutional class
    -T. Rowe Price Mid – cap growth fund
    -Franklin Balance Sheet Investment Fund – class A
    -Pioneer Growth Opportunities Fund – class A
    -American FundsSM EuroPacific Growth Fund – class R5
    -Lowe’s Stock
    Or i can put 100% in any of listed above. I’m new to stocks, investments so I would appreciate your advice. Bottom line in what should i invest?

    • ANSWER:
      I bet you must work for Lowes. Put a portion into Lowes for sure. Maybe 15-25%. There are two reasons to do so. 1. Shows management you are an investor in Lowes. 2. It is a good investment.

      The Vanguard Life Strategy Growth Fund is not a bad choice. It would not however be my 1st choice but not my last either. Maybe 25%.

      Fidelity Equity-Income is a somewhat mediocre fund (not too bad and not too good) but reasonably sound with large cap holdings that pay dividends. You could do worse. Maybe 25%.

      The T. Rowe Price Mid-Cap Growth fund is the best of the lot in my opinion. It is also closed to new investors. You are fortunate that you are able to invest in it as an option. 25%. It however will also be the most likely among the options to possibly suffer a significant loss in a bear market. If that prospect does not appeal to you, perhaps you should avoid it.

      American Funds is a premier mutual fund company but does charge a significant sales charge on their class A shares. I do not know about the class R5. This fund is your only option for non-US investments. So despite the sales charge, it should be included in your portfolio to provide you with appropriate geographic diversity. Its holdings are solid large cap companies that are world class. 25%.

      One of your responders suggested not putting more than 10% in any one investment. Generally, that is good advice for individual stocks, especially when considering an investment in Lowes stock. It does not apply to mutual funds to such an extent because by their nature of diverse investments. In your particular case a 25% contritubion to Lowes although it does not follow this guideline, would be appropriate because of the possible contribution to your career.

      I am not particularly please with the selections you are being provided. Each of the companies that I mentioned above have significantly better offerings for 401k accounts. In particular for example the Vanguard Global Equity Fund would be a fine choice for any 401k account. I do not know how a company selects the funds to offer their employees. I sometimes believe that they are perhaps offered kickbacks to offer certain funds.

      Maybe you should suggest to your management that the Vanguard Global Equity Fund would be a much better offering than most of the funds they are currently offering. If they should decide to do so in the future consider swithch the Euro-Pacific portion to that fund.

  15. QUESTION:
    These are the investment options for my 401k. Any recommendations?
    I’m 44 years old and conservative with money. The options are:
    Hartford Global Health HLS
    Ivy Global Natural Resources
    MFS Utilities
    AllianceBernstein International Growth
    American Funds EuroPacific Growth
    Templeton Developing Markets Trust
    Lord Abbett Small Cap Blend
    Goldman Sachs Mid Cap Value
    Thornburg Core Growth
    Victory Special Value
    American Funds AMCAP
    Davis New York Venture
    Eaton Vance Large-Cap Value
    Janus Adviser Forty
    LifePath2030
    Van Kampen Equity and Income
    Hartford Total Return Bond HLS
    Pioneer Strategic Income
    SEI Stable Asset
    AIM Real Estate

    • ANSWER:
      If you want a “set it and forget it” option, choose the target retirement date fund. Otherwise, you’ll have to decide just how conservative you want to be. Decide on your asset allocation before your zero in on the particular funds. You’ll want large-cap domestic stocks, international stocks, perhaps some mid-cap exposure and investment-grade bonds. The trick is figuring out the allocation that you’re comfortable with – but don’t be too conservative as you still have a long way to go before retirement.

  16. QUESTION:
    What are our options if my wife cannot max out on her 401k?
    If my wife stays home for most of the year and does not work very much, she will probably not max out on her 401k. Does that give us any more investment options such as putting money in a traditional or Roth IRA, etc.? Thanks.

    • ANSWER:
      1) Put some money in her IRA. Either a traditional or Roth IRA if you are qualified. Even if you are not, you can still put money in a nondeductable IRA and convert to a Roth IRA in a few years when the tax laws change.

      2) Put money in a college 529 plan. (Assuming you plan on kids going to college and haven’t maxed out on tuition savings.)

      3) Consider hiring a babysitter if your wife is interested in working a few more hours. Just think about it. The first k that she earns will be nearly tax free. How cool is that? If she makes an hour, that means she can work almost 40 days without paying federal or state income taxes. You could even consider taking a day off to watch the kids so she can work, and you might still break even if you make or less an hour. (There are still social security and medicare taxes, but you get the point.)

  17. QUESTION:
    I was just laid off from work so where can I transfer my 401K toward investment in GOLD?
    What are my gold investment options?

    • ANSWER:
      First of all you’ll need to open a discount brokerage account.
      Schwab, td ameritrade, scott trade, etrade

      Second there are gold ETF’s and gold stocks
      It’s easy to reserach and find these in schwab (ive never looked).
      good luck – but open a discount brokerage account this weekend!!!!!
      Ask for a rollover IRA
      Schwab will do all the paperwork for you.
      They will even call your old company if there are any problems.
      You get a free consultation – you can ask how to buy gold.
      They never charge a fee for anything – only / trade.

      Be careful with gold.
      If the market turns around gold buyers I believe live on computer with a finger on the sell button.
      You could lose your shirt if the markets turn around.
      /

  18. QUESTION:
    Any more great investment options for cash?
    Hello, I am 29, and I have a question. I max out my 401k at work, I do not qualify for IRA’s. I have a brokerage account and invest a large amount of money automatically a month to a portfolio of mutual funds. My “emergency” money sits in a money market account drawing around 3.4 percent (average) interest.

    So my question is, is there any other really good idea investment options for loose cash? For retirement planning.

    Thanks alot!

    • ANSWER:
      It sounds like you are in great financial shape. I have one suggestion before I get to the main one.

      Look at the mutual funds you are investing in closely.

      Do they have a high management fee?

      Do they have a sales load?

      About 75% of all mutual funds under perform the market. If yours are not outperforming the market, then why keep them?

      ETF’s are a good alternative. They have an overall lower fee rate on average than mutual funds.

      My main suggestion is a DRIP Plan. I have had mine in effect for over 14 years, and have achieved about 10% annual returns.

      They are seldom talked about because brokers make very little money when they suggest them. Yet, they have proven to be one of the best, if not the best, long-term strategy on Wall Street.

      The best part is you get solid annual returns from well-known, safe Blue Chip companies like: McDonalds, General Electric, Pfizer, Walmart, US Bancorp…….etc……..

      They are inexpensive to start and maintain, and your dividends are reinvested for free.

      They are perfect for small investors, as well as big investors. They are safe and allow you to not care about whether the market is going up or down.

      It appears as if you know what you are doing. Look at all the suggestions closely. My DRIP Plan has been great.

      Good Luck

  19. QUESTION:
    Help me out…what investment options should choose for my 401k?
    I’m very ignorant when it comes to 401k and stocks. I just got a new job and need to enroll in their 401k program. Do you know anything about the following stocks, and which ones should I choose (see below)?

    Stocks:

    Julius Baer International Eq II CL A
    American Funds® AMCAP Fund® Class R5
    Fidelity Equity-Income Fund
    Mairs and Power Growth Fund, Inc.
    Spartan U.S. Equity Index Fund – Investor Class
    Fidelity Mid-Cap Stock Fund

    Bond Funds:

    Standish Income Fund
    PIMCO Total Return Inst CL

    Blended Fund:

    Fidelity Freedom 2040 Fund

    • ANSWER:
      baer

      http://quicktake.morningstar.com/FundNet/snapshot.aspx?Country=USA&Symbol=FOUSA05ZWX

      amcap r5

      http://quicktake.morningstar.com/FundNet/snapshot.aspx?Country=USA&Symbol=RAFFX

      http://finance.google.com/finance?q=raffx

      fidelity

      http://quicktake.morningstar.com/FundNet/snapshot.aspx?Country=USA&Symbol=FEQIX

      mairs
      ????

      spartan us equity

      http://quicktake.morningstar.com/FundNet/Snapshot.aspx?Country=USA&pgid=hetopquote&Symbol=FSIIX

      Ahhh! found it!
      They hid it real well but i found it.

      http://finance.google.com/finance?q=NASDAQ%3AFUSEX

      Anybody who wants exposure to the stock market but doesnt know what to get, you’ll never sound stupid if you say you’re in the s&p 500.

      The s&p 500 is not a fund, but a list of 500 companies, and funds mirror that list. Your spartan fund is one such type. What’s so hot about this? Expense ratio. Look at how much higher it is for the other funds, it’s only .1% for spartan. That’s the % they’re taking off your gains, it’ll compound year over year, you want that damn low! Historically, S&P averages 9% gain a year, and its at a 23 year low discount.

      This leads to the difference between index funds and managed funds. An index fund is just stocks on a list that doesnt change. A managed fund, we have some genius who picks and chooses what stocks to buy. If he’s real smart and gives awesome performance 1 year, his fund will suddenly be flooded with money and he’ll have a hell of a time wisely investing it all. Plus, that genius needs a fat salary, and all those trades he makes cost money, hence the larger expense ratio.

      So if you’re not real close to retirement and want a good return, go for an S&P index.

      Those bond funds are for retirees who want a fixed income.

      The 2040 fund automatically adjusts your risk depending on your age. I get the sneaking suspicion they’ll take the opportunity to sell the brand and get you paying for some high-maintenance funds.

      If you’re feeling dangerous, go ahead and toss up to a third in the international fund. The worse might be ahead for the developing markets, they may repeat our 2008 in their 2009, but all and all they’ll outgrow the us in the long term. Lot of volatility with this choice and a fat expense ratio.

      One last thing. Don’t put money in the market that you might need in the next couple years. Don’t try to time the market. Do not pull out of your 401k under any circumstances!

  20. QUESTION:
    I need to find a 401K plan provider with better options than I currently have. Know any?
    My boss is not happy with the range of investments our current provider offers or their service (or lack thereof ) and the investment person they’ve assigned us is a joke. He’d like as broad a range of investment options as possible. Traditional, gold, private business etc.

    • ANSWER:

  21. QUESTION:
    If employer’s 401K fund choices are bad, what other retirement investment options (IRA?) should I consider?

    • ANSWER:
      Most 401K’s are handled by a third party. If the initial choices are bad contact who is in charge of your 401K and tell them where you want that money at. an employer does NOT control your 401K the money in your 401K is YOU’RE money you get to say what it does and what it doesn’t get invested into. Most are handled by Fidelity and can be played around with at http://www.401k.com

  22. QUESTION:
    401k investment question ?
    I was wondering if my 401k provider (Wells Fargo) can change my investments? In other words, I never really played around with my investment options, I just left all my money in the Wells Fargo Stable Return. I thought that was a save option. Last Year around this time, Wells Fargo notified everybody at the company that I work for, that they are going to be taking 3% from every employee to put in their 401k account. That was meant for the people that didn’t have a 401k set up. Not a big deal since I already had my account I never payed close attention to what was going on. Now back in October I received my first quarterly statement after the Financial Institute crisis. And what a surprise, I lost. Never thought a lot of it. Last week I received another statement, saying I lost again (more than the first time), and I was like what the h*** is going on. I have my money in a stable fund how can I be losing all that money. So I looked my statement over, and sure enough Wells Fargo changed switched 100% of my money over to the Wf Advtg Dow Jones Trgt 2040. I did find a letter saying that they were going to do that, but can they just go ahead and do it without me agreeing to it?

    • ANSWER:
      Yes, they can do that since you didn’t notify otherwise when you received their letter.
      Every 401(k) plan has different features and investment options, many of which are negotiated with your employer. The Stable Return (?) fund may no longer be available.
      Have you checked the investment results for the fund you originally signed up for? Most stock market investments have had losses for the past year or so.

  23. QUESTION:
    How much are the investment fees for a 401k??
    I just got the paperwork to enroll in the company’s 401k plan. They provide two options: self-investing or via their investment firm in Philadelphia (for a fee). This is all new to me, so which way should I go, and how much should I expect to pay in fees???

    • ANSWER:
      I am certain that at your company there will be some persons who can better advice you than we can. People enrolled in the 401k. Ask them for what they are invested in and the fees they have paid. Most people if their 401k has done well will talk your ear off. If they turn their head and look the other way, that is an indication that their investments in the 401k have not done too well.

      Actually, the only 401k I have experience with is the one that my company provides. They provide a selection of mutual funds run by Vanguard. There are no fees at all other than the expenses of the mutual funds which run about 1.2% annually. Typical of mutual funds. For a beginning investor mutual funds are an excellent option, better than self-investing if you do not have any experience.

      Without knowing the precise options, I can not offer any further suggestions.

  24. QUESTION:
    What are my investment options? How should I save money?
    My husband and I are 28, 27 years old, and we have a 3 month old baby. We bought our first house this year, but have no equity yet. We have about K in debt (cars, credit cards, and school loans) that we are hoping to pay off in just a few years. We have NO MONEY SAVED right now. Our gross income last year was about K and we were barely getting by, but is jumping to over 5K in 2008 because of job changes. We have thought about starting investing for retirement, but are afraid to go with 401k’s or the like because we don’t anticipate staying with the same employers for more than 2-4 years at a time. My hubby wants to pay off all debt, then save; but I think it is important to do both.

    What are our options for saving for retirement besides an employer’s 401k. Will changing jobs “too soon” affect 401k investments? What would you do in our shoes, and how much would you save? How much income do you think we should save in liquid funds as opposed to “for retirement”?

    • ANSWER:
      It’s good to see that you’re thinking ahead. Many people don’t. They’re called “too broke to retire.”

      If you have no savings, then the first thing that I would do is to save for an emergency fund. Professional financial advisors usually recommend 6-12 months worth of normal expenses in an interest-bearing savings account or mutual fund money market account. This will help carry you through if one of you becomes ill and can’t work or if one of you loses your job. I had this and it was invaluable when I got laid off.

      I agree with you. I would pay debt and invest to the degree possible. The key to building wealth is time and compounding of returns. Getting out of debt is a wonderful goal. However, it is much more difficult to accumulate a large retirement fund if you start late. I started my retirement investing when I was 27. I’m now 50 and I am well on the way to a comfortable and secure retirement.

      Don’t be afraid to invest in a 401k even if you plan to change jobs. The money that you invest is portable. You can roll it over into an IRA and keep it regardless of when you change jobs or how many times. You will lose your employer’s contribution if you leave before you are vested in the plan. Of course, you’ll never get the employer match if you don’t invest in the plan so don’t worry too much about that.

      You might also want to think about a 529 plan to save for college for your baby. At 3 months old, you have lots of time to build a nice fund to pay the tuition.

      If you need more help, you might want to consider seeing a professional financial advisor. Get one who charges an hourly fee, not one who works on commission. An unscrupulous commissioned advisor may steer you into investments that are profitable for him instead of those that are profitable for you. A fee-based advisor does not have that conflict of interest. The cost will be much less than the cost of making a bad decision.

      Good luck!

  25. QUESTION:
    Traditional and Non-traditional investment options?
    I am a recent college graduate and have started a career. I want to learn more about my investment options. Everyone lists: 401K, Roth IRA and regular IRA and life insurance. But those are a given, what are my other options?

    My main interest would be in investments requiring low or no taxes. If taxes will be deducted I would prefer the option of being taxed prior to any gains.
    ***I will do all of the above listed, currently I have only my student loan as debt which I should be paid off in 3-4 years.

    • ANSWER:
      Well no tax option is municipal bonds. The best way to buy them is through a mutual fund. But I would not advise that approah for someone just starting their journey through life.

      Purchasing collectables is a way to increase your wealth without having to pay taxes until you sell. I do not recommend that either unless you are willing to do a whole lot of homework. But it can be fun. It can also be expensive.

      Rental properties are very popular and can be very lucrative also. I know friends who have done very well with rental properties. But you have to be a little careful of your leverage. The tax advantages are a great advantage with these. You can actually shelter all of your income with rental properties.

      Your IRA accounts are for retirement. The tax advantages should be taken advantage of, especially those of the Roth IRA.

      Many times people who try to get fancy with their investments wind up holding an empty bag, so be careful. Frankly, sticking with decent mutal funds is a very good way to build ones assets and the advent of index funds reduces the tax bite significantly since they are unmanaged and thus have very little realized capital gains.

  26. QUESTION:
    Why don’t we have more investment options with our 401Ks?
    Why can’t we, for instance, put matching 401K money into our houses? Why do we have to invest in some fund?

    These Funds do not disclose their fees, which are often substantial. When saving for retirement, why are we so limited in our freedom to choose?

    • ANSWER:
      I’ve had 401K’s with several different employers over the years.

      They all disclose their fees, and they all have MANY options for the different types funds (stock, bond, cash, etc)

      If you want to invest money in your house, you can, but it won’t be the pre-tax money from the 401K. That’s the difference between the 401K money and regular cash…. Pre-tax Vs. after-tax makes a big difference.

  27. QUESTION:
    Should I split my retirement investment options?
    I am in my mid 20s and have both a 401K as well as a Roth IRA and small amounts of stock. Am I spreading myself too thin? Should I focus all my efforts on one or the other in order to maximize my earning power for retirement? I am aware that I have time to be aggressive, but I lost quite a bit in the market after the tech crash and have yet to realiz my original investment from the stocks. Thanks.

    • ANSWER:
      Good for you! You do not need to be worrying about being stretched too thin–your return and the effects of compounding are the same, whether your assets are spread between 2 accounts or 100 (though consolidation is good for other reasons; it’s much easier to track your performance and asset allocation with fewer accounts).

      You are doing the right thing as far as retirement goes. Contribute to a 401k enough to get the match–then max out your Roth IRA. If you can still afford to save more for retirement, go back and start upping your contribution level to your 401k. It’s good to have both of these accounts to hedge your bets tax-wise. Your tax rate may be lower when you retire–or it may actually be higher if the government raises tax rates accross the board (which I think they will). So you want to have both types of accounts (taxable and nontaxable at retirement) since you can’t be sure which will be most advantageous in the future.

      At the same time, I’d be saving at least 5% of my gross income each month in a high yield savings/money market account. This money can be a cushion if an emergency strikes, but it can also be used for irregular expenes (vacations, insurance premiums, car maintenance) and savings for short term goals (new car, downpayment on a home).

      As for your small amounts of stock which are presumably held outside of your retirement funds, I’d leave them alone if they’re still showing a loss–but I wouldn’t be adding to them. You would have to have ,000 or more in that cash savings account in my opinion–above and beyond what you think you’ll need over the next 2 years–before you should start investing in stock in taxable accounts. If you are showing gains (or if you want to take the losses for tax purposes), then you can sell them and just wipe that slate clean and get a head start on your cash account.

  28. QUESTION:
    I am 27 yrs old and am self-employed (no steady/consistent income. What are my best svgs/investment options?
    Roth IRA? Traditional IRA? Mutual Funds? 401k?

    • ANSWER:
      Hi
      People not having regular income may plan their investment as per their risk aptitude.
      After getting any income put it in a saving bank a/c and up to a minimum liquidity for day to day expenses any surplus may be invested in small amounts in mutual funds of the duration of 1-3 years maturity . In such a period if the growth rate is satisfactory keep them there other wise change the strategy and invest in other options .
      Hope this idea would give you a new thought.

  29. QUESTION:
    Is this a bad time to roll over a 401k? ?
    I have read some posts on this and have a couple thoughts/questions. I am in my mid-30s. I have a 401k with a previous employer that I have not rolled over. Fees are basically comparable b/t former and current 401k options. Investment options in both are adequate (ie., I am not in love with one plan over the other). In today’s depressed market, it would see wisest course is to leave my old 401k as is and not roll it over. Here is why: Let’s say I have 100 shares of X stock that I purchased at .00. The value should be 0. However, b/c of the drop in the market, the stock is now worth $.50 per share, leaving me a value of . If I rolled over now, I would only get rolled into my new 401k plan, to be allocated to new funds. In other words, I have lost 1/2 of my savings. So, it would seem the smartest course is to sit and wait for my 100 shares to get back to value (or more) before rolling into a new 401k. Am I missing something, or is that correct?

    • ANSWER:
      That’s a tough pickle that you are in. I can understand why you do not want to roll over your 401(k).

      You could leave the money at the old place, but don’t mention if you can contribute to the old plan to cost average the price. If that’s an option, then I would put some money in that.

      I personally would roll over the 401(k) to a Traditional IRA account. You will a much wider selection of mutual funds, stocks and bonds. With a 401(k) you are restricted to only a handful of funds.

      A lot of people have lost a lot of money the past several months, but you are only in your mid 30′s, you still have a long ways to go before you retire. Stay focus on the long term perspective and everything will be fine.

  30. QUESTION:
    People who are investment savvy PLEASE answer, just quick advice to a novice please?
    These are my employers 401K investment options, I currently am contributing 100% to the Vanguard Total Stock Market Index.
    With the market on the fritz, should I distribute it better and what do you recommend based on the options below.
    THANK YOU IMMENSELY FOR YOUR GUIDANCE!!!!!

    Vanguard PRIME Money Market
    Vanguard Short-Term Invest Grade Bond
    Fidelity US Bond Index
    PIMCO Total Return
    American High Income Trust #
    Vanguard Value Index #
    Vanguard Institutional Index #
    Vanguard Total Stock Market Index #
    Allianz CCM Capital Appreciation +
    Fidelity Contrafund
    Vanguard Growth Index #
    CRM Mid Cap Value
    Dreyfus International Stock Index +
    Nuveen NWQ Small Cap Value
    Roxbury Small Cap Growth
    Vanguard Small Cap Growth Index #
    Company Stock Fund
    Dreyfus Large Cap Equity I
    Dreyfus Limited-Term High Yld I
    BNY Mellon International Appreciation M
    Dreyfus Large Cap Value I
    Dreyfus Bond Market Index Basic
    BNY Mellon Bond Fund M
    Dreyfus Enhanced Income Institutional
    BNY Mellon Intermediate U.S. Govt M
    Dreyfus Instl Reserves Money Hamilton
    Dreyfus BASIC S&P 500 Index Fund
    Dreyfus Instl Reserves Treasury Fund
    GW&K Multi-Cap Equity Fund(A)

    • ANSWER:
      Vanguard is the low cost leader for mutual funds because of their strategy of indexing has very low trading costs. A good choice for most investors.

      Fidelity Contrafund has been a great fund but like every other mutual fund has taken a beating this year.

  31. QUESTION:
    How do I move some money out of my 401K and into my IRA without quiting my job ?
    I would like different investment options than are in my 401K.

    • ANSWER:
      As already mentioned, you cannot do this without a “separation of service” from your employer, which translates to your employment ending.

      If you are unhappy with the options, I would definitely bring it up to your plan sponsor (try your HR department), as well as request the ability to open a “self-directed” 401k account. If a bunch of people are unhappy, it definitely carries some weight as far as getting a better plan or self-directed accounts.

      Persistence pays off…

      More employers are allowing employees with a certain minimum balance to choose other investments outside the standard, as long as you sign a mountain of paperwork.

      Further, if you are contributing money above what is getting matched by the employer, I would contribute that excess to an IRA (probably a Roth) instead.

      Then you could balance out your portfolio by using the best options available for one or two asset classes in the 401k, and buying the best options for the others in your IRA.

      Hope that helps! Good luck!

      Ken Clark, CFP
      Certified Financial Planner

      Disclaimer:
      Answers provided are for general educational purposes only, and may exclude other important factors relevant to your unique situation. No reader should act on the information contained in this article without consulting a financial professional directly.

  32. QUESTION:
    Can I use my 401k to buy a investment home.?
    I want to buy an investment home to use as a rental or to resale when the market gets better. Can i use my 401k to buy an investment home? In effect, using a second home as a retirement option?

    • ANSWER:
      Maybe but you would have to leave the job and roll the money into a IRA. A IRA can own real estate but the rules are very strict like you can’t do any management yourself. Your IRA can’t get into debt so you would have to have enough to pay cash and the management company.

  33. QUESTION:
    What is the best way to rollover my 401K?
    I left my old job, and want to rollover my 401K to another institute so that I can have more investment options, such as trading stocks, or ETFs, instead of mutual funds only in my 401K. and, exchanging in and out any time I want, instead of order being excuted after market closed. What is the best way to this and what financial institute would be the best place (etrade, DT Ameritrade, T.R.Price, etc., etc) to rollover to?

    • ANSWER:
      Do a web search for discount broker and look for comparisons. While stocks and ETF’s can be traded instantly any time the markets are open (or when limit or stop orders are reached), any trades for any mutual funds have to be arranged before the broker’s deadline and you end up with whatever it is at market close. Mutual funds may have minimum holding periods from 30 days to 6 months to avoid penalty.

      Whatever you decide, do a direct trustee to trustee transfer to an IRA to avoid withholding. If it is paid out to you (check in your name or cash) there is mandatory 20% withholding that you have to add back in within 60 days with the rollover, or the withholding would be taxed plus 10% penalty if under age 59.5.

  34. QUESTION:
    Can I roll my 401k over to an IRA while still employed at said company?
    I would like to move my money to take advantage of other investment options, but I don’t want to get out of the 401k or close my account. What are the legalities behind this?

    If I am 100% vested can my employer dictate whether I can do this or not? Is it even possible? Say I wanted to do this yearly, is that possible?

    • ANSWER:

  35. QUESTION:
    Can you rollover a 401k to an IRA without leaving your job?
    Just wondering if it was possible to do this. It would definitely be great to sock away the money in the 401k, get the match, and then roll it to an IRA where I could actually get some decent investment options.

    So, does the IRS promote sound investing (let you roll over and make your own choices) or job instability (quit jobs as frequently as possible to be able to put your money where you want it)?

    Thanks.

    • ANSWER:
      I always wondered about that, because when I got laid off a few years ago, I rolled my 401K into an IRA where I have very flexible choices. My new 401K has fairly limited choices (most of them are bad) but I cannot withdraw funds, unless it is a “loan” (which has to be paid back). I suspect that is typical. But if I get laid off again, I can roll the new one over, too. 8-)
      Government regulations often have unintended consequences. When you reward certain behavior, you get more of it.

  36. QUESTION:
    My 401K is deteriorating along with the economy. I do not trust stocks. What’s a good safe no-risk investment?
    I want to make changes to my 401k allocations, but I am not sure what to choose. Also, my IRAs are in the same boat as my 401k (sinking fast). Do I have the option of rolling my IRAs into a safer investment? I do not like risk.

    • ANSWER:
      Put your money in a “bear fund.” This is a mutual fund that makes money during a recession.

  37. QUESTION:
    Starting a new job that doesn’t offer for 401k for 1st year – what should I do with money in my old 401k?
    I have about ,000.00 vested in my current, soon-to-former employer’s 401k program. I think these are my options – leave it where it is and allow it to continue to collect interest, transfer it to an IRA, where I have more control over the investment options (though I don’t think I can continue to contribute funds…?). The third option is cashing out, but I’ll get heavily taxed and penalized. The one advantage of cashing out, however, would be that I could pay off ,000 in credit card debt, and I figure the interest I’m being charged on that is probably more than the interest I’my making with my retirement funds.

    Are there other options? Do I understand these three options correctly? What should I do?

    • ANSWER:
      You need to do a “Direct Rollover” to a traditional IRA. Go to a discount brokerage like Scottrade (www.scottrade.com) and request the forms for a Direct IRA Rollover. Then contact your old HR rep for the information on who you need to contact to get Rollover information. With these two pieces of information, you will be able to roll over all of your old 401(k) funds into a traditional IRA without having any money withheld for taxes.

      The worst thing you could do would be to ask for a distribution. The govt will withhold 20% off the bat, and if you do not get all 100% (including the withheld portion) into an IRA in less than 60 days the outstanding part will be taxed not only at your regular tax rate (or one tax bracket up if you’re that close), but you will pay a 10% tax penalty if you are not already 59 1/2 yrs old. It sucks! Never, never do this!

      Once you have done a direct rollover (hint, hint), then all of the monies in your 401(k) will be investable in whatever stock, mutual fund, bond, etc that you want for investment!

      Never leave your monies with your old employer… I know they offer it. The rollover will protect you from 2 important possibilities– 1) Imagine if your employer went out of business or illegally mishandled the 401(k) funds (trust me it happens). How (and how long would it take?) would you get your money back? In a brokerage it will be protected by SIPC insurance. 2) You will have *MANY* more options for investing in your IRA.

      If in doubt, don’t do anything until you talk to a CPA or Certified Financial Advisor. You can always leave the funds alone in your 401(k) until you know what you want to do with them!

  38. QUESTION:
    Should I rollover my Pension to my current employer’s 401k?
    I have a Pension from a former employer currently valued at just over ,000 (if it matters, it is managed not by the employer but at a respected financial institution). The Pension currently earns a 4.83% annualized rate of return which is about 0 every quarter.

    The 401k at my current employer is non-matched but has good investment options.

    Should I rollover my Pension to my current employer’s 401k?

    Does it matter how much I am contributing to the 401k to make this decision?

    • ANSWER:
      I would actually roll over your 401K to an outside, national, financial planner/retirement/stockbroker, like Edward Jones or Smith Barney. You need to also know if the pension is in an annuity. One of mine was and I have to wait 10 years before I can move it to another broker. I try to keep things centralized, but not at a current employer.

  39. QUESTION:
    Who can I go to for help and questions regarding my 401k program?
    I’m 27 and have started investing in my 401k heavily since 3 years ago. However, I have so many questions, it’s not even funny…from basic understanding on how it works, picking the right investment options, obtaining the highest rate of return possible, frequent trading, are blended funds better than individual, etc, etc, etc. I don’t think my human resources department would be of benefit either. Who should I talk to? Thanks.

    • ANSWER:
      The company that handles your 401k should have representatives that can explain things to you.

  40. QUESTION:
    Should I contribute towards 401K beyond the limit?
    Hi,
    I have reached the limit on the 401K for this year. Should I continue to contribute or stop it and look for other investment options? If I continue would it be the same as if it was under the limit minus no company match?

    • ANSWER:

  41. QUESTION:
    Need help on 401K investments selection?
    I am not expert in investment options.I need to select from below for my 401k plan.
    Can any one tell me which one are good from below :

    DWS Stable Value Trust – Institutional Shares
    DWS Core Plus Income Fund – Class S
    T. Rowe Price Retirement Income Fund – Advisor Class
    T. Rowe Price Retirement 2010 Fund – Advisor Class
    T. Rowe Price Retirement 2020 Fund – Advisor Class
    T. Rowe Price Retirement 2030 Fund – Advisor Class
    T. Rowe Price Retirement 2040 Fund – Advisor Class
    T. Rowe Price Retirement 2050 Fund – Advisor Class
    DWS Strategic Value Fund – Class S
    Davis New York Venture Fund – Class A
    American Funds The Growth Fund of America – Class R3
    Artisan Mid Cap Value Fund – Investor Shares
    T. Rowe Price Mid-Cap Growth Fund – Advisor Class
    Loomis Sayles Small Cap Value Fund – Retail Class
    American Funds EuroPacific Growth Fund – Class R3
    T Rowe Price Emerging Markets Stock Fund
    DWS RREEF Real Estate Securities Fund – Class S
    DWS Stock Index Trust

    • ANSWER:
      How old are you? Put 35% in your target date retirement fund. Artisian Mid Cap has a good record. Put 15% in it. 15% in Loomis Sayles Small Cap Fund. 10% in T Rowe Price Emerging Markets. 5% in Real Estate Securities Fund. Rest in Growth Fund of America. Not my favorite American Fund but not bad.

  42. QUESTION:
    Guaranteed 401K Investment?
    My mom has what she calls a “Guaranteed 401K” at her job called PERF. She works for the state (obviously). My husband has reached his 1 year mark and now has the option to invest. I don’t see anything in his investment book about “Guaranteed 401K”. All I see is the most conservative option of “Income and Inflation protection”. Is this the same thing? If not, how safe is it in todays market?

    • ANSWER:
      Read the fine print in your husband’s investment book. If your husband’s company matches any funds, that makes a 401K a terrific investment right there. Within any 401K, there are usully different funds with varying degrees of risk and return. Invest in the funds that you wish, taking into account your risk tolerance and your desire to see your 401K grow over the long run. Check the book or the 401K’s web site for any information they have about “Asset Allocation”. They may have tools to help you plan.

      Grandpa

  43. QUESTION:
    Can I use my IRA to pay off a ,000 second mortgage on an investment condo? Would a 401K loan be better?
    I know IRA money can be used for investments other than stocks or bonds, but I want to make sure the money is transferred and used within legal rules for IRAs.

    The 401K option is okay but, even though interest would be paid back to my own account, I dislike taking out ,000 after the market has already tanked (and while I’m still contributing and getting matching funds).

    Either way, I would reduce my negative cash flow while I continue to attempt to sell the Las Vegas condo or rent it out.
    Perhaps borrowing money from a parent at 3% or less interest (to keep up with inflation) is the best option: the ,000 second mortgage at 9.124% interest can be paid off and my tax refund in the next month can pay off about ,000 back to the parent (all without touching my 401K or IRA).

    • ANSWER:
      You can invest IRA funds in real estate utilizing a self-directed IRA. Check out Equity Trust Co. at www.trustetc.com
      You can not self deal which means you can not purchase property with IRA funds that you currently own.
      Therefore, your only option here is to use the 401k borrowing provisions. I do not suggest doing that just to cover a current mortgage.
      I do teach how to utilize this strategy in circumstances that benefit you and not hinder your 401k.
      Contact me for more info if you like.

  44. QUESTION:
    Where should I allocate my 401k money?
    Here are all my investment options. My 401k is through Fidelity. Like what do some of these mean and which ones have you had luck with? I would appreciate any insight or feedback.
    FID FREEDOM K 2050
    FIDELITY MIP II CL 3
    FID FREEDOM K INCOME
    PIM TOTAL RT INST
    TEK STABLE VALUE
    FIDELITY RETIRE MMKT
    ABF SM CAP VAL INST
    AF GRTH FUND AMER R6
    DANAHER STOCK (My company stock)
    FID DIVERSIFD INTL K
    DODGE & COX INTL STK
    FID EQUITY INCOME K
    FID LOW PRICED STK K

    FID MAGELLAN K

    • ANSWER:
      Do your asset allocation plan 1st. Once you do that, then you can pick the funds to fit your plan. But I might go something along the lines of:
      35% Fido Equity Income
      15% Fido low priced stock
      20% D&C Intl stock
      20% Pimco Total Return
      10% money markets

      If you want to be more aggressive, decrease your allocation(s) of money markets & bonds & put that in stocks. Don’t know much about your company stock. But if you like it, take 4/5 percent out of large caps, and buy it. But certainly put no more than 10% in company stock.

  45. QUESTION:
    IRA or 401K with no employer contribution?
    Is an IRA better investment option if my employer does not match 401k contributions? Also, the funds avaialble through my 401k are not that great in terms of returns. Would it be better to go with an IRA? If yes, which IRA would be best – Traditional or Roth? Thanks for your time.

    • ANSWER:
      Take the IRA option, if there are no matching funds for the 401K. It will allow greater freedom of where to invest your money. If bonus monies or special stock shares or something go into the 401k set that up, but put minimal input into it.

      Traditional IRA is tax deferred, so you get the benefit of not paying taxes on the money, currently. Roth has no penalties if you need access to the money at some point down the line for emergencies or something.

  46. QUESTION:
    how can i rollover my 401k tax free?
    i am 60 years old and my 401k only allows limited investment options. how do i rollover my 401k on a tax free basis

    • ANSWER:
      You can complete the forms at your current employer to effect the direct rollover of assets to your IRA only after you separate from service. In order to avoid the 20% withholding-tax requirement, a check for your entire vested account balance will then be sent to your IRA custodian, or to you, payable to your IRA custodian.

      Are you sure your choices are truly limited? If you have “Lifecycle,” “LifeStages,” or Asset Allocation funds in your 401k, for example, they could be a combination of other funds (fund-of-funds), and/or consist of many asset classes, and, often times, over 1,000 individual securities.

      Hope that helps.

      DISCLAIMER: While the information in this response was obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. The opinion voiced in this answer is for general information only and is not intended to provide specific advice or recommendations for any individual. Questioners are urged to consult with their professional advisers before making any decisions regarding their finances.

  47. QUESTION:
    what are good investments to roll over my dads 401K?
    He is leaving is job and deciding to start over again, ( unhappy with current job) so he and his ,000 401K are leaving. What are some options for roll over to make his investment grow within the next 5-10 years? Thanks for the help, I appreciate it.

    • ANSWER:
      You’d want to invest in the same mutual fund company in order to take advantage of breakpoints. Most fund companies have a 50K breakpoint, so don’t let anyone at a bank or elsewhere talk you into diversifying into more than one fund family.

      If you’re going to use the funds within the next 5-10 years, then you don’t want to get too aggressive, even if you’re an aggressive investor. Have your father take a risk tolerance questionaire online to find out where he falls, and then invest accordingly.

      Find a fund family that’s strong in bond funds, because that’s where a lot of the money is going to be going as your time horizon is approached. In the past, I’ve used Oppenheimer, American Funds, Franklin Templeton, MFS, and Fidelity.

      Good luck.

  48. QUESTION:
    Where would be the best place to roll over my 401k to on leaving my job?
    I want to have control over and choice of diverse investment options.

    • ANSWER:
      if you are wanting to trade single securities (stocks), it won’t make much difference from Schwab, Ameritrade, Scottrade etc.

      If you want to concentrate on your new job, your family, your hobbies etc. then I suggest that you interview 2 or 3 local advisors. Find one that you trust and let them help you manage your investments as part of your larger financial plan. Consider Waddell & Reed, Raymond James or local 1 – 2 man firms. If your investment is at least ,000 you can even get “A” shares without a sales load. But don’t let sales commission (high or low) be the exclusive determining factor.

      If you want to be in the investment research and management business, then by all means find an 800 number so that you can phone in your order to a different faceless person each call.

  49. QUESTION:
    Besides 401k and Roth IRA and traditional IRA, what are my options for tax deferred investing?
    I have my 401k maxed out and both the Roth IRA and traditional IRA have low contribution limits of about 00 this year.

    Are there any tax deferred ways of saving for retirement with much larger amounts (say ,000 to ,000 a year)?

    Obviously I can just save in a normal investment account. My understanding is that only dividends (not growth) are taxed each year. A tax deferred account just defers tax on the dividends (correct me if I’m wrong). If that’s the case (and if I have no alternatives) then I’ll just try to choose a fund that doesn’t give dividends.

    • ANSWER:
      If you can start your own small business, you could look into SEP, SIMPLE, and Keogh accounts. They provide similar tax deferral with higher contribution limits.

      You could decide on investing in rental properties. They provide many tax advantages as well. Tax on capital gains for selling real estate can be deferred if you use the proceeds to invest in another property.

      More options include investing in municipal bond funds, where the dividends can be tax free, or investing directly in tax exempt municipal bonds.

  50. QUESTION:
    Can I roll my 401k to a Roth IRA if….?
    I work for company A. Company B buys company A. The resulting company C merges two existing 401k plans. I have an IRA with better investment options than the new 401k plan. Since Company A’s 401k plan is no longer an option, can I roll over my vested balance to my personal IRA?

    • ANSWER:
      That depends on the terms and conditions of the specific 401(k) plan. Some do not allow that as long as you are still employed with the company. Check your plan provisions.