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Question about our 401k options....
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<blockquote data-quote="mountaingoat" data-source="post: 369718" data-attributes="member: 1250"><p>You can talk to an accountant or better yet, a financial planner. If you're looking for some advice regarding investment here ya go...</p><p></p><p>1. Determine when you need to cash your money out. The length of time between the day that you need to cash out and today is called your time horizon. If that time is 1 year from now (and it doesn't sound like it based on your post), you should be into more conservative funds (i.e. less risk, but less return). If your time horizon is 5 years or more, you should be into a long-term strategy (i.e. more risk, more return).</p><p>2. Based on your time horizon, if it's short-term, you want to be more heavily invested in bond funds (say, 75% bonds, 25% equities). If it's a long-term time horizon, you need to be more aggressive (90-100% equities, 10% or less bonds).</p><p>3. From an equities standpoint, it doesn't mean that you need to invest in individual stocks. I'm a firm believer in index funds. But make sure that you diversify among those that you are given. Say, 25% each in a large cap (S&P500 index), International (EAFE index), Small cap (Russell 2000), and midcap (S&P 400).</p><p>4. Make sure that you rebalance at least once a year. That way, you force yourself to take the profit that you earned on your better-performing funds, and purchase shares in funds that have not done as well. Each index will perform differently depending on the economy.</p><p>5. It sounds like you're doing it, but put aside money each month into the 401K. Not only will it reduce your taxable income each month, but the money grows tax-deferred and you are dollar cost averaging. That means that you're buying the same dollar amount of a fund no matter the cost. Over time this will pay off.</p><p></p><p>Good luck!</p></blockquote><p></p>
[QUOTE="mountaingoat, post: 369718, member: 1250"] You can talk to an accountant or better yet, a financial planner. If you're looking for some advice regarding investment here ya go... 1. Determine when you need to cash your money out. The length of time between the day that you need to cash out and today is called your time horizon. If that time is 1 year from now (and it doesn't sound like it based on your post), you should be into more conservative funds (i.e. less risk, but less return). If your time horizon is 5 years or more, you should be into a long-term strategy (i.e. more risk, more return). 2. Based on your time horizon, if it's short-term, you want to be more heavily invested in bond funds (say, 75% bonds, 25% equities). If it's a long-term time horizon, you need to be more aggressive (90-100% equities, 10% or less bonds). 3. From an equities standpoint, it doesn't mean that you need to invest in individual stocks. I'm a firm believer in index funds. But make sure that you diversify among those that you are given. Say, 25% each in a large cap (S&P500 index), International (EAFE index), Small cap (Russell 2000), and midcap (S&P 400). 4. Make sure that you rebalance at least once a year. That way, you force yourself to take the profit that you earned on your better-performing funds, and purchase shares in funds that have not done as well. Each index will perform differently depending on the economy. 5. It sounds like you're doing it, but put aside money each month into the 401K. Not only will it reduce your taxable income each month, but the money grows tax-deferred and you are dollar cost averaging. That means that you're buying the same dollar amount of a fund no matter the cost. Over time this will pay off. Good luck! [/QUOTE]
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