I have worked in the preload the last several years and now I want to start putting some money into the 401k but I am unsure on which one to put my money into, Does anybody have an advice??
There will be tons of opinions, but you have to choose the strategy that's right for you. That being said, here are some things to think about.
Deciding what to invest in is based on your time horizon and your risk tolerance. Time horizon is the time that you have until you plan to cash out the money. For instance, if you're 20 and you plan to retire at 65, you have a 45-year time horizon. Your risk tolerance is how much risk you can stand, or does your stomach turn upside-down when your funds lose 5% in a day?
The choices that you have are based on these two factors. If you have a large time horizon (8-10 years or more), you should choose the funds with the greatest risk because they will provide you with the greatest return on investment (ROI). Sure, they are riskier, but that's why you receive a larger ROI. You're being paid for your level of risk. Since you have a long time horizon, you can watch the stocks funds go up (and down) and you can wait until they recover. If you have a low risk tolerance, you should only look at your funds once a month AT BEST so that you don't get concerned with the day-to-day mood swings of your equity (stock) funds.
Once you've decided that you need to be in equities, you need to diversify yourself. Don't put everything into one stock. Mix among Large Cap (i.e. S&P 500 Index Fund), Small Cap (i.e. Russell 2000 Index Fund), and International (i.e. EAFE Index Fund) funds. This way, you're not locked into just emerging markets or small cap, but you will get the rise as it goes up.
So your question is - what if one of my funds goes down while another goes up? Well, you should be rebalancing every 6-12 months. This means resetting your funds to their default percentages. So, suppose you chose four funds, each at 25%. At the end of the year, your best performing fund has grown to 28% and your worst one at 22% of your 401K portfolio. You want to rebalance (and the 401K website has an option to do this automatically) until both of them are back at 25%. This means selling the stock that has risen (selling HIGH) and with those gains, purchasing more of the stock that has gone down (buying LOW). It seems counterintuitive to sell the best-performing fund to buy the worst-performing fund, but it locks in the gains from your best performing fund, and it helps you to buy low.
Hope this investing primer helps.