I believe that you should deversify with safe stock T Bills, Mutual funds, I would tend to stay away from any markets that are soaring right now like the gold market because if history repeats itself then it will come down drastically and you will lose money.
A simple rule of thumb is that 100 minus your age is the percentage of your portfolio that should be invested in the stock market. I'm 47, so a simple asset allocation for me would be 53% in a broadly indexed mutual fund, 37% in a broadly indexed bond mutual fund, and 10% in a money market account. One year from now I would rebalance my assets, and remove another 1% from the stock market.
If you want to make things more complicated you can divide the stock portion up between different types of mutual funds based on how big the companies are that the mutual funds invest in, or what investment style the mutual funds use. You could also break the bond portion down into long term and medium term bonds. But the simple allocation I gave will work for most people.
Only do MATCHING 401k's. Not all companies match, if yours doesn't, don't do 401k at all. 401k's grow tax deferred, which means that if you manage to build up $1 million by retirement, you will pay taxes on the whole thing. That is offset by matching funds, so it's still a good deal. Only contribute to the extent that your company matches.
If your Co. doesn't match, do Roth IRA's instead. They are AFTER TAX investments, but grow TAX FREE. You would not owe any taxes on that same $1 million at retirement.
After you max out both of them, do the four following mutual funds: growth, growth and income, international, and aggressive. Those are also the ones that you should diversify with in your 401k.
For more info, go to http://www.daveramsey.com and click on ELP (endorsed local provider) for a financial counselor in your area who will TEACH you investing. Dave Ramsey does not get any money from these counselors, he endorses them b/c they teach their clients how to invest wisely, rather than telling them what to do.
Child, if your employer is matching your 401K, then add funds to the max…once this is fullfilled, then start putting funds into whatever financial opportunities that your personal capability for risk, may find opportunity to invest in. "Risk" is the keyword of investing. Bonds, Treasury bills, tend to be the lowest risk, particularly if they are guaranteed, but have the lowest pay-off, stocks, and mutual funds are the highest risk…depending upon how much chance you are willing to take, as to whether they are long-term gainers, or short-term gainers..no one can tell, that's why the market is a gamble…would suggest that you educate yourself about "futures". Would suggest that you read the pulp-fiction novel,"Paradigm" for a start, as your desire is all that can guide you into the future,as greed tends to be quite selfish…Peace,Love,& +Comprehension…MeSighAh…CanU…
Nobody can answer this question for you with so little information.
What other assets do you have? What is your tolerance for risk?
Are you 30 or 49? When do you expect to retire?
Avoid the crooks running mutual funds. They pay themselves huge salaries and bonuses at your expense. You will have a better income and be just as safe if you put equal amounts in the shares of the top 10 companies on the stock market.
Alternatively go to an honest stock broker and consider his advice. But do not take it automatically.
December 29th, 2008 at 6:14 am
I believe that you should deversify with safe stock T Bills, Mutual funds, I would tend to stay away from any markets that are soaring right now like the gold market because if history repeats itself then it will come down drastically and you will lose money.
December 29th, 2008 at 6:14 am
It depends on how much work you want to do.
A simple rule of thumb is that 100 minus your age is the percentage of your portfolio that should be invested in the stock market. I'm 47, so a simple asset allocation for me would be 53% in a broadly indexed mutual fund, 37% in a broadly indexed bond mutual fund, and 10% in a money market account. One year from now I would rebalance my assets, and remove another 1% from the stock market.
If you want to make things more complicated you can divide the stock portion up between different types of mutual funds based on how big the companies are that the mutual funds invest in, or what investment style the mutual funds use. You could also break the bond portion down into long term and medium term bonds. But the simple allocation I gave will work for most people.
December 29th, 2008 at 6:14 am
Only do MATCHING 401k's. Not all companies match, if yours doesn't, don't do 401k at all. 401k's grow tax deferred, which means that if you manage to build up $1 million by retirement, you will pay taxes on the whole thing. That is offset by matching funds, so it's still a good deal. Only contribute to the extent that your company matches.
If your Co. doesn't match, do Roth IRA's instead. They are AFTER TAX investments, but grow TAX FREE. You would not owe any taxes on that same $1 million at retirement.
After you max out both of them, do the four following mutual funds: growth, growth and income, international, and aggressive. Those are also the ones that you should diversify with in your 401k.
For more info, go to http://www.daveramsey.com and click on ELP (endorsed local provider) for a financial counselor in your area who will TEACH you investing. Dave Ramsey does not get any money from these counselors, he endorses them b/c they teach their clients how to invest wisely, rather than telling them what to do.
December 29th, 2008 at 6:14 am
Child, if your employer is matching your 401K, then add funds to the max…once this is fullfilled, then start putting funds into whatever financial opportunities that your personal capability for risk, may find opportunity to invest in. "Risk" is the keyword of investing. Bonds, Treasury bills, tend to be the lowest risk, particularly if they are guaranteed, but have the lowest pay-off, stocks, and mutual funds are the highest risk…depending upon how much chance you are willing to take, as to whether they are long-term gainers, or short-term gainers..no one can tell, that's why the market is a gamble…would suggest that you educate yourself about "futures". Would suggest that you read the pulp-fiction novel,"Paradigm" for a start, as your desire is all that can guide you into the future,as greed tends to be quite selfish…Peace,Love,& +Comprehension…MeSighAh…CanU…
December 29th, 2008 at 6:14 am
Nobody can answer this question for you with so little information.
What other assets do you have? What is your tolerance for risk?
Are you 30 or 49? When do you expect to retire?
December 29th, 2008 at 6:14 am
Avoid the crooks running mutual funds. They pay themselves huge salaries and bonuses at your expense. You will have a better income and be just as safe if you put equal amounts in the shares of the top 10 companies on the stock market.
Alternatively go to an honest stock broker and consider his advice. But do not take it automatically.
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