401 Que?

401 Que?

401(k) plans. Who knows anything about them? For the first time in my life, I am sqatting over the 401 chamberpot, and I'd like to know what to do with it. (Can you smell the loathing?)

What am I supposed to do/arrange/choose to maximize my profits, yo?

(We need a pregunta section.)

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Shippy's picture

Re:401 Que?

I always thought pregunta meant "pregnant junta".

Keester's picture

Re:401 Que?

This link should help you out a little. And that post does help.

http://mutualfunds.about.com/cs/glossaries/tp/topfundterms.htm

definitely do pre tax
small caps are riskier but have more potential, mids are medium, and large caps are big companies.
growth funds are riskier
index funds only buy stock in a certain family (ie the stocks that make up the s&p index, only technology stocks, etc)
blanaced funds try to balance large and small cap stocks so that you are somewhat secure but still stand to gain if the smaller ones take off.

I would say if you can split it up go with a growth/riskier, and one index or large cap. possibly even mix in a balanced if you want.

Keester's picture

Re:401 Que?

Doh. Double post. Ignore.

sundaykofax's picture

Re:401 Que?

I am going to try to answer the questions as best I can, although I feel like I'm speaking a different language.

I know that I don't have an employer match to my contribution. Currently (and by default, I think) I have the guaranteed long-term, uh, thing.
I have no idea what a Large Cap vs. a Small Cap stock is. I'd like to learn how to dick around with this thing, but I really don't know my jargon, and get confused. Who's going to come over and have a few beers and point to my computer screen whilst patiently explaining this?

I have options like "CBS of Illinois Match, Rollover, and Employee pretax" for contribution type. Then there are options- (sorry about the lame c&p)

EMPLOYEE PRE TAX
Investment
Name Current
Percentage New
Percentage
DRYDEN S&P 500 INDEX FUND 0.0
FIDELITY ADVISOR BALANCED FUND 0.0
GUARANTEED LONG-TERM 100.0
INT'L BLEND/THE BOSTON COMPANY 0.0
JANUS ADVISER GROWTH ACCOUNT 0.0
JANUS ADVISER WORLDWIDE ACCT 0.0
LARGE CAP VALUE/JOHN A. LEVIN 0.0
LIFETIME20 FUND 0.0
LIFETIME40 FUND 0.0
LIFETIME60 FUND 0.0
MD CAP GROWTH/ARTISAN PARTNERS 0.0
MID CAP VALUE/WELLINGTON MGMT 0.0
SMALL CAP GROWTH/TIMESSQUARE 0.0
SMALL CAP VALUE/TCW 0.0
STRONG GROWTH & INCOME FUND 0.0
STRONG GROWTH FUND 0.0
Total 100.0 100.0

I have no idea if this will help.

Colin's picture

Re:401 Que?

Is this a straight 401K? Is it a mutual fund 401K? Do you have a list of possible funds you can invest in or is straight stock market?

If there's a list of funds, they also have a listing with the rate of return in varying time segments. Look for funds with higher rates of returns...the longer the time period the better. Graver is right with the stock thing since we're young, we're supposed to do it 70% stocks and 30% bonds and slowly reverse it as we get old old old...like Graver.

I always wish I could buy Nvidia stock, but that's just me.

sundaykofax's picture

Re:401 Que?

"Graver", I appreciate your willingness to speak of this filth.

I need to know about what to invest in. There's this online account I have to choose what i want to invest in.

OK- who knows anything about stocks?

(If my 8th grade spanish is any good, I think 'pregunta' means 'question'.

wadsbone's picture

Re:401 Que?

'Pregunta' means 'question' in Spanish. As for the 401K, it doesn't matter, because Jebus will have returned by then, bringing along war, pestilence, famine, and something else (reality tv, I think), all of which are really bad for the stock market.

Graver's picture

Re:401 Que?

at the risk of sounding stupid, what's pregunta?

and at the risk of sounding like the tool I've grown to be.... 401k's can be great. You don't really need to do much with them after they're set up. My recommendations for set up would be to put as much money as you can possibly spare in there. every dollar helps. As far as which funds to invest in, I go heavier on the stocks because I'm young and can take the risk. The older you get, the more you shift your investments to more conservative things. It also helps that the stock market probably won't go much lower.

Think of every dollar you put in there as one less hour of work shaved off the end of your career. Seriously, if you do it right, you could retire earlier than you think.

Good God, I wish I could post this anonymously.

Keester's picture

Re:401 Que?

I know a thing or 3 about some of these things.

Personally I prefer the 401k over stock purchase plans or stock options if your company offers those as well. The reason being that most 401k plans will let you take a LOW interest loan against your 401k and thus your money is mildly liquid without the harsh tax liabilities of stock as well as lack of recovery options. And it gets even better than that, the interest you pay goes back to yourself so when you are done paying it back, your balance is higher than it was. There are some good reasons not to take a loan against your 401k if you can help it but if you are in credit card debit or have a higer interest car loan this is definitely the way to go so you can pay those off and make money for yourself versus giving it to Visa or a bank.

Colin is right in that they are required to give you the risk assesment of any 401k plan options they give you and you should look at them. I agree with Graver that since we are all young taking risks are worth the possible pay outs. I do not agree that you should place ALL your money that way though. Diversify if at all possible. I have my money split up 1/3 into straight stock 1/3 in a high risk 401k and 1/3 into an index fund 401k which basically just buys blue chips and is pretty solid.

The main thing is to start asap and stay with it. I started investing at 21 and so far paid for my wife's engagment ring and a large portion of our wedding with stock I sold. I leveraged 401k money and the fact I even had a decent sized 401k and sticks to buy my house at the age of 24 or 25. On top of all that it is pre tax so you are also giving uncle sam a little less money to do his evil deeds with while keeping your interests in the forefront. A win-win if i ever saw one.Also, we all as gen x'ers or later cannot even hope that social security will be around for us when we retire. When the baby boomers hit the retirement community over the next 5 years you will see a rapid degredation of social security because there will just be to many of them and they will bring the system to it's knees.