401k needs help, please help!

Every month I get my statement from work, every month I say "that $$ is just sitting there doing nothing, I need to invest in something".

Then I get distracted by, I don't know, everything? And another month rolls by. Any tips on stocks to invest? Funds or bonds? I had a decent run about 10 years ago on a few stocks, then the ex-wife helped me run up serious debt & I plundered the account to pay most of it off.

It's back up to $9-10k, and all cash basically. Any ideas?

Are you old? Look at "safe" accounts.

Are you young? Go risky.

I'm 46. That could be either depending on who you talk to.

Two choices, hire a financial guy to look at it for you or do it yourself. Look through what your options are (generally the company will have a few dozen investment choices) go to google finance (or whatever your preferred stock ticker site is) and research past performance. Place your bets.

First, if it is a company sponsored 401k, you're likely very restricted in the investments you can make, so we can't make any recommendations until we know what you can invest in in the first place.

Easiest way to invest the money? Look at a suitable target retirement fund for your age, those are supposed to move to less risky assets over time.

If you're in 100% capital preservation mode, you pretty much have to keep it in a savings account or money market account, but you can't get any half-decent returns. Unless you're planning to retire in the next couple of years, I would move it out of cash.

Personally, I would try to keep it simple and pick a handful of of low-cost mutual or index funds, one that mirrors the US stock market (you want all of it if you can get it, otherwise look at S&P 500 based funds), one that does international equity (established companies only, no emerging markets) and possible a small slice into an emerging markets fund. Your choice very much depends on what is available in your plan. I wouldn't go too exotic and I would keep a close eye on the fees of the funds you invest in as that has a major bearing on your actual investment return.

I would stay away from bond funds at the moment (although I have some of my 401k money in them) because bond prices are artifically high at the moment due to the low interest rates and they only have one way to go when interest rates go up. Unless you want to watch the market and pull out if you see interest rates rise that's a little too exciting for my liking.

Disclaimer - I'm not an investment advisor, the advice is worth what you paid for it and this is just my $0.02 how I would handle the situation.

tuna55 wrote: Two choices, hire a financial guy to look at it for you or do it yourself.

Just make it a fee-only advisor, not a "fee based" or similar one. You want to make absolutely sure they're not trying to sell you something they get a commission on.

That's not enough money to hire a financial guy. It will cost you more than you could earn by almost any investment, unless you have a larger portfolio outside of your 401k.

At 46 you should be looking at about a 15 to 20 year horizon until you need that money (unless, of course, you decide to get divorced again) . Look at the offerings in the 401k plan you are in. It probably consists of a number of funds rather than individual stocks. You'll see bond funds and stock funds. I would suggest you find a stock fund that meets your risk tolerance. Best thing for small investors is usually an index fund. They cost less and basically just follow the market. Nobody really beats the market over the long term.

Again, this isn't much money, but I expect you'll continue to add to it over time, so choose carefully, because you probably will ignore it again for several years.

In another few years, you'll want to diversify your portfolio a bit towards income-- bonds, for example, as you get closer to retirement.

Open an online brokerage account (i.e. etrade, etc.) and invest in a couple of these:

http://www.kiplinger.com/tool/investing/T041-S000-kiplingers-25-favorite-fund/index.php

As noted previously, I'd stay out of bond funds right now.

Edit: Ooops! I see you are already in a 401k. Great! Just move (some or most of) the money into growth-and-income type stock funds. I'd consider a fund with a focus outside the US also if it's available to you.

Lessee: Every business is making less money or losing money. Even Walmart is down on US same store sales. Since 2008, food stamps are up 68% and full time jobs are up 1%. The stock market is at the highest point it has ever been. Yeah, this is a GREAT time to invest. Go all in on Detroit Bonds. y0.

(Or, keep your money in cash and wait. At least you'll still have your money.)

Jerry wrote: Every month I get my statement from work, every month I say "that $$ is just sitting there doing nothing, I need to invest in something".

If it's in a 401(k) it's already invested in something, but it just may not be in funds that are making much money. Sit down with whoever it is that's in charge of administering your company's retirement account and talk to them, you should be able to move the money around to different funds.

Here is my 2 cents.

Assuming you are contributing on an ongoing basis to your 401k I would take all of your funds and invest them into an index type fund that mirrors the S&P 500. This minimizes maintenance fees that you have to pay (passively managed vs. actively managed fund) and guarantees you close to the return rate of the S&P 500. Statistically over the long run nearly all actively managed funds FAIL to outperform the S&P 500, and they still get to charge you a yearly fee to manage your money!

Index funds have the lowest yearly management fees in general and offer the best performance returns. Don't try to time the market either with your contributions, or freak out if the market goes up or down excessively. Over the long run you will be ok. In my eyes there is no need to try to further diversify your fund selection as you are already buying into 500 different companies through the index fund and these companies have exposure to foreign markets. You can safely pass on the emerging markets fund.

As you get closer to retirement (10 years out) you can then begin to shift a portion of your S&P Index Fund money over to a bond fund which will help protect your money from any wild valuation swings. Moving over 10% a year will help protect your nest egg until you get to a ratio of 70-30 or 80-20, or whatever you feel comfortable with. Hope this helps.

I automatically contribute every paycheck (weekly). Employer makes a contribution, I think every 3 months or so. Guess I need to dig into the options I have, it's been awhile. At one time I had 4-5 stocks and a mutual fund or two.

This kind of thing makes my eyes glaze over. And is why I put it off every month.

At your age you can make mistakes and still make out.

My retirement is partially based on Mutual Funds, Stock Market and lower interest Gov't funds. Problem was, to shuffle money from one fund to another, you had to fill out paperwork, send it off in the mail, they move it when they're ready. In 2008 when bad things were on the horizon, I moved money around; but before the deed was done, I lost $200,000.

I would talk to an investment guy. Generally they invest in risky (higher return) stuff when you're young; as you near retirement they back off and go for the lower rate of return - safer stuff.

Quick money, high rate of return = higher risk. Sponsor a drug boat into Florida.

Feeling squeamish, want to be safe? Go for a bank 1% savings account.

Talk to an investment guy about investing. He knows that stuff, not so much about cars. We know cars ....

Dan

I very much like www.fool.com

914Driver wrote: Talk to an investment guy about investing. He knows that stuff, not so much about cars. We know cars ....

BullE36 M3! I feel like I can ask ANYTHING here and get some decent replies. ...and a healthy dose of frivolity to balance it out.

I had to roll over some 401's due to my divorce and got pointed to Vanguard as a suggested stopgap thing. Turned out to be an excellent move; the Wellesley fund has been clicking right along. It doesn't have the wild swings others do, the fee is .85% of gains (not principal) and there is no annual fee. DISCLAIMER: I don't work for Vanguard at all but I do have some investments with them.

At age 46 you have a pretty decent time window, you can go more aggressive. Some companies limit the funds you are allowed to invest in, that bites if all of them suck (my Principal 401 was that way, for instance). You can roll a 401 into a self directed IRA pretty easily but if you do so you'll lose your company match because they lose the tax benefits.

About investment guys: I've been down that road, the ex went with Edward Jones on some money she inherited from her grandmother. After ~8 years it was still right about at the amount she originally invested. But, EJ made a nut (annual fees and a percentage of any gains) every year regardless of the fund's performance. In short, they made money but she didn't. Nope, not for me.

914Driver wrote: I would talk to an investment guy. Generally they invest in risky (higher return) stuff when you're young; as you near retirement they back off and go for the lower rate of return - safer stuff.

Not at this dollar level. Take control of the situation and DIY. My experience with "investment guys" is that they'll try to put you into whatever makes them the most money. I know an older co-worker who followed the advice of an "investment professional" from a big-name firm and moved heavily into stocks (and many of them tech stocks) just before the market tanked in '08. I don't even want to guess what he lost.

Can you read a racing form? Put it all on a trifecta.

I don't really understand the original post in this thread. How is a 401(k) "basically all cash"? It sounds like you need a more clear picture of the matching that your employer does. What are you buying with your contribution dollars, and what are they matching with?

There's a lot of different ways to operate a 401(k), like methods or plans of attack. It's hard to give advice with the information given, I think.

'All cash' I take to mean that he's 'vested', i.e. it's all his. $9-10k is not a helluva lot of money but it's enough to get the ball rolling for bigger/better things.

Actually, a lot of 401(k)s these days seem to have options to invest money in a money market type account. That's what I took the "all cash" as.

Need more clarification, it seems.

I'm glad someone asked this, as I felt kinda silly asking about it. Fixing to turn 35 next month, and I am really starting to feel that I'm way behind on this sort of thing.

pres589 wrote: I don't really understand the original post in this thread. How is a 401(k) "basically all cash"?

Simple IRA through PNC Investments. "Cash" account, versus money market, bonds, mutual funds, stocks, anything else. Just getting pulled from my paycheck every week and going to PNC but not into anything worthwhile.

They're called "Stable Value" funds. Most 401(k)'s have that as an option. I think, being a total amateur here, that leaving the existing ten large in the Stable Value fund and allocating future contributions to, say, 50% Stable Value and split the other half to various growth/income funds would not be a bad idea. It's actually what I just did. I think we're about to see another decline in stock prices, and buying a little each period on the way down is not going to hurt (much), and will give a long-term potential gain that you might not see with the Stable Value fund. If it all turns to E36 M3, then you still have the SV funds.

1988RedT2 wrote: My experience with "investment guys" is that they'll try to put you into whatever makes them the most money.

There are idiots in every line of work, but it doesn't mean they are all idiots.