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JB5



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My wife has finally convinced me to join my 401k at work. Does anyone have any investment strategies or funds they recommend?

Infamous
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This should be very interesting

Big Garea Fan

 

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It is going to depend upon the 401K plans being offered by the employer's plan. A lot of your investing strategy is going to depend upon your age (when you are younger, you can afford to take chances; when you get older, you will be more conservative).

My only advice is:

a) if the employer offers a 401K matching program, invest at least enough to qualify for the 401K match

b) if you can afford it, invest as much as you can (up to a maximum of $16,500, can be higher if you are over 50) in your 401K to reduce your tax bill at the end of the year since 401K contributions are taken from your paycheck pretax.

JB5



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Big Garea Fan wrote: It is going to depend upon the 401K plans being offered by the employer's plan. A lot of your investing strategy is going to depend upon your age (when you are younger, you can afford to take chances; when you get older, you will be more conservative).

My only advice is:

a) if the employer offers a 401K matching program, invest at least enough to qualify for the 401K match

b) if you can afford it, invest as much as you can (up to a maximum of $16,500, can be higher if you are over 50) in your 401K to reduce your tax bill at the end of the year since 401K contributions are taken from your paycheck pretax.


The plans are done through Principal.

My employee does match up to 3%. I was going to invest at least that, but possibly up to 5-7%

dogfacedgremlin34
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JB5 wrote: Big Garea Fan wrote: It is going to depend upon the 401K plans being offered by the employer's plan. A lot of your investing strategy is going to depend upon your age (when you are younger, you can afford to take chances; when you get older, you will be more conservative).

My only advice is:

a) if the employer offers a 401K matching program, invest at least enough to qualify for the 401K match

b) if you can afford it, invest as much as you can (up to a maximum of $16,500, can be higher if you are over 50) in your 401K to reduce your tax bill at the end of the year since 401K contributions are taken from your paycheck pretax.


The plans are done through Principal.

My employee does match up to 3%. I was going to invest at least that, but possibly up to 5-7%

I second what BGF told you.  Also, before giving advice, I'd have to know a lot more about you and your plan.

*  What are Principal's choice options?  Usually, in 3rd party situations like this, you only get a limited selection to choose from.
*  How old are you?  How many years do you have until retirement?
*  How much to you have in retirement already?

A decent new retirement vehicle for the novice investor is lifecycle funds, which mirrors strategy BGF mentioned.

JB5



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Here are some of the options I have with Principal.

International Equity
OppenheimerFunds Inc- ODMAF fund
Principal Global Investors- Diversified International Separate Account
Principal Global Investors/DFA- Interational SmallCap Separate Account

Small/Mid U.S. Equity
DFA/Vaughan Nelson/LA Capital- SmallCap Value II Separate Account
Goldman Sachs/LA Capital Management- MidCap Value 1 Separate Account
Principal Global Investors- MidCap Blend Separate Account
Principal Global Investors- MidCap S&P 400 Index Separate Account
Principal Global Investors- SmallCap S&P 600 Index Separate Account
Prudential Investments, LLC- Prudential Jennison Small Company A Fund
Turner/Mellon/Jacobs Levy- MidCap Growth III Separate Account

Large U.S. Equity
Capital Research & Management Co- American Funds Fundamental Investors R4 Fund
Edge Asset Management Inc- Equity Income Separate Account
Principal Global Investors- LargeCap S&P 500 Index Separate Account
T.Rowe Price/Brown Advisory- LargeCap Growth I Separate Account

Balanced Asset Allocation
Principle LifeTime Strategic Income Separate Account
Principle LifeTime 2010 Separate Account
Principle LifeTime 2020 Separate Account
Principle LifeTime 2030 Separate Account
Principle LifeTime 2040 Separate Account
Principle LifeTime 2050 Separate Account
Stock Emphasis Balanced Separate Account

Fixed Income
PIMCO- Core Plus Bond I Separate Account
Principal Global Investors- Bond and Mortgage Separate Account
Principal Real Estate Investors- U.S. Property Separate Account

Short Term Fixed Income
Principal Global Investors- Money Market Separate Account
Guaranteed Interest Accound 5 year

dogfacedgremlin34
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JB5 wrote: Here are some of the options I have with Principal.

International Equity
OppenheimerFunds Inc- ODMAF fund
Principal Global Investors- Diversified International Separate Account
Principal Global Investors/DFA- Interational SmallCap Separate Account

Small/Mid U.S. Equity
DFA/Vaughan Nelson/LA Capital- SmallCap Value II Separate Account
Goldman Sachs/LA Capital Management- MidCap Value 1 Separate Account
Principal Global Investors- MidCap Blend Separate Account
Principal Global Investors- MidCap S&P 400 Index Separate Account
Principal Global Investors- SmallCap S&P 600 Index Separate Account
Prudential Investments, LLC- Prudential Jennison Small Company A Fund
Turner/Mellon/Jacobs Levy- MidCap Growth III Separate Account

Large U.S. Equity
Capital Research & Management Co- American Funds Fundamental Investors R4 Fund
Edge Asset Management Inc- Equity Income Separate Account
Principal Global Investors- LargeCap S&P 500 Index Separate Account
T.Rowe Price/Brown Advisory- LargeCap Growth I Separate Account

Balanced Asset Allocation
Principle LifeTime Strategic Income Separate Account
Principle LifeTime 2010 Separate Account
Principle LifeTime 2020 Separate Account
Principle LifeTime 2030 Separate Account
Principle LifeTime 2040 Separate Account
Principle LifeTime 2050 Separate Account
Stock Emphasis Balanced Separate Account

Fixed Income
PIMCO- Core Plus Bond I Separate Account
Principal Global Investors- Bond and Mortgage Separate Account
Principal Real Estate Investors- U.S. Property Separate Account

Short Term Fixed Income
Principal Global Investors- Money Market Separate Account
Guaranteed Interest Accound 5 year



I don't know too much about the Principal family of funds, but at a very high level glance, it looks like there's some decent choices.  How actively do you want to manage your investment choices?  Do you want to develop a strategy where you reweight your holdings periodically, or do you just want to pick something and forget about it?

It's tough to say with any level of precision what the "right" strategy is without knowing what your goals are, what your age is, what your level of risk is, and probably a dozen other questions specific to your plan.  Unfortunately, there really is no such thing as a cookie cutter "right" investment strategy; after all, if there was, everybody would be doing it, right?

My best suggestion to you is define your goals, decide what you want to get out of your retirement account, do a bit of research and choose accordingly.  Now, I'm not saying you have to become a a Certified Financial Analyst just to set up your 401k, but even at a very high research level, you should be able to pick some funds that most fit your needs.  If your feeling particularly ambitious, read some books (Jim Cramer, even though he's been proven to be somewhat of a dicey investment picker, has written some decent, easy to follow books that provides some interesting tips for the novice).  But at the very least, look at the funds offered, read the summaries, determine which ones are right for you and choose accordingly.

Last edited on Mon May 23rd, 2011 05:01 pm by dogfacedgremlin34

dr_papufnik

 

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If you're young enough to be doing equities, I've read that only about 25% of managed stock funds beat the S&P 500.  So doing the S&P 500 index fund (fund mirrors the S&P index) seems to make sense.  Right?

HBF



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JB5 wrote:
Big Garea Fan wrote: It is going to depend upon the 401K plans being offered by the employer's plan. A lot of your investing strategy is going to depend upon your age (when you are younger, you can afford to take chances; when you get older, you will be more conservative).

My only advice is:

a) if the employer offers a 401K matching program, invest at least enough to qualify for the 401K match

b) if you can afford it, invest as much as you can (up to a maximum of $16,500, can be higher if you are over 50) in your 401K to reduce your tax bill at the end of the year since 401K contributions are taken from your paycheck pretax.


The plans are done through Principal.




Getting advice from Principal Raditch is sound advice.



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