How much I should pain into my 401k this year (2007) given that I joined the workforce in June?
How much I should pain into my 401k this year (2007) given that I joined the workforce in June?
I joined work force in June 2007 and I am new to the United States (originally from Europe). Any recommendation on how much I should invest?
My second question is related to my 401k portfolio - how I should invest? Any suggestion about diversification - and if yes, what are the rules/guidelines for allocation? Any advice on what funds/bonds/stocks are the best?
Answers:
Thin Kaboudit: Invest as much as you can afford and are allowed. The money you invest earliest when building retirement savings is the money that has longest to grow, and will constitute the bulk of your nest-egg when you get there! (For example, if you invested $1000 a month for one year, then added nothing more, in 40 years it would be worth over $1,000,000.... You would have to invest $1000 a year every year for 40 years (four times as much) to earn the same.
The further away retirement is, the more aggressive your choices should be.
2007-06-06 17:37:37
2007-06-06 17:37:37
Chosen Answer
MinocStriker: Depending on your bills and everything, and this is just my advice, I set aside a health reserve of funds for the "just in case" situations...after which I've aggressively contributed to my 401(k) (18% of my paycheck). If your company matches contributions to your 401(k), even better. I think most companies will match 4-8% of your salary as long as you're making contributing the same percent. If you have any questions about your company match, it should be defined in your company's policies so you can consult a HR personnel if you still have questions. As for how you should invest, it really depends on the amount of risk you want. As you're young, you can afford to gamble alot more now than someone who is nearing retirement. Wherever your company's 401(k) financial institution is, they should be able to provide you prospectuses on their assortment of funds that you can have your contributions go to. My one bit of advice though is that when going into a fund, use a fund with an expense ratio less than 1 (and preferably anything below 0.5).
2007-06-06 20:45:24
MinocStriker: Depending on your bills and everything, and this is just my advice, I set aside a health reserve of funds for the "just in case" situations...after which I've aggressively contributed to my 401(k) (18% of my paycheck). If your company matches contributions to your 401(k), even better. I think most companies will match 4-8% of your salary as long as you're making contributing the same percent. If you have any questions about your company match, it should be defined in your company's policies so you can consult a HR personnel if you still have questions. As for how you should invest, it really depends on the amount of risk you want. As you're young, you can afford to gamble alot more now than someone who is nearing retirement. Wherever your company's 401(k) financial institution is, they should be able to provide you prospectuses on their assortment of funds that you can have your contributions go to. My one bit of advice though is that when going into a fund, use a fund with an expense ratio less than 1 (and preferably anything below 0.5).
2007-06-06 20:45:24