HELPPPP retirement and 401k questions?

HELPPPP retirement and 401k questions?
When nearing retirement, you may not want to abandon stocks completely for which of the following reasons? a. Stocks are increasingly becoming safer than mutual funds b. You may still need the growth associated with stocks due to increased life expectancy c. Mutual fund fees are expected to increase dramatically in coming years d. You should always take more risk as your time horizon narrows e. All of the above ++++++++++++++++++ It is typically recommended that you have at least 50% of your 401(k) holdings allocated to your own company's stock. a. True b. False which answer is right for the two questions above??


Answers:

Tashi:  I believe the first answer is B. It's not A b/c stocks are definitely not becoming 'safer' than mutual funds. I don't believe mutual fund fees will increase so drastically that you should abandon them so it's not C. It's not D b/c the rule is you take more risks when you're younger and have lots of time between your current point and your retirement. And it's definitely not all of the above so it isn't E. Not sure about the second. I wouldn't think it's true but I can't say that for sure. My logic is, if the your company's market performance decreases, you don't want so much of your retirement threatened. You want to hedge your money which is why you diversify in the first place.
2011-07-28 08:21:02
don_sv_az:  First one is B Although you should have less of a percentage in stocks as you grow older. Second one is false. You already have your entire wage income dependent on your company. You do not want most of your retirement money also dependent on them.
2011-07-28 09:54:42
efflandt:  B for both. Stocks or related investments historically do better than cash interest in the long run, and if you invest too much in the company you work for and that company goes under, you are out that money. So you would need to diversify so no one thing is going to drag you down. After you retire, cash interest may not even keep up with inflation after taxes, and you may live longer than you expect.
2011-07-28 09:56:59