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401k Profit Sharing Plan & Trust Allocation?

Hi! I'm 26 years old and eligible for my company's 401k plan. I was handed a single sheet of paper, with no other information to assist in my allocation of funds. I want to invest 7% of my salary. My options are:

Oppenheimer Cash Reserve Fund (761)

" " Limited-Term Government (856)

" " Discovery Fund (501)

" " Quest Opportuinity Value Fund (237)

" " Quest Small Cap Value Fund (252)

" " Quest Balanced Value Fund (258)

" " The Equity (421)

" " Main Street (701)

" " Global Fund B (331)

" " Strategic Income Fund (231)

" " Capital Appreciation Fund (321)

If someone could please give me some advice as to how I should distribute my 7%...I would greatly appreciate it. I'm not much of a finacial planner and don't want to just throw my money away. Thank you for any help you can give me!!

4 Answers

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  • 1 decade ago
    Favorite Answer

    Very refreshing to see a young person who understands the value of their 401(k) plan. 7% is a good amount to start with. You're young enough that you want the majority of your money in stocks. I would suggest the following allocation -

    40% Capital Appreciation Fund

    30% Quest Small Cap Value Fund

    10% Limited-Term Government

    10% Global Fund B

    10% Strategic Income Fund

    This is an aggressive allocation, but we've also limited your downside loss with some international, bond, and government options. You don't want to worry about every day ups and downs. You've got all the time in the world and over time you should realize a rate of return of at least 10%.

    Every year, or whenever you get a raise, increase your contributions 1 - 2% until you have it maxed out. Or instead of maxing out your 401(k) you can put additional funds in a Roth IRA or better yet, both!

    Good luck!

  • Anonymous
    1 decade ago

    Here's what I would do:

    1) Open up a Roth IRA with a stock broker (E-Trade, Scottrade, Fidelity, etc.)

    2) Contribute to the 401K up to what they will 'match'

    3) Take the other 2-3% of my salary, and put it in the Roth IRA.

    4) With the money in the 401K, I agree with the first answer.

    5) With the money in the Roth, find 5 companies that will probably be doing well 30 years from now (ex. Coca-Cola, AT&T, Exxon, etc.), and buy stocks in those.

    6) As I get raises, increase my contributions until I'm putting away 15%.

  • r2mm
    Lv 4
    1 decade ago

    Go to www.oppenheimerfunds.com. Under "Fund Information" go to "Performance". Compare the funds allowed by your 401K. Check the historic growth rate, how long the fund manager has been in charge of the fund, check for all fees related to a specific fund. The site has more information than anyone could absorbe in one sitting.

    Try to get some diversification. Choose at least two or three funds, each specializing in different types of investments. Choosing three index type funds does not give you any diversity. Keep in mind also, as interest rates drop, bonds and bond funds increase in value. When interest rates go up, bonds and bond funds lose value.

  • Anonymous
    1 decade ago

    DON'T ask the company accountant - he/she'll protect co interests! Ask an outside investment/insurance broker/banker - they'd probably give you the best advise!

    XXXXX

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