Am I making good choices with my 401k plan?

Question

I have been in my company's 401k for just a couple months. I have been averaging a weekly contribution around roughly $75 per week. I know it hasn't been very long but I would like to know how this computes out over the long haul.I know this all depends on which funds I have placed my contributions to (25% ODMAX, 25% MMUFX, and 50% TWCVX) and the market and my funds performance make the difference. From what I can tell I have lost about 2.2% over the past couple months. I would like to know if anyone has an opinion on whether I have made decent choices and how these contributions will figure out in the long run. Thanks!!

CK

Answer 1

Your selections are a tad more aggressive than I would recommend at least overall. That is not to say that the funds are not good, but they could be subject to considerable downward movement. MMUFX lost over 1/3 of its value from 2001-2002.  TWCVX lost 60% of its value during that time.  ODMAX has had a less volitile history until recently.  It has host 15% so far this year.  

You are not in 100 yard dash here.  You are in a marathon.  A more conservative strategy might do you better over the long term.

But let's talk about what you might expect with $75 a week.  That computes to $3900 a year.  Do you get a company match?  With the aggressive allocation you have, you might expect a long term return of anywhere between 0% and 20% annually over a ten year period.  TWCVX has returned exactly 0% over the past 8 years.  So in ten years you might have $39,0000 to $101,200.  A more conservative strategy can be expected to yield between 5% and 10% annually.  So in ten years you might have $49,000 to $62,150.  This of course does not count employer contributions.    

Answer 2

Your investment time frame is decades, not months.  Short-term performance tells you nothing.  Just make sure your portfolio is suitably diversified - domestic stocks, foreign stocks and some fixed-income component.  Pay attention to fund costs, too.

Answer 3

Well...I'm going to just combine both answers and twist a little, too.

Yes...wayyyyyy too soon to be looking at your returns ( especially with THIS market).... and your funds really aren't that bad...right now, yes...long run, maybe different..( decent holdings..fair five year returns)

Give it all some time...if your results still falter...go with whatever " life- cycle " funds your plan offers...but as for just starting? ..really not the time to be ultra- cautious.

...and for figuring long-term, keep this " calculator" bookmarked:

http://www.finishrich.com/free_resources...