My 401k help?

Question

First you can begin telling me the highlights of a 401k. But anyway the company im working for offers 401k however there are different 401k savings plan investment funds and i dont know which one to choose. Theres about 25 funds to choose from such as short-term fixed income fund, large cap value index fund, international large cap value fund, company common stock fund, and aggressive lifestyle portfolio. So which one?! additional info about this kind of plan would be great.

THANKS

Answer 1

Money you put in a 401K is tax deferred meaning any money you put in there you don't pay taxes on until you withdraw it. Another feature of most 401K's is that employers usually match your contribution with some money of their own (free money). How to invest is up to you. It's dependent on your age, how long you work and your risk profile. I'd suggest reading some books, magazines and the internet. For some direction go here: http://www.troweprice.com/retailHome/0,,...

and click on Investment Guidance & Tools. Good luck to you.

Answer 2

I agree with David, his answer is best. But I wanted to add something.

If you aren't a savvy investor and want a simple way to invest, look into the "target" retirement funds. They usually have a year attached to them. They are managed for you over time and invest in 25+ different mutual funds alone. You put the money in and leave it alone.

Answer 3

As you're new to this I must assume you're young.  And, when you're young, you can afford to take risks for greater returns.  Risk would be the small companies and international funds.  You should also balance it out with some large cap funds.  You don't need income funds or bonds in your 20's... though you should think about moving that direction in your 50's.