Want to open a 401k. Need some inputs. ?

Question

Its through my job - UPS. (Teamster-UPS National 401(k) Tax Deferred Savings Plan) Which would you go with, and how does this 401k thing work? Any help is good.

GOVERNMENT STIF ELECTION

%

STABLE VALUE FUND ELECTION

%

BOND MARKET INDEX FUND ELECTION

%

BALANCED FUND ELECTION

%

S&P 500 EQUITY INDEX FUND ELECTION

%

S&P 400 MIDCAP INDEX FUND ELECTION

%

RUSSELL 2000 INDEX FUND ELECTION

%

EAFE INTERNATIONAL INDEX FUND ELECTION

%

REIT INDEX FUND ELECTION

%

BRIGHT HORIZON INCOME FUND ELECTION

%

BRIGHT HORIZON 2015 FUND ELECTION

%

BRIGHT HORIZON 2025 FUND ELECTION

%

BRIGHT HORIZON 2035 FUND ELECTION

%

BRIGHT HORIZON 2045 FUND ELECTION

Answer 1

A 401k plan is simply a way to save for retirement.  Usually thru periodic contributions thru your paycheck.  But if you don't understand much about these retirement plans, go to your bookstore or library & pick-up a book on the subject.  No one cares as much about your retirement as you do.  Check out investing for dummies by eric tyson (I have this).  

Do your asset allocations plan 1st - stocks/bonds/cash.  After than you can pick your funds.  But I might go something along the lines of

35% s&p500 index

10% mid cap 400 index

05% russell 2000 index

20% eafe international index

20% bh income

10% cash  

Answer 2

If I were you, I would choose S&P 500 EQUITY INDEX FUND ELECTION , because historically it has provided a good rate of return (around 8% per annum), and yet it is a fairly safe investment. If you don't know this, the S&P 500 index is an average of the stocks of 500 of the largest corporations in the US. Also, since your 401(k) is a long-term investment, don't worry about the current short term bearish performance of the stock market. Good luck!

Answer 3

...it's a great idea...save your own money for your own future.

Because the contributions you make are taken out of your pay before taxes...you are saving a little there...and because the amount you put into your 401 doesn't show up as " income" at tax time...you are saving a little more there.

Now onto the " good stuff"..." How does it work ?"...well the money you put in is going to be put into different " investments"...those are all the funds listed... of course you have no idea what they mean or represent...but as time goes by and you look at the quarterly reports that you will be getting...you WILL become more interested and knowledgeable... after all, it's your money...you WILL see that it's working for you.

The " Bright Horizon" funds are what's called " life -cycle" funds... you put your money in the one that represents your retirement date ( or close). Those funds are " managed" by your plan company and will change as the years go by...getting into safer and safer investments.

Generally they're a good idea, but if you are young they still tend to be a little " conservative" ( too safe)

Gov't...Stable...Bond...Balanced.... are all very conservative, too. If you are already 45 or so, you could put a small percentage into Balanced ...but otherwise go with some of the others.

So that leaves about five to get into... The three index funds would probably be good for about  25%  each... then 15% in Foreign ...and if you are " a ramblin', gamblin' man"  about 10% in the REIT fund  ( MAN ! someday real estate will turn around again...and these things are down so far now, they could really rriple the gains of the indexes ...if..if you've got time...

Good luck however you choose...but just remember to take a look at those reports  when they come in..(.or you can check on- line with most plans)...