Hi ,
I have a 401k plan with my company. I am planning to invest under the 401 k plan. There are plans like target 2050, s&p and others. There is one plan called the growth which holds stocks from Apple, google, Facebook and other top companies. The return on this seems to be 14% in an year and about 12% in 3 years. So would it be wise or rather how risky would it be to invest in this?
Personally I wouldn’t. I ignore the past performance when I’m looking at 401k options. Buying the thing that JUST DID great only means you’re buying high. What you really want to buy is the thing that’s ABOUT to do great. Since we don’t know that, optimal investing strategy is to buy and hold broadly diversified, low fee index funds.
Take a look at this post to figure out the best option based on your 401k provider:
Hi Priyanka, the target date fund will also have Apple, Facebook, google in it. What is the the target date fund? I can look it up for you. Should be fidelity, trowe, Schwab vanguard etc. give me the name and the year. Also the growth stock won’t have any bonds. So you will have to manually change your assets as you get older. The target date fund rebalances for you automatically
Fund name. 1 year return 3 year return fee
Target now. 5.9%. 4.27. 0.18
Target 2050. 7.16%. 5.07. 0.14
Target 2030. 7.44%. 5.46. 0.10
Target2035 6.97% 5.50% 0.09%
Target 2040 6.34% 5.41% 0.08%
Target 2045 5.85% 5.34% 0.08%
Target 2050 5.37% 5.27% 0.07%
Target 2055 4.74% 5.09% 0.07%
Target 2060 n/a n/a 0.07%
Building Block Funds
fixed 2.29% 2.05% 0.32%
Bond 9.74% 5.23% 0.11%
Real Return 1.18% 2.13% 0.42%
Global Stock 5.30% 5.60% 0.03%
S&P 500 Index 12.90% 10.28% 0.02%
Value Stock 4.29% 4.78% 0.03%
Growth Stock 19.90% 14.94% 0.03%
International stock (3.15%) (0.09%) 0.05%
Mid&Small Stock 3.74% 5.82% 0.03%
These are all the options I have for investing the money for 401K. Please let me know if you need any further info on any of these. They are all in MORNING STAR.
@Nirav @Jeremy - if the above mentioned are the options I have, what percentage in which of these funds would you recommend?
Those are great options! I would put 100% in a target date fund. Pick the year based on your birth year plus 65, I like to round up to the next higher five year fund to keep it a little more aggressive for a little longer. Here’s an article on why I love target date index funds!
Nice job @ referencing us too, @Priyanka20!