Basics of Investing

Archive for December, 2009

Question: I’m 23 and starting my 401K…which funds should I invest in?

My Options are the following Fidelity Class T accounts. I was told that if you are younger, you want to invest in the more aggressive accounts.

1) FA Balanced Fund
2) FA Government Investment Fund
3) FA Small Cap Fund
4) FA Dividend Growth Fund
5) FA Mid Cap II
6) FA Strategic Income Fund
7) FA Intermediate Bond Fund
FA Equity Income Fund
9) FA Growth Opportunities Fund
10) FA Equity Growth Fund
11) Prime Fund: Daily Money Class
12) FA Overseas Fund

Or I can put 100% in any of listed above. I’m new to stocks, investments so I would appreciate your advice. My employer will match 1/4 of a percent for the first 4 percent I invest.

Thanks in advance for your advice!

Answer: First off, it’s a great thing to see someone fo your age starting their 401K. Most younger generations are skipping this til later years, and then find they are behind.

For your age group, whatever company you are going through, each one will have its own data on what should be invested in. The one I deal with says your age group should invest their 401K in the following:

(These are approximates, you do what you are comfortable with.)
5% Short-Term Fixed Income
15% Fixed Income
0% Balanced/Asset Allocation
40% Large U.S. Equity
20% Small/Mid U.S. Equity
20% International Equity

Recently the US Equity hasn’t been doing well. If you want, cut down those percentages and concentrate on the Internation Equity (which has an excellent 1-5 year gain.)

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