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I need advice on 401k
The company I work for recently changed from a pension to 401k. my company does not match what I put in. I decided to put in 10 percent of what I make. When I signed up the person asked me what I wanted to invest the money in. I told I didn't know and asked for advice. she said she is not allowed to give that kind of advice. She also said that most people who don't know what to invest in pick target stocks. I choose the target stocks. Is that a good choice? Should I change it if so what? I would appreciate any advice you can give as i am new to this
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My thoughts:
In general, stocks are a good long term investment. Not sure what you mean by the phrase, "target stocks." Is that a group of pre-selected stocks, or do you have to pick out the "target stocks" yourself?
Either way....
Is there a "mutual fund" choice? For most people just starting out in investing, mutual funds make more sense than individual stocks — at least until you gain a little experience and have some time to figure out what stocks to pick.
How old are you? Asking the question another way, how many years do you have before retirement? If you are 40-years away, you'll get one set of answers. If you are only 4-years away, the advice should be quite different.
BTW: Changing from a pension [defined benefits] plan to a 401K is usually a good thing in the long run — especially if you take the time [as you are doing] to get started on the right track. No company matching contributions is a bummer. Oh well, if you change companies to one with a more enlightened benefits plan, you should be able to take your 401K bucks with you. That is often harder to do with pension plans. 
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Jim somebody associated with the plan MUST be a registered rep and will be able to give you advice. The pension protection act requires it. The quality of that advice is of course unknown. Go out and get a copy of Money magazine or Smart Money magazine, The last issue of Money had an article on retiring rich, it's worth a read. Go to your local borders and read everything over a coffee. Learn about asset allocation strategies and find one that fits your stage of life.
I would household the assets in a large cap value fund if your under 50 or a bond fund if you're over 50, and learn what you need to know to get a proper allocation ASAP. Target stocks, whatever that means, is crazy , and individual equities are not even allowed in 401k's except for the company you work for's stock.
I clipped the following from about.com and while I don't necessarily endorse the exact allocations it is a good start:
How should a 401k be balanced?
According to Money magazine, the suggested allocations at three life stages are:
Aggressive--for those with 35 or more years until retirement
50%--large cap stocks
15%--mid cap stocks
15%--bonds
10%--small cap stocks
10%--international stocks
Moderate--for those with 20 years until retirement
35%--large cap stocks
35%--bonds
10%--mid cap stocks
10%--small cap stocks
10%--international stocks
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I'm glad I posted first, because you are a tough act to follow!
What a great reply!
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