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Need advice on how to invest in my 401k

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Lauren1059
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Need advice on how to invest in my 401k  Reply with quote  

I'm a 26 year old who makes 40k a year. I want to invest as best as I can into my 401k and currently know little to nothing about doing so. My work offers 401k options through ADP and from the little research I've done, it looks like they have shit for options. Below are my current investment and then all of the options and current rates. Any and all advise would be greatly appreciated! Below is some information about the 401 k plan my company offers and a list of the investment options.
as of July 15, 2016. Also i'm currently investing 5% before tax 0% Roth 401k.
Years of Service 1 2 3 4 5 6 7
Employer Match w/vesting 25% 50% 75% 100%
Employer NEC v 20% 40% 60% 80% 100%


Plan Eligibility
You can take advantage of this employee benefit as soon as you have met your plan’s age and service eligibility requirements.
21 years of age on the next plan entry date.
You must have completed 1 month(s) of service by the next plan entry date.
Contributions

Pre-Tax: 1% to 88%
Roth 401(k): 1% to 88%
Catch-Up Contribution: If you’re over 50 years of age, you may also make a catch-up contribution in excess of Internal Revenue Code or plan limits. For 2016, you may contribute an additional $6,000 to your retirement plan.

Employer Contributions
There may be special requirements for you to receive your company contributions.
Vesting

Your contributions and any amounts you rolled into the plan, adjusted for gains and losses, are always vested 100%.
Your company contribution vests according to the following schedule:
Years of Service 1 2 3 4 5 6 7
Employer Match w/vesting 25% 50% 75% 100%
Employer NEC v 20% 40% 60% 80% 100%

Plan Investments
You choose how to invest your savings. You may select from the following:
The variety of investments listed in the Investment Performance and Information pages.

Loans

Your plan allows you to borrow from your savings. (A fee may apply.)
Maximum repayment period: Generally, five years, unless for the purchase of a primary residence.
Interest rate: Prime + 2%

Withdrawals

Types: Rollover, Age 59½, Hardship
Special rules: Special rules exist for each type of withdrawal. You may be subject to a 10% penalty in addition to federal and state taxes if you withdraw money before age 59½. See your Summary Plan Description for more information.
Distributions
Vested savings may be eligible for distribution upon retirement, death, disability or termination of employment.
Rollovers
Rollovers are accepted into the plan, even if you are not yet a participant. See the Rollover form for instructions regarding transferring money into your plan.

Account Management Options
Save Smart®: Save Smart allows you to save gradually over time, as you can afford, to help you meet your retirement savings goals. This feature lets you increase your pre-tax plan contribution by 1, 2, or 3% annually on the date you choose.
Automatic Account Rebalancing: Automatic Account Rebalancing can help you maintain the long-term investment strategy you decide is appropriate for meeting your savings goals. Once you have created your diversified asset allocation for your savings, automatic Account Rebalancing will rebalance your account as often as you choose: quarterly, semi-annually, or annually.

nvestment Fund Price Change in
Price Units/
Shares Balance % of
Assets

My Current Investments
American Century One Choice 2055 Portfolio - Class R $13.000000 -0.02 255.7706 $3,325.02 55.00%
Victory Sycamore Small Company Opportunity Fund - Class R $36.760000 0.04 24.8526 $913.58 15.11%

Available Funds
State Street Cash Series U.S. Government Fund - Class L $1.000000 0.00 0.0000 $0.00 0.00%
PIMCO Low Duration Fund - Class R $9.860000 0.00 0.0000 $0.00 0.00%
JPMorgan Government Bond Fund - Class R2 $10.940000 -0.03 0.0000 $0.00 0.00%
PIMCO Total Return Fund - Class R $10.330000 -0.01 0.0000 $0.00 0.00%
State Street U.S. Bond Index Securities Lending Series Fund - Class VIII $10.823000 -0.03 0.0000 $0.00 0.00%
Prudential High Yield Fund - Class R $5.390000 -0.01 0.0000 $0.00 0.00%
PIMCO Real Return Fund - Class R $11.130000 -0.02 0.0000 $0.00 0.00%
American Century One Choice In Retirement Portfolio - Class R $12.620000 -0.02 0.0000 $0.00 0.00%
American Century One Choice 2020 Portfolio - Class R $11.850000 -0.02 0.0000 $0.00 0.00%
American Century One Choice 2025 Portfolio - Class R $13.920000 -0.02 0.0000 $0.00 0.00%
American Century One Choice 2030 Portfolio - Class R $11.950000 -0.02 0.0000 $0.00 0.00%
American Century One Choice 2035 Portfolio - Class R $14.800000 -0.02 0.0000 $0.00 0.00%
American Century One Choice 2040 Portfolio - Class R $12.310000 -0.02 0.0000 $0.00 0.00%
American Century One Choice 2045 Portfolio - Class R $15.330000 -0.02 0.0000 $0.00 0.00%
American Century One Choice 2050 Portfolio - Class R $12.320000 -0.02 0.0000 $0.00 0.00%
BlackRock Global Allocation Fund, Inc. - Class R $17.350000 -0.04 0.0000 $0.00 0.00%
State Street Aggressive Strategic Balanced Securities Lending Series Fund - Class VII $15.094000 -0.02 0.0000 $0.00 0.00%
State Street Conservative Strategic Balanced Securities Lending Series Fund - Class VII $11.875000 -0.03 0.0000 $0.00 0.00%
State Street Moderate Strategic Balanced Securities Lending Series Fund - Class VII $13.590000 -0.02 0.0000 $0.00 0.00%
BlackRock Equity Dividend Fund - Class R $22.480000 -0.02 0.0000 $0.00 0.00%
Lord Abbett Fundamental Equity Fund - Class R3 $12.420000 -0.01 0.0000 $0.00 0.00%
State Street S&P 500 Index Securities Lending Series Fund - Class IX $16.881000 -0.02 0.0000 $0.00 0.00%
Alger Capital Appreciation Institutional Fund - Class R $24.040000 -0.04 0.0000 $0.00 0.00%
AB Discovery Value Fund - Class R $19.050000 0.02 0.0000 $0.00 0.00%
State Street S&P MidCap Index Non-Lending Series Fund - Class J $17.699000 -0.01 0.0000 $0.00 0.00%
Prudential Jennison Mid-Cap Growth Fund - Class R $34.300000 -0.08 0.0000 $0.00 0.00%
State Street Russell Small Cap Index Securities Lending Series Fund - Class VIII $16.631000 0.04 0.0000 $0.00 0.00%
Lord Abbett Developing Growth Fund - Class R3 $17.210000 -0.01 0.0000 $0.00 0.00%
MFS Research International Fund - Class R2 $14.930000 -0.09 0.0000 $0.00 0.00%
State Street International Index Securities Lending Series Fund - Class VIII $12.535000 -0.03 0.0000 $0.00 0.00%
Oppenheimer International Growth Fund - Class R $35.200000 -0.26 0.0000 $0.00 0.00%
Oppenheimer Developing Markets Fund - Class R $31.250000 -0.03 0.0000 $0.00 0.00%
Post Mon Jul 18, 2016 2:40 pm
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oldguy
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 Reply with quote  

quote:
from the little research I've done, it looks like they have shit for options. Below are my current investment and then all of the options and current rates.


I think you have it pretty well defined. Of the list of available funds the two that you picked are what I would choose for a 26 year old.

In general, at 26, your goal is about 30 years of interrupted compounded growth. Most of us are given about 30 yrs for wealth building, then we transition to wealth preservation. You are starting the wealth building phase, you want the closest thing to an unmanaged SP500 Index Fund that you can find. 'Unmanaged' because about 85% of professional fund managers (mutual funds, pension funds, college funds) do not beat/match the SP500 Index by enough margin to pay their overhead.

The funds in your company's plan all have high fees and high commissions - in fact the Plan fees eat up quite a bit of the company contribution. The effect is large on a 30-yr scale. Eg, if your total investment is $5000/yr at 11%/y (The SP500 longterm average) you'll have $1,100,000 in 30 y.. But if the annual fees/costs are 3%, you'll have only $612,000. Barely half as much, ie fees make a HUGE difference.
During my early working years, I sent letters to HR and pointed out that employees needed better choices, ie, at least one pure SP500 Index choice that wasn't laden with fees. And happily, after a couple years, they responded.
But, that said, your Plan is still the right choice - ie, you get the tax deferment - and the company match covers the fees, plus a bit more.

Here's a site for the SP500 Index history.
http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html#.V40IzTWyDSZ
Post Mon Jul 18, 2016 5:03 pm
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Lauren1059
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Thank you for your help. Glad i'm on the right track.
I've previously reach out to HR with my concerns about our company 401k options and concerns and have seen no change, however, I'm going to take you advise and keep bringing it up until there is change.
Post Thu Jul 21, 2016 7:18 pm
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