Opinion on my 401K allocation

Hello all,

I'm new to investing and have been contributing to my company's 401K plan
for the last year or so. I'm currently 26, and contributing 10% of my
salary with 4% company match. I'm would say I'm not too risk averse or
worried about the ups and downs right now since i have about 35-40 years
until retirement. I'm wanting to know if my asset allocation is OK (meaning
well diversified, and aggressive enough for someome like me). Here's what I
have below and the percentage allocated to each. Thanks in advance.

Joe

FEIIX - S & P 500 Index fund - 35%
FSEIX - Mid cap value fund - 15%
FISGX - Mid cap growth fund - 20%
FSCCX - Small cap value fund - 15%
FAICX - International Large blend - 15%

Re: Opinion on my 401K allocation

Hi Joe,

In most cases people that critique a portfolio are basically telling you
what they would do if they had your choices. It would be great if you would
list all of your choices even if you just said that you had all First
American funds available to you.

My son just started a new job and asked for help with his 401k choices. His
401k is with Fidelity but the choices were limited and I ended up putting
him 40% in Fidelity Diversified International, 30% in Fidelity Contrafund,
and 30% in Royce Low Priced Stock.

Personally, I don't use index funds so I wouldn't be interested in FEIIX.

Your portfolio below is about:
57% large cap
32% mid cap
11% small cap

30% value
39% blend
31% growth

2% cash
83% US stocks
15% foreign stocks

Personally, I would like to see at least 30% in foreign and maybe closer to
40%. I am more flexible than most 401k investors though and do engage in
timing the forein markets. We do own 2 international funds though and will
probably just hold them. TBGVX and TRIGX are the funds.
I increase my foreign stake through ETF's and CEF's when I think it's a good
time to do so.



"Joe" <> wrote

> FEIIX - S & P 500 Index fund - 35%
> FSEIX - Mid cap value fund - 15%, average, in line with category
> FISGX - Mid cap growth fund - 20%, above average
> FSCCX - Small cap value fund - 15%, average, in line with category
> FAICX - International Large blend - 15%, average, in line with category

Re: Opinion on my 401K allocation

"Joe" <> wrote
> Hello all,
>
> I'm new to investing and have been contributing to my company's 401K plan
> for the last year or so. I'm currently 26, and contributing 10% of my
> salary with 4% company match.

Have you considered contributing 4% of your salary, then maxing out a Roth
IRA?

Many pundits recommend this as opposed to what you are doing. I can
elaborate if you wish.

> I'm would say I'm not too risk averse or
> worried about the ups and downs right now since i have about 35-40 years
> until retirement. I'm wanting to know if my asset allocation is OK
(meaning
> well diversified, and aggressive enough for someome like me). Here's what
I
> have below and the percentage allocated to each. Thanks in advance.
>
> Joe
>
> FEIIX - S & P 500 Index fund - 35%
> FSEIX - Mid cap value fund - 15%
> FISGX - Mid cap growth fund - 20%
> FSCCX - Small cap value fund - 15%
> FAICX - International Large blend - 15%

I think the following sites are excellent guidance for asset allocation.
Remember, this is not an exact science.

Portfolio allocation tools (online and free):

(Take the 49-question survey. At the end, it
will spew back at you recommended allocations, using the index funds it
sells. Just ignore the particular funds, and use the general
recommendations.)

(Faster than the above, but more
general, too.)

(This appears to be
identical to many others sites' tools. Fast but general.)

www.vanguard.com (Click on: "Go to Personal Investors... " ; "Planning &
Education" near top; "Retirement Planning"; "I'm already saving... "; "How
should I allocate my assets" on the right, middle; "I accept" at the
bottom.)

Googling for {portfolio allocator} turns up more, but I doubt they vary
much from the above.

If you have an account with Fidelity, I know one can log in and it has a
more detailed allocation tool. If you have an account elsewhere, it may
have an online allocation tool, too.

Re: Opinion on my 401K allocation

"Joe" <> wrote in message
news:v8ofe.9363$
> Hello all,
>
> I'm new to investing and have been contributing to my company's 401K plan
> for the last year or so. I'm currently 26, and contributing 10% of my
> salary with 4% company match. I'm would say I'm not too risk averse or
> worried about the ups and downs right now since i have about 35-40 years
> until retirement. I'm wanting to know if my asset allocation is OK
(meaning
> well diversified, and aggressive enough for someome like me). Here's what
I
> have below and the percentage allocated to each. Thanks in advance.
>
> Joe
>
> FEIIX - S & P 500 Index fund - 35%
> FSEIX - Mid cap value fund - 15%
> FISGX - Mid cap growth fund - 20%
> FSCCX - Small cap value fund - 15%
> FAICX - International Large blend - 15%

Joe:

First of all, congratulations on starting so young. I wish I had been able
to do so. If you keep it up, it means that you will require a much lower
average return to meet your retirement goals.

Portfolio allocation is a very personal choice. If you are comfortable with
the volatility of this portfolio then it looks pretty diversified to me. If
you are not, you might consider adding bonds at some point (though now may
not be the best time if, as we all seem to assume, interest rates are about
to rise).

Try to keep learning about investment. In time, you might want to consider
some things that don't correlate so well with the S&P like real estate or
precious metals.

The most important thing is to stay the course.

-herb

Re: Opinion on my 401K allocation

"Herb" <> wrote

> (though now may not be the best time if, as we all seem to assume,
> interest rates are about
> to rise).

I really enjoy Herb's little disclaimers. "as we ALL seem to assume".
I wish he wouldn't say "ALL", I rarely agree with him.

It was he that said the future can not be predicted and here he is
predicting the future. Elle/Caliban/Caroline/PhD does the same thing.

Be careful with these people and their advice.

As far as interest rates rising, I have been hearing that they have no place
to go but up for the last several years. Profunds offers a Rising Rates
Opportunity Fund. If rates rise you make money, 1.25 times the inverse of
the daily price movement of the 30 year bond. The fund has an inception date
of 5/1/2002 and the average annual return from inception to 4/30/2005
is -13.86%, one year performance is -18.56%. It seems that everyone who
thought about this fund and suggested it to others was dead wrong.

Two new ProFunds allow you to bet for or against the U.S. Dollar Index.
ProFund Rising US Dollar Fund
ProFund Falling US Dollar Fund

I haven't seen anything mentioned about these funds. It could be that the
direction of the dollar is not a sure thing like the direction of interest
rates.

Re: Opinion on my 401K allocation

On Sun, 08 May 2005 13:05:31 GMT, "Joe" <> wrote:

>Hello all,
>
>I'm new to investing and have been contributing to my company's 401K plan
>for the last year or so. I'm currently 26, and contributing 10% of my
>salary with 4% company match. I'm would say I'm not too risk averse or
>worried about the ups and downs right now since i have about 35-40 years
>until retirement.
[...]

The real issue with investing is not so much "what funds" you choose.
As long as you stay diversified then you don't have anything to
worry about. The really important thing is something that you
almost never hear about; and that is, having the correct mental
attitude and discipline.

I can assure you, sometime fairly soon you will be tempted to
stop contributing to your retirement fund "for just a little while".
Perhaps you will want to buy a house and you want to save up the
down payment quicker. Perhaps you will want to go on some vacation
but you don't have the money right now. It could be any number of
things.

The bottom line is, don't do it, ever. Once you stop putting in
your regular 10% contributions, it is very difficult to start up
again. Prepare yourself for this right now. Tell yourself that
the 90% of your salary that you are currently living on is *all
there is*, *there is nothing more*, and tell that to yourself
until you live by it always and will never change it.

You should even consider increasing the 10% as you get pay raises.
If you get a 4% raise, keep 3% for yourself and raise the 10% to 11%.

See Clayson's excellent little book "The Richest Man in Babylon" for
more on this.