401K---Time to diversify????

Discussion in 'Budget Board' started by BABY_EINSTEIN'S_MOM, Mar 18, 2008.

  1. BABY_EINSTEIN'S_MOM

    BABY_EINSTEIN'S_MOM DIS Veteran

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    Need some opinions here:
    Mid 30's with a company 401K
    Have been putting everything in company stock
    Told it is time to diversify considering age
    Choices for the portfolio include:
    mutual fund, income fund, short term interest
    fund, money market fund, U.S. savings bond,
    institutional international equity fund,
    institutional small-cap equity fund, institutional
    strategic investment fund, vanguard institutional
    index fund...any opinions??
     
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  3. Cheshire Figment

    Cheshire Figment <font color=red><marquee behavior=alternate>Friend

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    Keep only a tiny percentage in Company stock.

    Think Enron or Bear-Sterns! Both of them had lots of people with 401(k) money primarily in company stock and the value of the stock suddenly dropped more than 90%!!
     
  4. msmayor

    msmayor Finding my beach...

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    You are 100% invested in company stock??

    That is something you should change right NOW. Consider the fact that if you were a Bear-Stearns employee with your retirement money invested exclusively in their stock, your 401K would be virtually worthless right now.

    You are still young and have plenty of time to ride out market fluctuations, and mutual funds are the best way to spread the risk out over numerous sectors of the market.

    You should get some basic education on the types of funds your company offers based on their type, and think about how much risk you're willing to take.

    No one here can (or should) make recommendations on what to do. To get valid recommendations, an advisor should know your total financial picture and your retirement goals as well as a complete look at the financial investment products available to you through your company.

    See if you can speak to your HR department who might direct you to an advisor to help you understand your choices and the risks involved with each product.
     
  5. Toby'sFriend

    Toby'sFriend The thing about growing up with Fred and George is

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    Out of the company stock -- today. Your financial well being is already tied to the company by virtue of your paycheck. You need to spread the risk around.

    I am a huge fan of the Age Indexed Funds. Does your company offer one of those.
     
  6. DVC Sadie

    DVC Sadie <font color=royalblue>Those mashed taters are soun

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    The first thing I would do is find a Certified Financial Planner who could help you "Diversify" your company stock into a more well balanced portfolio.
     
  7. KelNottAt

    KelNottAt <a href="http://www.wdwinfo.com/dis-sponsor/" targ

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    Your company stock should only be a minimum fraction of the whole.

    Right now, go to your account and move most of it to one of the age-based funds they probably offer. Do that for your current account balance AND for the future contributions.

    Let your 401k sit in the age-based fund (something with a 2040 target +/-) until you can see a professional and get good advice for your personal situation. Then, once you have the advice, you can move it out of the 2040 "temp hold" fund.
     
  8. JoyG

    JoyG DIS Veteran<br><font color=blue>When I saw Titanic

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    I'm a fan of index funds. I hold large cap, small cap, bond and international stock index funds.
     
  9. mickeyfan2

    mickeyfan2 DIS Veteran

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    One should never own their companies stock in their stock fund. It is putting all of your eggs in one basket - your job, your pensions and your retirement account. If the company fell on hard times you could lose all three legs of your stool.

    Are these all of your choices? I thought all companies had to now offer the retirement date funds. That is what I would put yours in. I will assume you are 35. That means you have 30 years until retirement. 2008 + 30 rounded up is 2040. So put yours into a targeted 2040 account. They diversify for you and get more conservative as you age.
     
  10. BABY_EINSTEIN'S_MOM

    BABY_EINSTEIN'S_MOM DIS Veteran

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    I must say that we were very young(21) when we first invested in the stock and we loved watching our balance rise very quickly, which it did!(We are also matched up to 7%) We were very immature and would borrow money from our 401K and would think, oh well, we are paying "ourselves" back over time! LOL Not realizing(or caring) just how much time and money we were losing for retirement!! But, things change, we get older and wiser, etc. And also, we are going to get financial advice, I was mainly curious to see how most people spread their 100% throughout the portfolio. I have read so many things lately from financial advisors online and it seems no more than 10% is recommended for company stock.
     
  11. Karenj2

    Karenj2 Hot dog, hot dog, hot diggity dog!

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    I'm around the same age (35), and when I worked at IBM, I had my 401k diversified as follows:

    40% Large company stocks
    30% Small company stocks
    25% International stocks
    5% company stock

    (I also had the employee stock plan, too, so I had some post-tax IBM stock as well.)

    The company I work for now doesn't trade on the stock market, and I was a bit lazy when I moved everything over, so I currently have everything in one of those age range mixes.

    DEFINITELY get out of having 100% company stock!
     
  12. adkkev

    adkkev hiking fool

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    Your company, or whoever manages the 401k for your company, should have a financial advisor available to help you with your investments. I believe this is a requirement (by law) after the Enron fiasco (where just about everyone had Enron stock). Ask the folks at HR; they SHOULD be able to point you in the right direction.
     
  13. Cheshire Figment

    Cheshire Figment <font color=red><marquee behavior=alternate>Friend

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    Of course I (sort of) violate this guidance as I have 100% of my retirement funds invested in my employer's stock.

    However, the employer was the Federal Government and I am currently 100% in US Treasury Bonds.
     
  14. juliana_sd

    juliana_sd DIS Veteran

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    I have about 30% in my company's stock. We've been stuck in a pending "joint venture" for abut 6 months and have not been allowed to sell it or move it to a different investment due to insider trading fears. It was actually doing ok until the last few weeks, and recently has dropped about 20%. I can't even look at my balance :scared1:

    The other 70% I have in a "Growth" fund. Once this JV closes I'll probably do 50% in the growth fund and 50% in a retirement-year-targeted fund. I may keep the company stock where it is until it gets back to a better level. We'll see.
     

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