<p>I guess I could have posted this in that other overwhelming thread. Parents, I have a confession to make. So at work we have 401K options and the employeer contributes up to 5%. So sometime during hr orientation I signed up for it and am now at 4%. I have pretty much ignored this completely. In essence, throwing a couple hundred a month to the wind. lol. So my issue is I HAVE NO CLUE about any of this.I loged into the website and… Something about fidelity, fidelity 2025, 2030, 2050, Vang midcap, fid growth. I might as well be reading it in a completely foreign language. How embarassing. I have no clue what any of this means. I guess I will try to read as much of the fidelity website as possible and maybe there is an investment 401k for idiots or dummies book out there.I think I even have one from fidelity ( i don’t think i even know what fidelity is). Does every other functioning adult know about this? How far behind am I ?( mid 20s). yikes…</p>
<p>^One of the best financial decision that you will ever make in your life. Congrats! I am not joking, you sound like you might take it as a joke. Not many young adults realize that they might be sitting on some nice cushion relatively fast. Make sure that you pay at least a minimum to get that full 5% of Emloyer’s contribution. At some point of my life I contributed 25% of my salary. When D. is done with her school, if I am still employed, i will definitely go back to that 25%. Huge tax savings!</p>
<p>I do not understand it all, but I have been learning because it is important. The one thing I can tell you is that if your employer will match up to 5%, you should definately do the full 5%. That is free money from your employer to your retirement account. And you are NOT “throwing a couple hundred to the wind.” That money will certainly grow over time and 30 years from now you will be very glad that you did it.</p>
<p>There are lots of very educated investing people on this board that will hopefully jump in to answer you.</p>
<p>Fidelity is the company that your employer has decided should look after your money. They are the recordkeeper – so they know how much you’re putting in, they send you quarterly statements, they have that website, etc. </p>
<p>When you contribute $$$ to your 401(k), you get to decide which investment fund to put it in. The Fidelity 2025, 2030, etc., are what they call “target date” funds. The target date funds are for people who don’t know enough to decide how to split up their $$$ among different funds. When you put your $$ in a target date fund, you typically choose the date at which you’ll be around age 65, and therefore ready to retire. The manager of the fund uses rules of thumb for how much you should be invested in stocks, bonds, etc., depending on your age. Since stocks are generally more risky than bonds and cash, this means you take more risk when you are young (and have time to make it up, in case it tanks) and less risk, or more conservative, when you get older.</p>
<p>I’d suggest getting a Finance 101 textbook and reading through it. Investing is about valuation. Are you getting a good deal or not?</p>
<p>Mutual Fund managers ask you for money and you essentially trust them to do a good job for you. They don’t always do that.</p>
<p>Congrats! You are way ahead of most of your peers by starting to contribute to a 401k in your 20s. </p>
<p>There are lots of ways to become more educated about finance. The Fidelity website has lots of good information. </p>
<p><a href=“Down Homepage”>Down Homepage;
<p>Your probably get an email every month or qtr from them with a newsletter. Read it. Also, look into online or in person classes Fidelity offers. For my co, the Fidelity rep comes to the office a few times a year to answer any questions people have. Ask your HR group to set up an info session with them - I’m sure there is a canned Investment 101 Fidelity presentation. </p>
<p>Vanguard is another very good mutual fund company that has decent research on its website:</p>
<p><a href=“Vanguard - Page Not Found”>Vanguard - Page Not Found;
<p>Congratulations on taking the first step!
Don’t let yourself feel overwhelmed, you have plenty of years to fine tune a good beginning.</p>
<p>I’m a big fan of the ‘lifecycle’ funds in 401Ks for folks that are not interested
in devoting a large chunk of time/brain to the whole topic.
Our 26 yo son is newly employed and is just now faced with this decision. He spoke to some
coworkers and his supervisor/mentor at work and has decided to start with a small contribution per paycheck and learn as he goes.</p>
<p>You will be very happy 30 yrs from now, truly.</p>
<p>Just make sure the fees on the funds you select are low. The difference of 0.5% doesn’t seem like much, but compounded over 40-50 years… you get the idea. There are some times where they’re worthwhile, but they’re few and far between and I wouldn’t recommend trying to pick them since you’re fairly green at investing.</p>
<p>I am in my 50’s and still feel stupid when it comes to my 401k/403b accounts. I often feel like I am just throwing my money away, because the darned things lose money on a regular basis (yes, they do gain, too … but the losing part really gets to me). I still contribute 10%, though.</p>
<p>A very, very rough rule of thumb on asset allocation is to subtract your age from 100 and that’s the % of your long-term assets that should be in equities. This is after subtracting 6 month (or a year) of living expenses that you should hold in highly liquid assets such as cash in the bank or a money market mutual fund. (for more sophisticated investors or people with more money, there are many more ways to slice this, but consider this a reference point).</p>
<p>
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<p>Note that “equities” are the same as stocks.</p>
<p>What I tell my kids (who are also 20-somethings) is:
(a) you can’t retire on money you don’t save … so save SOMETHING, and regularly;
(b) you have to trust SOMEONE in the beginning, even if it turns out they give you advice that doesn’t work out; and
(c) learn about investing when your risk is low … the earlier the better since you have less money at risk and because you can recover from mistakes easier.</p>
<p>It will be awhile before you realize why putting tax-free investments in a 401K is a bad idea … or what a PITA reinvested dividends are in a taxable account. And hopefully you’ll never find out how badly 2010 Target Funds did in the 2009 crash. Don’t worry about that stuff. If you’re with a decent investment firm … which Fidelity is … and you’re putting enough of your own money away to get the maximum company match, then you’re doing OK.</p>
<p>DS has sent me a few different articles from this site to see if they were accurate and they seem to do a really good job of giving an overview to the clueless.</p>
<p>[How</a> 401(K)s Work: A Beginners Guide | The Art of Manliness](<a href=“http://artofmanliness.com/2011/07/19/a-young-mans-guide-to-understanding-retirement-accounts-the-401k/]How”>How 401(K)s Work: A Beginner's Guide | The Art of Manliness)</p>
<p>I don’t like to tell people what to invest in, since I have a hard enough time deciding that myself, and I have an MBA. However, it is essentially a no brainer that you should contribute the full amount to get the full employer match. Then study the fidelity website and other materials that your employer makes available to decide what you want to invest in. </p>
<p>You need to figure out if you are conservative, balanced, aggressive etc. I would not recommend aggressive for a novice. For many years I only invested in guaranteed things like government bonds. Now, I don’t have too many bonds, but a more diverse approach. </p>
<p>Good luck.</p>
<p>See if Brokeragelink is available for free - it opens up a much wider world of things to invest in.</p>
<p>Fidelity is one of the best administrators for 401Ks out there. Their target funds are designed for people who don’t want to learn about investing. For the time being, put your 401K (and definitely go for max match) in the target fund that matures around your 65th birthday. Then, focus on doing your day job well and forget about the money in your 401K. </p>
<p>You will have very limited options for investing in your 401K, so start by researching those. Your employer or your 401K manager will probably have seminars on what they’re doing with your money. Go to those and ask questions. </p>
<p>The Motley Fool website ([Fool.com:</a> Stock Investing Advice | Stock Research](<a href=“http://www.motleyfool.com%5DFool.com:”>http://www.motleyfool.com)) has some excellent information for beginners.</p>
<p>Thanks for all of the replies!!! They were very helpful and I will be looking at all of the links provided and next time I am in the bookstore I will look for some intro to finance/investment book etc… At least now I know why it is Fidelity ( what that even is…) 2050. By money to the wind I meant that I haven’t been looking at this at all and have pretty much forgot about it. I think I can manage to figure most of it out by my 30s. lol</p>
<p>You have two choices:
- to save enough money for your retirement and keeping it in cash. you will need to estimate how much you might need, and see if you can save towards it.
- invest, at your age, i would invest in one of two ways:
–index funds (read about the different types of funds)
–choose companies that you buy their products: whole foods, apple, urban outfitters, etc. invest in what you know–my daughter loves apple, and so that is where she invested.<br>
–watch what happens, and you will learn. </p>
<p>It can all be overwhelming. But when you are young, you can take more risks. The chairman of Vanguard believes strongly in index funds. You may want to read about him and his philosophy.</p>
<p>Also, many very knowledgable people do not invest. It is like the cobbler who wears worn-out shoes, or the doctor that doesn’t eat properly.</p>
<p>Additionally, you could join an investment club to learn. Good luck and save, save, save. Also, try to not have debt and to buy your own home!</p>
<p>By the way, congratulations on already participating in a savings plan. also, you can put away money in a roth ira that you will not have to pay taxes on when you retire!</p>
<p>Thanks peacefulmom. I read about roth IRAs in one of the links and now know how that is different than an IRA. I was also looking though TDameritrade’s website. The good part is that I am still relatively young but time is ticking .</p>
<p>I would suggest that you open up your Roth IRA with Fidelity. It would be great to keep all of your investments in the same record-keeping organization.</p>
<p>Until you can figure out how you want to invest, continue to put as much money away into retirement accounts as you are allowed There is a limit per year, and you can just keep it in a money market fund until you decide how to invest it later. It can be a two step process. 1) Setting cash aside 2) investing.</p>
<p>Lots of luck!</p>