Help Me With My Financial Future!

**Otis Fry** · 11-01-2004 05:08 PM

I finally work for a company that allows me to participate in a 401k plan. It's another three months before I can begin participating, but I thought I should start doing some research on it (looks like it's a lot harder than just stuffing money into my mattress). Our plan is handled through CIGNA, although I understand that division is being sold off to Prudential (cool...I always wanted a piece of the rock.

).

Anyway, I'm allowed to choose the manner in which my money is invested, and that's where I'm looking for help. They have a boatload of plans listed on their site and I want to make the best choice possible. As an example of what I'm looking at, here is a list of just the funds available that also have Morningstar Profiles:

Balanced Growth/RCM
Balanced I Fund/(sub-advised by Wellington Mgmt.)
Dryden International Growth Fund (formerly known as International Growth/CIGNA International Fund)
Dryden S&P 500® Index (formerly known as S&P 500 Index Fund)
Global Growth/Marvin & Palmer
Global Value/Morgan Stanley
Growth & Income/Multi-Manager
International Blend/Bank of Ireland
International Equity/Julius Baer
International Growth/Artisan Partners
Large Cap Blend/INVESCO-NAM
Large Cap Growth/RCM
Large Cap Growth/Morgan Stanley
Large Cap Growth/Goldman Sachs
Large Cap Growth/Waddell & Reed
Large Cap Value/Barrow Hanley
Large Cap Value/John A. Levin & Co.
Large Cap Value/LSV
Large Cap Value/Wellington
Mid Cap Blend/New Amsterdam Partners Fund
Mid Cap Growth/Artisan Partners
Mid Cap Value/Wellington
Small Cap Blend/WHV
Small Cap Growth/Granahan
Small Cap Growth/TimesSquare
Small Cap Value/Perkins, Wolf, McDonnell Fund
Small Cap Value/Sterling Capital
Small Cap Value/TCW
TimesSquare Core Bond Fund
TimesSquare Core Plus Bond Fund
TimesSquare Corporate Bond
TimesSquare High Grade Fund
High Yield Bond/Caywood-Scholl Fund

I'm not looking for a specific recommendation from anybody although I'll certainly read and consider any advice. What I'd like to find is some online resources that not only explain what I should be looking at for my particular financial situation but also that explains it is some reasonable language. Any help in finding any resources that will help me make an informed decision would be gratefully appreciated.

I do already have a bunch of stock in Enron and CART...is that stuff any good?

**dwcremax** · 11-01-2004 05:18 PM

I offer the following as strictly my opinion of 401K plans. I don't like them. While they entice you with "allowing you to choose where the money is invested", that is only a partial truth. You can select which funds your money goes into. But there is nothing to prevent your company's board from deciding to go with another investment firm which doesn't offer you the same options. I know. My company changed investment firms three times in six years. When all was said and done I barely got out of it what I had put in. Just one mans opinion. Buy Real Estate.

**mnkywrch** · 11-01-2004 05:19 PM

What stage of life are you in?

Are you fresh out of school (ie. wanting to maximize your income and maybe willing to take risks)?

Are you nearing retirement and don't want your money to be as

That's a gross simplification, but what are your goals - wealth accumulation or wealth preservation?

**Otis Fry** · 11-01-2004 08:46 PM

dwcremax...thanks for the heads-up on that. I find the 401k appealing because my employer will match 50 cents for each dollar I invest and others have suggested that I shouldn't pass up free money. Also, I'm starting pretty much from scratch and I don't think real estate is a realistic possibility for me right now (unless I start beliving those guys on those late night infomercials).

Originally posted by mnkywrch
What stage of life are you in?

Are you fresh out of school (ie. wanting to maximize your income and maybe willing to take risks)?

Are you nearing retirement and don't want your money to be as

That's a gross simplification, but what are your goals - wealth accumulation or wealth preservation?

Well, I'm in an unusual spot for most potential investors. I will turn 40 in July of 2005, and I have no wife or children. Basically, I drained my life savings several years ago trying to save the life of somebody else. In my last job, every time I thought I was close to start thinking about rebuilding my credit and investing again, I would get laid off and have to deplete my reserves again. Also, to survive, that company abandoned its 401k plan just before I became eligible to participate in it.

I guess to answer you questions, I'm looking for smart, steady, and as reliable as can be expected investments in whatever plan I select. I won't think about more risky ventures until I have the capital and knowledge to do that.

My current goal is to have some money saved so I don't have to spend my "golden years" living off of what is sure to be a reduced Social Security check (assuming there's any Social Security at all by the time I retire, which I expect may not be until I'm 70 assuming I'm lucky enough to live that long).

I really don't know at this point what to look at and what I should be asking. I have a general knowledge of these funds and that some are "slow and steady" and others are higher risk. I guess what I'm looking for is information that will educate me so I can decide which of these funds have the best performance for my needs and which ones are more likely to continue to be managed in an appropriate manner.

**Truth Detector** · 11-01-2004 09:03 PM

Here's the quick and easy:

Diversify within reason.

I'd put about 50-60% total in the "Cap" funds and the S&P index fund. (Break it down to your heart's content -- I prefer small caps & index funds)

I'd put about 10-20% in an international fund.

I'd put about 10-20% in a bond fund.

If you have any left put it in a gamble. Just pick an aggressive fund and have fun with it.

That's all just my opinion.

The best magazine out there for the small investor is Smart Money. http://www.smartmoney.com

Good luck.

**Truth Detector** · 11-01-2004 09:08 PM

By the way...

Put at least as much in the 401(k) as the company will match. That's a guaranteed 50% return on pre-tax money. You can't go wrong. Last time I looked 401(k) assets are not counted as assets when applying for student loans and they are untouchable in bankruptcy proceedings.

One more thing: For God's sake don't overly invest in your own company.