Originally Posted by 4banger4x4
Alright so im going to be starting my 401k at work in the next month or so and ive got some questions on what to do. 1st off im 21 years old so ill be doing medium/high risk investments.
I know i should prob start out with them managing my money just for the simple fact that im not sure what the hell im doing in the money market. but once i get a little money built up in my 401k i would like to manage my own money but like i said i have no clue how.
so pretty much any tips on what to do and how to do it would be greatly appreciated. And yes i know there is no way to predict the market but i know there has to be some tips and tricks that help people out
Sounds like you're off to a great start! First and foremost, if your employer offers any kind of contribution match then you should try your best to max what your employer contributes. Free $$$
opportunities are rare. Everything else is completely up for debate as everyone has their own idea of "the right way to invest." Read and try to access varied points of views so you can make your own opinion. And a few times per year, re-evaluate the decisions you made cause as you learn you may find an even better opportunity. That said...
Completely agree that if you're in any of the bottom three tax brackets then going post-tax is a great vehicle to take a smaller tax hit now. Medium/high risk is good if you have the stomach for it, but I try to keep 10% or so in bonds/muni's. It's dull and safe but keeps your portfolio balanced.
If you're going to be managing yourself and starting with small monthly contributions, I always like indexed ETF's as they provide easy diversification w/out the fees of a mutual fund since they follow an index rather than actively managed. Some ETF's to look at: SDY, SPY, DWX. As your savings increase you may also want to look at opening a Cash Management Account. Savings accounts pay next-to-nothing in terms of interest so I take excess savings and invest here for a better rate of return while still remaining liquid.