Young Investor With Questions

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rt76728
Posts: 2
Joined: Sat May 04, 2013 6:06 pm

Young Investor With Questions

Post by rt76728 » Sat May 04, 2013 6:34 pm

Hello All. I am a young investor hoping some of you more seasoned vets can answer a few questions I have. A little background about what I have going so far. I am 24 years old and have been contributing to my 401k up to my employers match for the past 2 years or so(since I've been eligible). They match 2/3 up to 10% so I am putting between $650 and $700 in each month. I currently have around $10,500 in the account with the majority being in the 2050 Target Retirement Fund(the latest date they have available). Here are my questions.

1. I am currently shooting for around 80/20 stock to bonds. I have 40+ more years to save so I am comfortable with the risk, but is this a good ratio for someone in my situation?

2. My 401k is with Fidelity and offers the BrokerageLink option, which gives me access to the Spartan Funds. I was thinking about funneling about 70% of my portfolio into BrokerageLink with a three fund approach for now. Is this a good idea?

After I move the 70% of my portfolio to the BrokergaeLink account here is what my breakdown will look like.

401K Side - 30%
2050 Target Retirement Fund - 20%
Company Stock Fund - 5%
Capital Preservation Fund - 5%

BrokerageLink- 70%
FBIDX- Spartan Bond Index - 20% of the 70%
FSGUX - Spartan International Fund - 20% of the 70%
FSTMX - Total Market Fund - 55% of the 70%

Is there any reason for me to hold onto the Capital Preservation and Company Stock funds or should I look into something like the iShare ETFS that have no commision fee?

Thanks in advance for any suggestions!

DaveS
Posts: 1308
Joined: Fri Jun 15, 2007 9:42 am
Location: Reno, NV

Re: Young Investor With Questions

Post by DaveS » Sat May 04, 2013 8:38 pm

Here is an answer from an old investor who learned things the hard way. First, I don't know what the Capital Preservation fund is. Secondly, I think the rest of what your doing is fine. I note you picked lower cost index options, and that your stock, bond, and international allocations are rational based on your station in life. 5% in company stock is not extreme, anything above 10% is extreme. Dave

2retire
Posts: 371
Joined: Wed Jun 13, 2012 9:00 am

Re: Young Investor With Questions

Post by 2retire » Sat May 04, 2013 9:55 pm

1. Yes, 80/20 is reasonable for someone your age.

2. I don't see a reason for you to move only 70% of your portfolio to BrokerageLink. Either move all of your 2050 and Capital preservation money there or none. There is no reason for you to keep to 2050 and Cap Pres. funds if you are going to set up a three fund portfolio in BrokerageLink.

rt76728
Posts: 2
Joined: Sat May 04, 2013 6:06 pm

Re: Young Investor With Questions

Post by rt76728 » Mon May 06, 2013 9:04 am

The Capital Preservation fund is just a fund whose goal is to preserve that value of the money at a 1:1 ratio. The more I look at it and think about it the more I am convinced I should just ditch it. The point of this is for me to let my money grow over time, not stay the same and in turn probably lose value over time due to inflation.

2retire, the reason I have kept at least some of it in the 2050 fund is that it also has a roughly 80/20 ratio right now but is divided up into many funds, not just three. Am i being redundant or overly cautious?

Thanks Again!

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