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Originally Posted by dylanCamaro582
So, i have been following the thread for a while. Investing 102 seems to be for the guy who have some money in the market.
I have one bigger question: what should the beginner investor(like one or two deposits in to their 401K) do?
I currently have a small amount(less $100 in to my 401k),but i put 10% of my pretax income in 401K and my company matches up to 6% in to my 401K. I estimate that in will need at least $1 million at today's current money valve to retire and live comfortably. I currenty have my small amount in to Fidelity's LifePath® Index 2055 Fund Q.
So my secondary question is: How long do I wait and change my investment?
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First -- I'm going to ASSume your name is Dylan.... So welcome Dylan!
Let me address one thing first -- this thread is not really so much about guys with any money - some have some - some have a lot - some have very little... and it's not so much about the stock market as it is about saving and INVESTING for retirement. The "stock market" has historically had the highest return - compounded - over time. But that's not all we talk about here. There are rental houses - apartments - commercial buildings - Master limited partnerships etc. BUT --- always the big butt in the room -- for most people INVESTING in the stock market is the easiest way and can use the smallest initial capital and can be added to as money is accumulated. In other words - a guy with a $1000 can buy some stocks and as he gets another $500 saved up - he can buy some more and so on. Other types of investments take larger up front capital. Since this is a thread for BEGINNER investors... we've all tried to stay focused on that aspect. BASIC INFO and ways to look and research and what is and isn't important etc.
Okay -- next up for you -- is your 401K. Good for you for starting early. I'm again going to assume you're young, and perhaps just beginning your career???? The reason I'm assuming that is because your investment in Lifepath 2055. That date has meaning. That date is for people that should be retiring about that year. Correct me if I'm wrong about you being younger.
Fidelity is the investment company your company uses to manage/direct/handle your companies retirement plan. They then give you choices within that plan to invest your contributions in. Some plans have lots of options - some keep it very simple and short. Your actual investment is in BLACKROCK LIFEPATH 2055..... and Blackrock is a very good company which runs about a half a zillion different "funds". I couldn't even find yours specifically in order to look at it. It was the "Q" that threw me off.
What I need from you is the actual TRADING SYMBOL -- such as "LIVIX" or similar.
So -- forgetting all the confusing detail above. You're in the right place as far as contributing to your company plan. Stay with that for now. The matching percentage is a good one... and as soon as you're able - I'd increase your percentage to 15% ASAP. If you read this thread from the beginning - you'll find a recurring theme, i.e., START EARLY in order to reap the benefit of COMPOUNDING over time. The more you save early - the more you'll have at retirement by a LONG SHOT and I mean HUGE.
Just quickly ----- a guy that invests $2000 a year from age 21 until he's 31 and after 31 he never adds another nickel to his pile - will retire with a million bucks at normal rates of return - compounded. If the same guy starts saving the $2000 at 31 and puts that away every year until he/she retires - will have about half that. Which guy would you rather be?? Don't answer that - it's a rhetorical question. LOL
OKAY THEN ---- keep pounding away - and increasing your contribution until you have at least $2500. At that point you're going to need to choose another fund in your plan -- and start putting the new money into that choice until you reach $2500 and so on. When you get $10,000 in your plan total... then you will need to start to look at alternatives if any. BUT -- the NUMBER ONE thing I'd do if I was you --- OPEN A ROTH IRA and start funding it with as much as you can. You're company plan is "PRE TAX" - which is great - but you'll pay taxes on it when you retire and start to withdraw. A ROTH IRA is "after tax" money that you put in on your own - and since you've already paid the taxes on it - it comes out totally tax free when you withdraw. That includes all the gains and income/dividends etc that it earned for all the years. TAX FREE. PERIOD. It's the greatest gift the tax man ever gave the good citizens of the United States. USE IT.
Any discount brokerage will help you understand it - and open the account. Just make a call to the one you choose and set up an appointment to discuss your personal situation. They'll be happy to help you. I'm talking Schwab - Fidelity - etc. Find an office that is convenient to your home or office. You can always move the account later. The key is to get started EARLY and save/invest as much as you can.... 65 years old comes up far faster than you can even imagine! Ask me how I know?!?!?! LOL