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401k advice
Old 11-11-2008, 06:37 AM   #1
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401k advice

Hello,

I'm looking for a bit of advice concerning my 401k. I am 48 years old and have been in the civilian workforce for the past 10 years. Prior to that I was in the U.S. Navy and retired after 20 years. I receive a small military pension and will get that as long as I'm on the right side of the dirt! I have been contributing 13% (with a 4% employer match) to my employer sponsored 401k (Fidelity) for the past 9 1/2 years. I've been contributing to FIDELITY FREEDOM FUND 2030 (50%) and FIDELITY INDEX 500 (50%). As like most, my 401k is down about 40%. About a month ago I somewhat panicked and changed my contributions to 100% FIDELITY MONEY MARKET FUND. After I emotionally sobered up I realize that this was probably not the smartest move I could have made. I'd like some suggestions as to which funds you'd recommend to place my money in and LEAVE IT ALONE for the long haul. God willing, I'm sure I'll work for another 20 years. I've got access to just about every Fidelity fund for my 401K. I've attached 2 lists of the Fidelity funds I have access to through my 401k. Thanks

Mike
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Old 11-11-2008, 07:12 AM   #2
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Welcome to the forum! The best place on the web for free, personalized 401(k)/investment advice is another forum: Bogleheads :: View Forum - Investing - Help with Personal Investments Read over there for awhile (especially the "stickies" near the top), then post your questions.

Then come back here and tell us how it worked out. Thanks!
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Old 11-11-2008, 07:26 AM   #3
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either now or when the SP500 falls below 839 put more money in stocks. don't sell your funds for now. the values in the summer of 2009 will be higher than they are today
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Old 11-11-2008, 07:42 AM   #4
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I'll will tell you what I did. I panicked as well around DOW 11000 back in July and sold so my AA went from 70/30 to 30/70. For a while I thought I'd really messed up as the DOW moved towards 12000 and I cursed myself for market timing and some of my friends said that I'd sold low. Now I'd say I got "lucky" as I'm only 20% down form last year's peak....man things are bad when that's a statement I'm glad I can make

I've reassessed my approach to investing. I'm 45 and I was following the slightly aggressive rules of thumb for AA ie equities %age about 110-your age. Now I'm being a bit more conservative and setting my fixed/bonds %age to be equal to my age, so I've bought back in and I'm at 50/50 right now.

So I'd recommend you'd look at your AA again, as I didn't stick with mine I was obviously being too aggressive. I really haven't changed much else, I'm still buying low cost index funds including a US Total Stock Market, Total International Market, Total Bond Market, a couple of Target 2025 retirement funds, a Real Estate Fund. an Inflation Protected Securities Fund and I've upped my MM savings a bit.
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Old 11-11-2008, 08:06 AM   #5
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Quote:
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I'll will tell you what I did. I panicked as well around DOW 11000 back in July and sold so my AA went from 70/30 to 30/70. For a while I thought I'd really messed up as the DOW moved towards 12000 and I cursed myself for market timing and some of my friends said that I'd sold low. Now I'd say I got "lucky" as I'm only 20% down form last year's peak....man things are bad when that's a statement I'm glad I can make

I've reassessed my approach to investing. I'm 45 and I was following the slightly aggressive rules of thumb for AA ie equities %age about 110-your age. Now I'm being a bit more conservative and setting my fixed/bonds %age to be equal to my age, so I've bought back in and I'm at 50/50 right now.

So I'd recommend you'd look at your AA again, as I didn't stick with mine I was obviously being too aggressive. I really haven't changed much else, I'm still buying low cost index funds including a US Total Stock Market, Total International Market, Total Bond Market, a couple of Target 2025 retirement funds, a Real Estate Fund. an Inflation Protected Securities Fund and I've upped my MM savings a bit.
I didn't move any of the INDEX 500 or the FREEDOM 2030 shares over to the MONEY MARKET FUND. I kept what I had hoping it will recover some day. I think my approach initially was a bit aggressive. I have been told by some to stay conservative and contribute 100% to the FREEDOM 2030 fund only. I think that's a bit too conservative. Thanks

Mike
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Old 11-11-2008, 08:23 AM   #6
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Originally Posted by wrigley View Post
I didn't move any of the INDEX 500 or the FREEDOM 2030 shares over to the MONEY MARKET FUND. I kept what I had hoping it will recover some day. I think my approach initially was a bit aggressive. I have been told by some to stay conservative and contribute 100% to the FREEDOM 2030 fund only. I think that's a bit too conservative. Thanks

Mike
Think about what AA you'll be happy with and rebalance and adjust your contributions accordingly. I find some of the target retirement funds are a bit aggressive, but I like their automatic rebalancing as you get closer to retirement, so I add some bond funds to get to my AA.

The FREEDOM 2030 isn't particularly conservative IMO as it's heavily weighted towards equities. Take a look at its AA and if you are comfortable with it great, if not buy something more conservative.
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Old 11-11-2008, 10:04 AM   #7
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Originally Posted by al_bundy View Post
either now or when the SP500 falls below 839 put more money in stocks. don't sell your funds for now. the values in the summer of 2009 will be higher than they are today
I used to work with a guy who would say "I'm not always right, but I'm always sure". That's who Al reminds me of.
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Old 11-11-2008, 10:31 AM   #8
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If all you did was change your future contributions and didnt change your current allocation and sell the funds you had, I wouldnt exactly call that panicking.

I see nothing wrong with putting everything into the 2030 fund if 2030 is about where you plan to retire. Whats wrong with letting Fidelity's experts set your AA for you? If you want to be a bit more aggressive you can leave it 50/50 between the 2030 fund and the Index 500 fund, but based on the fact that you felt panic, I would think that that AA is too aggressive for you.
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Old 11-11-2008, 11:12 AM   #9
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Originally Posted by LOL! View Post
Welcome to the forum! The best place on the web for free, personalized 401(k)/investment advice is another forum: Bogleheads :: View Forum - Investing - Help with Personal Investments Read over there for awhile (especially the "stickies" near the top), then post your questions.

Then come back here and tell us how it worked out. Thanks!
I would second this recommendation. You need to decide on an asset allocation you are comfortable with and then choose the appropriate fund(s). In your shoes I would go with one of the target funds - the one that best matches your risk tolerance.

DD
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Old 11-13-2008, 07:03 AM   #10
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Thanks everyone!

Mike
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Old 11-13-2008, 07:44 AM   #11
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Hey Mike,

Welcome to the board! I am a soon to be retired Navy Chief (currently enjoying terminal leave). I turn 40 in 9 days, and I have my TSP set to the L2030 Target fund. I feel comfortable in leaving it there. Like a previous poster said, why not let another move your money for you!
I wouldn't worry about the dips in the market right now, it will come out in the wash later and I think you will benefit for leaving it alone.
Thanks for serving!

Erik
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Old 11-13-2008, 10:53 AM   #12
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Hey Mike,

Welcome to the board! I am a soon to be retired Navy Chief (currently enjoying terminal leave). I turn 40 in 9 days, and I have my TSP set to the L2030 Target fund. I feel comfortable in leaving it there. Like a previous poster said, why not let another move your money for you!
I wouldn't worry about the dips in the market right now, it will come out in the wash later and I think you will benefit for leaving it alone.
Thanks for serving!

Erik

and THANK YOU for serving as well. My wife is currently in the Reserves and just picked up CPO off of this past cycle. Thanks for the advice!

Mike
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Old 11-13-2008, 11:21 AM   #13
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I'd add one of the foreign funds to the mix to balance the S&P500 (maybe 25% each), or just go with one retirement date fund. Too bad Fidelity isn't offering fsiix, their foreign index fund.

I think the 2030 fund might be about right for you, setting your "retirement date" to about the year you hit 70. That's not terribly conservative. You can easily adjust that by selecting a different year if you want.
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