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Old 12-12-2008, 09:47 AM   #21
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FinanceDude I have to assume they have at least a million invested since they are the largest medical supply outlet in the US and have been around since 1928. They will match his contribution 25%. I so appreciate everyone's opinion!
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Old 12-12-2008, 10:07 AM   #22
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FinanceDude I have to assume they have at least a million invested since they are the largest medical supply outlet in the US and have been around since 1928. They will match his contribution 25%. I so appreciate everyone's opinion!
Well, in my opinion he should contribute at least enough to get the entire match. Most companies do a percentage up to a certain amount, say 25 cents on the dollar on the first 6% or something.

The size of the pplan means that he is not going to be paying any loads to invest. Not knowing how risky of an investor he is, I would look at the following:

American Funds Growth Fund of America
Dodge and Cox International
Baron Growth
MFS value
SSga S&P 500 Index fund (some)

If all of us can agree that we are in a recession, smaller stocks tend to lead the way out of a recession, so Baron Growth is a fit. Dodge and Cox are well run, their international fund is no exception. American Funds is a low cost fund company. I am not a nig MFS fan since they burned investors in the tech bubble collapse, but their value funds are ok.

He should put some in the S&P 500 fund, but I wouldn't just "throw it all in" as some would suggest........
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Old 12-12-2008, 10:44 AM   #23
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He should put some in the S&P 500 fund, but I wouldn't just "throw it all in" as some would suggest........
I think it depends on how much he throws into the 401K as opposed to, say, a Roth IRA. If someone puts enough into a Roth relative to the 401K, I indeed would consider only the index fund in the 401K and look for good low-cost alternatives for other asset classes in the Roth.

But if most of the retirement contributions will be in the 401K, they'd probably need to have more types of funds than just the index fund in order to maintain a prudent AA.
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Old 12-12-2008, 10:46 AM   #24
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I think it depends on how much he throws into the 401K as opposed to, say, a Roth IRA. If someone puts enough into a Roth relative to the 401K, I indeed would consider only the index fund in the 401K and look for good low-cost alternatives for other asset classes in the Roth.

But if most of the retirement contributions will be in the 401K, they'd probably need to have more types of funds than just the index fund in order to maintain a prudent AA.
How many 28 year olds do you know in general that can max their 401K AND a Roth IRA? You gotta walk before you run.......
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Old 12-12-2008, 10:49 AM   #25
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How many 28 year olds do you know in general that can max their 401K AND a Roth IRA? You gotta walk before you run.......
I'm not even talking about maxing out the 401K -- just putting in enough to get all the company match. If there was no company match, I'd just put it all in a Roth, and then add to the 401K only if I maxed out the Roth and still had some left over to invest.
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Old 12-12-2008, 12:45 PM   #26
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He will be nowhere near maxing out the 401k. While he has generous benefits at a low cost, he has an entry level salary. So no Roth in the near future. We are so grateful that he was able to find a good job so quickly, even before the old job closed down, that we are not looking a gift horse in the mouth. There are so many out of work here in the greater Cleveland/Akron area. I will have him read your answers to my question. Thanks!
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Old 12-12-2008, 01:06 PM   #27
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I'm not even talking about maxing out the 401K -- just putting in enough to get all the company match. If there was no company match, I'd just put it all in a Roth, and then add to the 401K only if I maxed out the Roth and still had some left over to invest.
I don't think putting all your money in a Roth IRA and not participating in the 401K if the company doesn't match is such a great idea. It's the subject of a different thread.........
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Old 12-12-2008, 06:43 PM   #28
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Shoe,

Congrats to your son for taking care of business. That's a good thing.

Is he just starting out in investing? Because you can do a lot worse than the low-cost S&P index fund. (Most of us have done a lot worse, and some of us, like me, are only a few years ahead of your son in terms of experience).

I'd put 80% in the S&P index fund and 20% in the Dodge & Cox (which I own in my 457). The expense ratio on the Dodge & Cox isn't the greatest, and it's not an index fund, but it gives him some international exposure and that might be helpful later on.

I'd also recommend he read "The Bogleheads Guide to Investing" if he's just starting out with investments. I've spent the past two and a half years reading personal finance / investing books and it's the one I wish I'd read first -- it would have saved me a ton of trouble.

Also, your son needs to come up with an asset allocation. Vanguard has one on its website -- similar ones exist elsewhere.

Good luck to him!
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Old 12-13-2008, 07:45 AM   #29
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Guess I will be the odd man out and suggest 1/3 S&P index, 1/3 D&C Intl and 1/3 some sort of fixed income option (preferably bond market index or stable value fund).
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