American Funds Amcap
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Sonia Said:
Help me out...what investment options should choose for my 401k?We Answered:
baerhttp://quicktake.morningstar.com/FundNet…
amcap r5
http://quicktake.morningstar.com/FundNet…
http://finance.google.com/finance?q=raff…
fidelity
http://quicktake.morningstar.com/FundNet…
mairs
????
spartan us equity
http://quicktake.morningstar.com/FundNet…
Ahhh! found it!
They hid it real well but i found it.
http://finance.google.com/finance?q=NASD…
Anybody who wants exposure to the stock market but doesnt know what to get, you'll never sound stupid if you say you're in the s&p 500.
The s&p 500 is not a fund, but a list of 500 companies, and funds mirror that list. Your spartan fund is one such type. What's so hot about this? Expense ratio. Look at how much higher it is for the other funds, it's only .1% for spartan. That's the % they're taking off your gains, it'll compound year over year, you want that damn low! Historically, S&P averages 9% gain a year, and its at a 23 year low discount.
This leads to the difference between index funds and managed funds. An index fund is just stocks on a list that doesnt change. A managed fund, we have some genius who picks and chooses what stocks to buy. If he's real smart and gives awesome performance 1 year, his fund will suddenly be flooded with money and he'll have a hell of a time wisely investing it all. Plus, that genius needs a fat salary, and all those trades he makes cost money, hence the larger expense ratio.
So if you're not real close to retirement and want a good return, go for an S&P index.
Those bond funds are for retirees who want a fixed income.
The 2040 fund automatically adjusts your risk depending on your age. I get the sneaking suspicion they'll take the opportunity to sell the brand and get you paying for some high-maintenance funds.
If you're feeling dangerous, go ahead and toss up to a third in the international fund. The worse might be ahead for the developing markets, they may repeat our 2008 in their 2009, but all and all they'll outgrow the us in the long term. Lot of volatility with this choice and a fat expense ratio.
One last thing. Don't put money in the market that you might need in the next couple years. Don't try to time the market. Do not pull out of your 401k under any circumstances!