How I Picked my 401k Selections

I changed my 401k selections and my portfolio balance sky-rocketed! I will be the first to admit, when I signed up for my 401k plan almost 11 years ago for my first after-college job, I was overwhelmed…and my degree is in finance!

The reason why it was so overwhelming was because the options seemed never-ending. How would I know the best selections to pick? So, I went with a single targeted-date fund. I put 100% of my contribution into that fund and left it alone.

After a few years, my 401k balance had grown, but now I had much more experience, knowledge and background with investing. It was time to change my selections.

A target-date fund is great because it’s supposed to allocate your investments to help you reach a certain amount by the time you retire. However, the younger you are, the more investments in stocks or high-volatile investments you should have. It’s great to reach your target goal amount, but it’s even better to exceed it!

I made the decision to change my 401k selections to a more lucrative set of assets. I followed the guidance of respected experts and the results were unreal! After growing at about a 2-3% rate with the targeted date fund, my growth was in the 10-15% range! Here are the selections I picked (and what I would recommend for those who don’t know where to start).

Note: The older you are, the less you should have invested in stocks. Experts recommend you use the following formula: 100-age = the percent of stocks in your 401k portfolio. Most recently, 120 is the suggested start point. I’m in my 20s, so I’m primarily invested in stocks.

100% of my contribution is broken up as follows:

85% Equity/Stock

-25% Institutional/Extended Market Funds (Vanguard)

-20% Large Cap Fund (T. Rowe Price)

-15% International Stock Funds (Vanguard)

-10% Equity/Dividend (Blackrock)

-10% Common Stock of my Company

-5% Small Cap Fund (Fiam)

10% Bond/Fixed Income

-5% Inflation-Protected (Vanguard)

-5% Total-Return (Pimco)

3% Allocation/Target Date Funds

-3% Target Date Funds (Lifepath)

2% Money Market/Stable Value

While every 401k plan has different funds and options available, most have the same “type” of funds (Small, Mid, Large Cap) and overall investment options.  I hope this article has helped give you some clarity on where to start when picking your retirement plan selections.

Note: All opinions are my own, and are simply for share and guidance. Not a sponsored or commission-based post.

I would love to hear your thoughts, experiences, or concerns when it comes to your 401k plan. Please leave a comment below to share and I will get back to you!

-Raya

The CGS Team