hey guys,

so im working at an insurance agency this summer and they have 401k plans for their part time employees. they match 4 percent and its administered through morgan stanley. im only 19 but decided to participate contributing 4 percent. i know i want to invest in aggressive funds since i dont plan on retiring any time soon. How do you all think i should split this up... i dont mind losing a bit in the short run, but since im only working part time, i wont be making that much money, thus if i split my contributions too much, i run the risk of having nothing to compound, yet if i consolidate it too much, i run the risk of having too little diversification. any advice?

thanks

 

The Stanley Morgan rep should visit you to help you select a product.

It seems to me that stocks are a bit high at the moment, but it's impossible to predict. I wouldn't worry about diversification, being that you're only going to invest a small amount.

Personally, I wouldn't split at all. I'd select one stock fund for the time being. And I'd select something less risky, since this is your only investment at the time being. Perhaps a large cap value fund or large cap blend?

Good Luck,
-Bob

 

He means, of course, Morgan Stanley.

In the next week or two I'll have a tool on my website to help you with decisions such as this; check the sig.

 

They match 4% and you are contributing 4%? My first thought was don't even bother. If you are working there part time, and are only going to contribute 4% of your pre-tax income to the 401(k), it probably isn't enough money to really be worthwhile. I mean, at the end of the summer, is it really important to have put $500 into a 401(k)? I would say skip it and just take the money in your paycheck. Sure it give you a higher taxable income, but wouldn't you rather have a little extra money this summer? Also, your employer may not match your contribution immediately, and even if they do, you probably won't be fully vested by the end of the summer, so they will never really fully match your contribution. Talk it over with the advisor, but my advice is skip it.