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Time to set up my 401k -- HELP!!

February 13th, 2008 at 08:00 pm

I have decided it's time to start building a retirement account. I know I need to concentrate on paying off debt, but I really feel like I need to get started on retirement at the same time. I really should have started long ago, but that wasn't possible with the way I'd ruined my finances. Now I work for a company who will match 50 cents for each dollar I contribute, up to 6% of my base pay. I think I'd be crazy not to get started!

Where I stand right now: I got my tax refund, and immediately put $1,500 into an emergency fund. I paid the remainder of my February bills today, and I still had over $1,000 left. I received half of my Feb. child support today and deposited that, and the other half will come at the end of the month. I also have one more paycheck still coming this month. So I am in a great position to set up my monthly budget so that I can put away set amounts monthly in categories such as gifts, car repairs, things that always totally knocked me off course in the past. At the same time, I have started my debt snowball! I paid off my first (smallest) debt, and I am getting close to paying off the next one!

I spent some time today reading all the 401k literature I was given when I started my job last October, and I am SO confused! All this financial stuff seems like Greek to me. I thought I would turn to all of you to get some advice and input. I know there are some real financial wizards in this group!

I have decided to contribute 6% of my salary. There are 10 different core funds in which I can invest: Fixed Fund, Vanguard Total Bond Market Index Fund, Vanguard Wellington Fund, Vanguard Windsor II Fund, Vanguard 500 Index Fund, Vanguard Growth Index Fund, Pacific Capital Small Cap Fund - Class Y, Wells Fargo Advantage Small Company Growth Fund - Administrator Shares, Vanguard International Growth Fund, and our company stock. I do have fact sheets on each of these funds, including their overall risk level rating (1-5), so I can answer questions (but reading them all just confuses me further)! Big Grin

All suggestions welcome!!

6 Responses to “Time to set up my 401k -- HELP!!”

  1. Broken Arrow Says:

    You're right! It would be crazy not to contribute if your employer is offering 50 cents to the dollar. Big Grin

    I take it your 401k brokerage is contracted with Vanguard? If so, it's a good company! Well, I like it, but some will not agree with me.

    Please tell me they have the target retirement funds available as a selection. If there is, just throw all your money in there and call it a day unless you want to know more and control more of it yourself.

    If not, you'll need to put together your own asset allocation. But don't worry, it doesn't have to be complicated. In fact, if you want to follow just mimick Vanguard's target retirement fund, here it is.

  2. LadyT Says:

    Thanks for the link, BA, I will check it out today. I am able to choose a target retirement fund, so I should probably just do that ... I know it would definitely be the easiest.

  3. merch Says:

    The other good thing is that Vanguard has low fees and has index funds. As BA said, you need to start with your allocation. Stock vs. bond. The boond piece you could put into Vanguard Total Bond.

    The stocks you need to divide into large, growth, and international and you could divide it into Vanguard Growth Index Fund, Vanguard 500 Index Fund, and Vanguard International Growth Fund.

    Vanguard also has an education center you might want to read through.

    https://personal.vanguard.com/us/planningeducation/retirement

  4. Ima saver Says:

    I have all my IRA money in Vanguard Index 500 and it has been good to me the past 15 years!

  5. terri77 Says:

    Yes, now is always the best time to start! Good luck. You're lucky to have a company that offers a match.

  6. scfr Says:

    Another Vanguard fan here - You are fortunate to have so many Vanguard options!

    If a Target Retirement Fund is indeed available, I think that is a great place to start. You can go 100% Target Retirement Fund and get good diversification. Your employer probably allows you to change your allocation once a year, so as you learn more about the funds, you can make changes if you want to.

    P.S. - Try to resist the temptation to check your fund balance every day! Smile

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