How should I allocate my 401K among these 3 options? - junk bond funds
I am 31 years old and above to be $ 216, 700 saved for retirement. The bulk of this money is savings and CDs, and now I participate in my company 401K. I have no tolerance for risk and can not handle the volatility or downturns in equity funds. I have 3 options are to invest in stocks is no longer something is going to invest. My options are a money market fund the acquisition of 0.04%, PTTAX, the pension fund is PIMCO Total Return, and sghsx, a High-Yield Bond Fund junk. I like going to pension funds for performance, but they are safe? Will I be able to manage the volatility of a bond fund? What risks are these 2 funds? If you write about the investment in an equity fund to save your time and your fingers --- I will not do. How is my 401K Divy these 3 options? Bond funds are here a bit risky when interest rates start to rise? Should I continue with the Money Market Fund? $ 216.700 is a good place to age 31 or must begin to invest more?
Friday, January 15, 2010
Junk Bond Funds How Should I Allocate My 401K Among These 3 Options?
2 comments:
If you have zero tolerance for risk, you give in exchange for security. That is all. End of story. You should save more and spend less.
If your car is the right description, you do not belong to a fund to "junk bond" for three reasons: (1) your risk profile (the Fund "junk bonds" are more at risk than the conservatives most exposed equity funds), (2 ) Total dollars under management (a bond portfolio only need a little trash to diversify - less than $ 500K does not make the effort), and (3) is not an option for the very good - not bad, but hardly convincing.
With your choice will be left exposed and for all, we recommend you start with 50/50. Pay attention to your balance once a quarter, not more. If you agree with your choice after a year, I recommend that up to 75% come from PIMCO. I also recommend that you cover your nose and put 10% in equity funds at low cost index, if you have this option. If you may be limited to an examination once a year, I also recommend that to do so. People who are a risk averse bEtter was to choose by less attention to their investments more - a plan to keep it and leave it alone.
When you invest in cash and bonds only, you need to save more (much more) than the 31yo, at least 50% of your money invested in stocks. Most of the models, or 7% per year every year for the 30yo, which in equities (60% s/40% B model) and avoid investing 12% -15% for each year 30yo population.
Explore By comparison with the "average" protector of their age, that 10% of income for the years he has been so far. Add it up, with compound interest of 2% to 3% and an estimate of what would be just a sign with his source of income.
Compared to your current income savers can take, multiply it by your age and divided by ten. If you are on top of their game, which will be the number.
(Full disclosure: I have retirement assets in the ruling class of the PIMCO Total Return Fund. I think Bill Gross, one of theInvestors on the best in the world)
They have done an excellent job, that saves a lot on the age of 31 years. But inflation Eat You Alive, if not at least some money on something more volitile. Inflation is expected to hurt so much as a falling market - and time has little time to recover from the recession.
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