401(k) Confusion
Posted by KC | Posted in 401(k), expenses, mutual funds, p/e ratios, Retirement | Posted on 24-05-2007
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A 401(k) is a scary thing when you really think about it.
At least for me. I’m trying to learn all I can about how best to manage my money.
Some things are easy:
- Join
- Invest 10% of my pay (pre-tax)
- Take advantage of the company match (a.k.a. free money)
- Diversify your holdings
Some things are not:
- Out of the limited funds I have to pick from, which funds are the right fund
- How much should I be paying (expense ratios)
Recently, my 401(k) fund swapped out some “under-performing funds” for some that matched their criteria. This, in turn, replaced two of my funds.
Now I’m doing some research into what’s available and what I should be in, but honestly it’s very confusing and I’m not exactly sure what to do.
Yes, I have time before I retire.
But I realize that the better I manage my money now, the harder it will work for me in the time allowed.
So, what do you think about expense ratios and p/e ratios? Any tips out there or solid guidelines?
Dave Ramsey says to look at the lifetime return for funds that have been in business at least 10 years. Look for a return over 12%. When I was picking funds for my IRAs and ESAs, I picked funds net of expenses.
Other people suggest no-load index funds. Vanguard has some good ones like the Vanguard Total Stock Market Index (VTSMX). Good luck!