The Hustle of Sistah Ant

By the time I’d settled down to register for participation in my company’s 401K, I had already read about such things as risk tolerance, diversification to avoid having all my eggs in one droppable basket, the difference in risk between stocks and bonds, fees, and allocating my assets so that my performance would address my goals.  I’d played with a few calculators for risk tolerance and asset allocation.  I’d refreshed my memory on the various types of stock that are commonly recommended to include in a diversified portfolio.  Basically, I knew more than I thought I did.

I was able to register online.  It was a little intimidating at first.  There were about 16 funds to choose from.   However, there were various resources right there for me to use.  First, there was an earnings sheet, detailing all kinds of information ranging from the fund’s trading symbols to the expense ratio (reflecting fees coming out of your money) to the return percentages for the past year (or three, or five, or since the fund’s inception).  I used this to look up Morningstar ratings, compare fees, and compare returns.  There was also a summary of each fund’s purpose and holdings strategy.  It was wordy and technical, but it helped me get the gist of each fund as follows: "stock," "bonds," "international," "playing it safe," "risking for reward," etc.  Finally, I could look at each fund’s prospectus by clicking on its name and seeing its major holdings for myself along with other information.  To be honest, I didn’t read every word of every one.  But I read enough to understand what the funds do and feel comfortable with choosing them. 

I went mostly with index funds because I’ve heard such good things about them - lower fees, decent returns, good diversification.  I tried to avoid the funds with the highest fees and the lowest returns.  I also tried to get a good mix of small caps, large caps, international, etc.  It was good to see that a lot of that diversification work was already done in some of the funds.  I went with an 80% stock/20% bonds split, and the stock funds I chose lean towards more aggressive growth investments because I’m young and I can use the boost (and risk taking some loss on the chin).  I flirted with 85/15 and 90/10, but I more I read, the more I punked out.  I am still debating that decision.   I’d say it took me a couple of hours - I started not long after my wake-up bowl of cereal and finished shortly after lunchtime.

I’m happy I registered.  My deductions will start next month.  I’m contributing 6% myself, and my company will match 3%.  I’ll try not to be a nut and check its performance every day or every time the market shoots up or drops down - I don’t need that headache, and if I wanted that, I could be day trading.  I have automatic account rebalancing and I also have a financial advisor’s number (somewhere).  I hope my 401K serves me well.