I am pretty new to investing. I know that I am interested in it and I want to be responsible and save for my future but I don't quite understand all the different types of funds. I am 29 years old and recently purchased my first house this year. Conventional loan, 10% down, very affordable. Mortgage with interest rate, PMI, insurance, tax is 1/5 of my monthly income. My credit score is near 800.

I have ~$5k in emergency funds. $850 in debt. Car is paid off. No student loans (I have a masters degree).

I am currently investing 5% of my paycheck to my 401k. My employer matches up to 4% right now. I am 80% vested and will be 100% in one more year. I am investing 100% of it into a 25-To-Go plan (60% equity and 40% fixed income). I'm not even 100% sure what that means.

It's distributed:


Here are my other options. Should I distribute some money into these?


My company also just offered an Employee Stock Purchase Plan. They selling stocks to employees at 90%. The company is HCA and the stock appears to be doing very well. Should I consider putting a certain % of my paycheck into this stock at the discounted 90% rate?

Thanks for the help.

The 25 to go fund is a target retirement fund.  The fund automatically adjusts from aggressive to moderate to low as you near retirement.  The idea is that by retirement age the money is at a low risk of losing value thus allowing you to retire.

Personally, I'd opt for the 35 or 45.  IMO, you're losing out on some potential growth because the fund is allocating its holdings under the assumption you're ~ 10-15 years older than you really are.  So it's allocating money away from growth toward sustainability.  IMO 40% fixed income is too high for your age, go with 30% or less in fixed income.  The lazy metric is to take your age and that's what percentage should be allocated toward sustainability, doesn't work so well the older you get though because by 60 you may be deciding to retire so you'd want most of your money to be allocated toward fixed income.  

Consider moving 100% to the 35 or 45 plan instead.  At 35 take note of where things are at and see what your options are for diversifying.  Don't try and diversify too much right now, you don't want to spread the money too thin because that can cut into growth.

My routine with company stock is to take it and sell it at a profit as soon as it makes sense and the rules allow.

A thread from a month or so ago...still applies.

Since you are getting your company stock at a 10% discount, you should considering getting as much of it as you can afford and tolerate.  I say tolerate because the caveat to investing heavily in the company you are employed by is that if the company goes south, so could your job (the all of your eggs are in one basket analogy).

If you are in the accumulation (i.e. contributing) phase of investing, use bonds sparingly, if at all, at least now when interest rates are so low.

Your 25 To Go Fund is 60% stock and 40% bonds.  A commonly used formula is 100-your age in stock; the rest in bonds.  So one was 40 (which your are not), with 25 years to retirement, 60% in stock, 40% in bonds.

The problem with the formula is that it doesn't take into account current economic conditions (like near zero interest rates) nor your current/expected financial situation.  While in theory there are a couple of reasons for holding bonds, in practice the only reason to hold bonds is so that you will have them to cash out and spend.  Even though a 100% equity portfolio will have greater swings in value, both up and down, than a mixed portfolio (containing some bonds), the 100% equity portfolio will be worth more in the long run.

In reviewing what I posted and one of the subsequent answers in that thread re:  bonds.  I reiterate that with interest rates near 0 and consequently no where to go but up, bonds are an extremely risky investment at this time.

So does the 45-To-Go seem like the best plan for today's market and my age? The investment management fee is 0.15% for that fund.



Or should I do a 90% investment in the S&P 500 with 10% in something safer like bonds? S&P 500 investment management fee is 0.01%.

1. I would avoid the company stock, unless you just want to buy a small amount less than maybe 5% of your overall net worth. Individual stocks can go up or down by more than 10% in a single day of rough trading. Too risky. I had a stock Atlantic Power lose almost 50 percent of its value in a few days because it was suddenly revealed they had more debt than everyone expected. Luckily i didn't own too much of it so it was no big deal, but if you had thousands and thousands and it was YOUR company... you would potentially add years before you could retire.

2. We are both young, I am mostly in US stocks and have some emerging markets. I avoid bonds and treasuries mostly right now. Stocks are a bumpier ride, but we have a long time before retirement so in my opinion you can be a little more risk tolerant.. You need to read some investment books so you can actually make up your own mind. That Said, if you have under 50k in your 401k i'ld probably suggest keeping it simple and getting 75 percent in the S&P500 fund and 25% in the Emerging Market fund. If you have over that I'ld look into the other funds, do some real research after you learn more about investing and determine if any of those need to be in your portfolio to diversify as well. Just having those two funds will likely put you in atleast 700 different companies, so thats a good start.

Do you want to stay in a target retirement fund or do you want control over when your holdings move from growth to income?

If you want someone else to manage the transition stay with the 35 or 45 to go plan.  Understand the fund manager may have a different idea than you as to when holdings change direction.  Also understand that the fund manager is likely a lot more knowledgeable than you are right now.  IMO, a lot of the target retirement fund managers are pretty conservative.  As a result, I opted to go for a fund intended for someone 10 years younger than I am so I'd be positioned more toward growth than sustainability yet still take advantage of having someone else manage the change in direction.

If you want more control over the percentage in growth and percentage in income then your 90%/10% scenario can work.