Quote from I, Deviant:
Depends on if he is looking to buy that aggressive fund before or after the 90% drop, right? (Referring to your advice of buying after a 50%+ drop)
Exactly right - if the OP is willing to become an active manager of his funds and not a set it and forget it participant, then looking for those large drops are key to some quick success.
Quote from morreo:
I was actually planning to keep it pretty risky for the next 3 or 4 years until I graduate from college. Also I chose that the max I was willing to lose in an investment was 15% (they had a question for how much I was willing to lose). Of course I know I can still lose more than 15%, but wouldn't the fund put a stop loss or something so that I wouldn't lose 90%?
Also the place I got the 401k from told me of the best 4 years and the worst 4 years it had since 1970 on a $1,000 investment. The best was a $3,900 return and the worst was a $850 return.
Honestly, I know i'm being reckless in my strategy (or lack thereof). Though I feel that if I wipe out in the next 4 years, I have another 43 to go and if I don't wipe out, what a head start!
Also these are not my only assets. I also invest in stocks with a portion of my paycheck. I am going to put a large percentage of my portfolio in the aggressive fund, but I understand that I will still need to protect a good percentage (20-25%) so that I won't just be throwing money away.
Thanks for the advice.
Mor - if you can only stomach a 15% loss, then I hope you are ready to pull the trigger and get out QUICK on your aggressive fund(s). It will happen, it's just a matter of when.
If your goal is to make money, 100% aggressive will not work with the majority of people. The human psyche is a wonderful and detrimental thing.
I do have a question - in your snapshot, I did not see actual funds listed. When you put it into aggressive, do you pick the fund(s) or is it what's called a Fund of Funds where the 401k vendor gets to decide where your money goes? Perhaps we can nail down a few possible fund choices if you are allowed do that. The snapshot you provide looks like a fund of funds type deal however.
Quote from I, Deviant:
I am going to catch shit I am sure for not touting the virtues of "safe" investing...
but remember-
who dares, wins.
Definitely do your homework. You will probably feel better about managing your 401K if you can become more comfortable with the concepts. Knowledge mitigates fearfulness in trading/investing.
Great advice IF the OP is willing to do the work in actively managing the funds.
Quote from nutmeg:
HAVING ALL YOUR EGGS IN ONE BASKET IS FOOLISH, NO MATTER THE AGE
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Most people's largest asset is their home. Ta da, all eggs in one basket. Start a business = all eggs in one basket, sometimes + house for collateral. Expand your business? Once again the risk may be as high as double or nothing = all eggs in once basket. Great wealth is achieved through calculated high risk. You diversify to maintain wealth.
Conservative = plow horse. Aggressive = thoroughbred.
You are assuming a business owner does not own a home or a 401k... Most successful business owners are going to own at least one home, own their business, have a substantial 401k and have plenty of other liquid assets. And to assume that anyone with any wealth has their largest asset in their house is a BIG mistake. Yes, the average American only has a home and small 401k (if at all) but I think the goal of the OP at his age is to make money. He's one of the ones that later in life could like brilliant for starting so early.
So, again, having all your eggs in one basket remains foolish.
Conservative may equal plow horse, but Aggressive may also equal dead horse.
And by no means is a few % in G/I and G considered conservative. I simply suggested the OP put SOMETHING into the G/I and G areas to spread his risk out somewhat. Just 5% into G/I and G can make a difference. That would then mean 80% of the funds are in the aggressive portion.
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mor - there's some good advice here and some real shitty advice as well. Anyone that suggests put 100% of your money into one fund or area has obviously never invested themselves and/or never seen a fund take a big hit. It happens all the time so you should prepare for it. If by chance your 401k vendor found the next great money manager, then you lucked out. Odds are however that you just have some average to below average funds available and they will lose money, esp in the Aggressive category. And to say you don't want to lose more than 15% says enough to me. You cannot go 100% Aggressive AND maintain a 15% loss strategy. Those two do not and cannot go hand-in-hand.
