How to Invest in a 401k | BeatTheBush

When you sign up for an employer 401k plan, you are allowed to invest in various assets by selecting the percentage you want in each allocation. Generally you need to pick a target fund date suitable for your age and when you wish to retire. The closer you are to retirement, the more conservative it needs to be so that you do not find yourself deep in losses with not enough time for the market to bounce back.

How’s it going everybody this is pete bush today i’m going to give you some of my opinions on how to invest in the 401k now generally when you’re at a workplace they don’t really tell you how to invest in a 401k they only tell you the list of funds that are available and then you’re on your own to choose which funds to invest in you’re likely here that you’re supposed

To contact your financial advisor to see which funds that you should actually invest in i remember a long time ago when i’ve got my first job in my first 401k i did not have a financial advisor back then and i’m sure most people who started their first job they actually don’t have an financial advisor generally in a 401k there’s a lot of different kinds of funds

That you can choose from so let’s look at some of those types inside your 401k generally have maybe 10 to 20 funds that you can pick from and then you’re left with selecting how many percent goes into each type of fun generally they have these things called a target date fund which is a date at which you plan to retire generally these dates the closer it is to the

Current date the more conservative it is if you pick a date that is really far out maybe like 30 or 40 years from today such as this 2050 fund then it’s going to be a lot more aggressive in terms of stock most of the percentage inside this one is going to be stock based you pick a target fund a of 2030 it’s going to have more heavily loaded in bonds instead this

Is mainly for as you get closer to your target retirement date you want less fluctuations because there’s not going to be as much time to recover if you plan to retire early you might have to set this date a little bit closer because if you set it really far out you might be too aggressive for what you’re trying to do you might find yourself not having enough time

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To recover from a market downturn all of these days is really just kind of whether a market downturn so that you can actually survive if something like that happens farther out you are the more heavily invested in stocks that you can be and still be okay because you have a lot of time for the stock market to recover then it goes on to have all these other kinds of

Funds like small cap medium cap in terms of market cap of the company so this large cap fund is going to have a lot of companies that are that has a large market cap then you have like international bonds you also have capital preservation funds which really tries to hole your money so that you don’t lose any value and then some 401 k but not all and it’s kind of

Rare these days to actually have an smp index for you to invest in inside of 401 k now you heard me talk about the expense ratio and when you go in your 401 k plan you don’t make it very easy for you to find out the expense ratio but if you do go and look at each one it’s likely going to be about point eight even all the way up to one point five or something like

That it’s pretty high but then there’s nothing you can do about it if you’re going to contribute to a 401 k especially if you get a matching you’re going to put in whatever that amount is and then you’re going to get the matching which is essentially like one hundred percent gain then you’re going to have to invest in one of these funds of course the expense ratio

Is going to be high so then later on if you ever change jobs then you should really take this money out and put it in an ira instead so that you can invest in things with our lower fee the expense ratio is not too good so you could also try to look for the lower expense ratio fund within your 401 k plan now where do you want to invest in this i mean there’s a lot

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Of choices and you’re basically how like empty spots here and you’re left to fill out how many percent you want to this how many percent you want to know it’s kind of like well it’s up to you right maybe you feel like oh international stocks is something good and invest in so let’s say you put 100 percent in there is that the way to do it it’s actually really up to

You but let me talk about the whole premise with investing in general because you are essentially investing in something and you’re hoping that the future value of these funds will be greater than it is today generally that has held true for a really really long time however my personal thinking is that the future is sort of unprecedented now let me tell you how

You’re supposed to invest in this which is to just keep on putting money in and don’t look at it oftentimes for people who invest in their 401 k they may look at it once in awhile and then when there’s a market downturn maybe they go and really look at it all the time and see that the value keeps on going down so before you even start all this you have to realize

That the companies in the united states is worth a certain intrinsic now you yes during a market downturn sometimes the value might be really really low and below its intrinsic value certainly the value will never really go to zero because it’s always worth something and the whole idea with this is that your dollar cost averaging into these funds and you’re

Investing consistently over a long period of time without selling it at any one given moment so what you’re actually doing if you invest in long term you’re really betting on the innovation of companies to be able to produce more for the same given unit of work this is really done through technology and the companies being more and more productive they’re able

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To make more and more goods so that’s the idea and if you believe in that you really really have to believe in that if you’re going to invest in this long term because if you don’t then whenever the market goes down you can adapt yourself and then you might sell which a lot of the investors actually do when the market is really really bad so hey you might ask me

Where am i investing all my 401 k well i am putting it mainly in capital preservation which is not lend us lists over here and this dance of capital preservation is kind of unique to myself because i am planning on retiring pretty early and that’s just the way it is for me because if the market ever has a downturn i don’t have the timeframe to wait for the market

To recover because my target date of retirement time is edging up closer and closer i won’t actually say how many more years or whatnot because i actually don’t know but i am you know somewhat close based on my income levels and my savings rate so i hope this gives you some clarity on actually what to do in your 401 k and how to allocate each one so these days i

Have two separate channels this one over here is the finance channel i also have a do-it-yourself channel i’ll leave a link over here just has a lot of do-it-yourself videos reviews of electronic gadgets cooking car repair and things like that the stuff that i used to put on this channel but this one has kind of morphed into more finance only stuff don’t forget

To give me a like on this video comment down below let me know how you’ve been allocating your 401k assets if you’re interested in supporting a channel check out my audible link down in the video description below i also have a game file link down there patron over here and don’t forget to subscribe thanks for watching

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How to Invest in a 401k | BeatTheBush By BeatTheBush

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