OP here. Thank you everyone! I did a LifeCycle fund and did the minimum but enough to get my employer match. I will bump it up once my budget evens out.

Thanks!

You can invest in Lifecycle funds through a Roth IRA, a regular IRA or a 401k. There are even similar lifecycle funds for college savings based on when your kid will go to college.

I would start by putting at least the minimum amount you need to get the full employer match in the lifecycle fund appropriate for when you are going to retire. That way you won't lose the free money from your employer while you are figuring this out, and later you can always move the money in your 401k between the investements your plan offers.

Many 401k plans offer a limited range of funds and don't include Vanguard ones--no biggie. You can always open an IRA or Roth IRA with Vanguard, but this won't help you get the matching $$$ from your employer.

Anonymous wrote:Hi all-
I just started a new position where I have a 401k option. I've never had a 401k, so I wasn't totally sure how they worked. I just got my paperwork in the mail with how and where to enroll.
I was under the impression it was basically just an account where I send a percentage of my paycheck, and my employers matches 3%. Bing bang boom. However, in the paperwork it lists my options for the 401k-
- Domestic Equities (Spartan 500 index fund- Fidelity Advantage Class), JP Morgan Large Cap Growth Fund, T Rowe Price Mid-Cap Growth Fund Advisor Class.. and a few others)
- International / Glodbal Equity (American Funds EuroPacific Growth Fund Class R-4, T Row Price Emerging Markets Stock Fund)
- Specialty (Cohen& Steers Realty Shares Fund)
and then Lifecycle Funds: all T Rowe Price - Target date 2000-2014, Target date 2015-2030, Target date 2031+


However.... I was under the impression that "LifeCycle" Funds were Roth IRA's. I thought 401k's and IRA's were two separate things. Yes, I know I can google this, and I am, but I still am not seeing it in black and white.

Any help?

A 401k is basically an account where you (and hopefully your employer) invest part of your salary. You get a tax break for investing in the 401(k), and in return there are a lot of limitations on how you can access your money, at least until retirement age.

However, a 401k is not like a passbook savings account. Since you are investing for the longterm, you usually want to have 1/2, 3/4 or even more in the stock market, because historically while stock values go up and down, over the long term they have the best record.

If you really know nothing about stocks or investing, I would probably suggest picking the T Rowe Price lifecycle fund for the year when you expect to retire (rounding down if necessary) (and then suggest not really opening the account statements). The lifecycle fund will keep you invested in a variety of stocks and bonds, and rebalance across the assets over time.

It is true also that the fees charged can eat into your returns. The TRP funds should have fees of less than 1%. Ideally you'd want fees under .5% or even .25% but sometimes under 1% is all you can do, and shopping solely on fees isn't a great idea unless you know the two funds are otherwise pretty identical.

Lifecycle funds are not Roth IRAs. A Roth IRA is a type of investment for retirement. Within a Roth IRA, you can pick individual stocks, bonds, or funds such as the ones you've listed.

A lifecycle fund is one that will change its investment strategy over time based on a particular schedule. So let's say you're 40 years old and you want to retire in 20 years. You can pick a lifecycle fund with a target date of 20 years from now (2033) that will shift its investments over the next 20 years as you get closer to retirement. All you have to do is pick the fund that is closest to your retirement date, and the company will do the work for you.

If you prefer to pick your own funds and change the strategy yourself, you'd go for some of the ones you've listed.

It sounds like you are pretty new to investing and so you might want to look at the lifecycle fund. Also it's likely your employer has a help line that you can call to give you more information. Start there.

OP here. No Vanguard options. I remember learning that Vanguard was the way to go.

Any Vanguard options? If not, you need to Google Low fee 401K funds and see what comes up.

Hi all-
I just started a new position where I have a 401k option. I've never had a 401k, so I wasn't totally sure how they worked. I just got my paperwork in the mail with how and where to enroll.
I was under the impression it was basically just an account where I send a percentage of my paycheck, and my employers matches 3%. Bing bang boom. However, in the paperwork it lists my options for the 401k-
- Domestic Equities (Spartan 500 index fund- Fidelity Advantage Class), JP Morgan Large Cap Growth Fund, T Rowe Price Mid-Cap Growth Fund Advisor Class.. and a few others)
- International / Glodbal Equity (American Funds EuroPacific Growth Fund Class R-4, T Row Price Emerging Markets Stock Fund)
- Specialty (Cohen& Steers Realty Shares Fund)
and then Lifecycle Funds: all T Rowe Price - Target date 2000-2014, Target date 2015-2030, Target date 2031+


However.... I was under the impression that "LifeCycle" Funds were Roth IRA's. I thought 401k's and IRA's were two separate things. Yes, I know I can google this, and I am, but I still am not seeing it in black and white.

Any help?