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Subject:  Re: Need a 401(k) opinion Date:  3/31/2002  6:40 PM
Author:  joebedford Number:  34080 of 88090

My recommendation is along the same lines, but varies slightly. I personally would put very little if anything in bonds if you are relatively young; put it all in stocks. More risk, but if you have plenty of time to make up any short-term losses, more return. I would gradually ease a part of my portfolio into bonds as I approached retirement age, and will probably have most of my portfolio in bonds once I reach retirement age.

Second, I would still stick with index funds. They may not be doing well in the short term, but short term is not what investing is about. ;-) Their lower costs make them the way to go IMHO, when you consider the track record that managed funds have in beating the market consistently over the long haul.

Third, for a truly diversified stock portfolio, don't forget about international stocks. This can help even out any bumps caused by economic factors that affect only the US, exchange rates, etc. Vanguard has a Total International Index Fund (or words to that effect), which trades under the symbol VGTSX.

I am in my mid-thirties, and my personal asset allocation model is:

60% Vanguard VFINX (large-cap blend/index fund)
22% Vanguard NAESX (small-cap blend/index fund)
18% the aforementioned VGTSX

You could throw in a little VIMSX (mid-cap blend/index fund) if you wanted.

My two cents; YMMV. =)

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