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Greetings, Nothumbs, and welcome. You asked:

My question is, should I buy into some sort of index fund now, sell the index when I accure the $3K and then buy into the fund or leave my contributions in the money market? Can I even do that? Am I being foolish (in a bad way) buying stocks?

You may invest in whatever your 401k plan offers as an option. As we say in our 401k area at

"If you're young and will be making regular and continuous contributions to your 401(k) plan over a number of years, history shows that allocating all of your deferral into stocks will likely produce the highest returns.

If you have a 401(k) plan administrator, she won't tell you how to invest your money, even if she knows that, historically speaking, stocks outperform other types of investments. Generally, plan administrators won't expose themselves to any legal liability and won't offer specific investment advice -- markets, after all, don't end up behaving in predictable ways all the time. Or any of the time.

We can't offer specific investment advice to you either, because we don't know your specific situation. (Our message boards, however, are an excellent place for you to discuss your specific situation with the Foolish community at large. Register for free by clicking here.) But if there's a sufficient reason for someone who is decades away from retirement not to take full advantage of the fantastic possibilities that stocks provide, we don't know what it is.

All you've got to do to maximize your returns, therefore, is pick the right equity mutual fund. There's a good chance that your 401(k) has the right fund for you.

But did you know that only 15% of all the 401(k) funds that are put into equity mutual funds are put into the best performing funds? Do you want to know how you can beat 85% of your co-workers?

We're going to boil down all of the information that you'll ever need to know in as short a form as possible -- but, just to make it more fun, we'll test your linguistic abilities by presenting the answer in the form of a question, Jeopardy-style -- and in different languages.

The answer: "Over time, the absolute best performing type of stock mutual funds, bar none."

And the question: 'What are…index funds?'"

The choice is up to you, but most Fools would opt for an index fund above any other type of fund.


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