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Author: pdiddyd Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25313  
Subject: Re: 401K Allocatons Date: 10/31/2008 12:19 PM
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You have way too much in your company stock. You already have plenty of risk with that company as you are employed by them and your employement counts on their success. Do you really want to have a huge chunk of your investments tied to their success too?

To best answer your allocation question, it would help to know all of your investment options and the amount of money in the account and annual contributions. However:

You are using two Fidelity Freedom Funds that are great funds, but these are Target-Date funds. They are fund-of-funds with each owning like 20 to 25 other funds inside of them. They are typically meant to be used on their own where you give up control of your allocation and give it to the fund manager who allocates the money inside the fund into other funds and adjusts that allocation becoming more conservative as the target-date (typically your retirment date) gets closer. People usually choose these based on either their retirement date, or their risk tolerance at this time, understanding that the funds will become more conservative in the future. It is ok to use these funds with other funds, but usually they are not because they really confuse the situation with your investment allocation.

Use one of these funds alone, or maybe in combination with another fund in a distinct asset category not offered within these funds (like a REIT fund), or do not use them and create your own allocation with individual funds.

Your current allocation appears to have roughly 7% of the portfolio in fixed income. This is through the Target Date funds where one has over 50% fixed income and the other over 30% multipied by the amount of money in each.

If you build your own portfolio, consider something like:
Company Stock 10% (or less)
Intermediate Term Bond Fund 10% (or more)
U.S. Large Cap 48% (all in a blend fund or split 28% large value 20% large growth)
U.S. Small Cap 16%
International 16% (This area may lag for awhile, but if your long term and accumulating I would continue to add to it over the long-term.

If the plan offers a REIT fund (most do not), then consider for 5%.

Good luck!
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