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After starting read "The Unemotional investor" I started to wonder the best way to diversify my 401k portfolio. There are several mutual fund options one of which is in my employer Corporate Stock Fund. Should I stick to that or should I break it up according to an asset allocation model? Or should I stick to the one index fund it offers? My employer matches dollar for dollar up to six percent and I can contribute and additional 4% pre-tax. Should I do this or should I contribute only up to what they contribute? I have just become eligible this month and I am very confused now. Any help or advise is greatly appreciated!
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Greetings, Foolishlypoor, and welcome. You wrote:

After starting read "The Unemotional investor" I started to wonder the best way to diversify my 401k portfolio. There are several mutual fund options one of which is in my employer Corporate Stock Fund. Should I stick to that or should I break it up according to an asset allocation model? Or should I stick to the one index fund it offers? My employer matches dollar for dollar up to six percent and I can contribute and additional 4% pre-tax. Should I do this or should I contribute only up to what they contribute? I have just become eligible this month and I am very confused now.

Allocation of investments within a portfolio is a personal decision based on a number of factors, the primary one of which is the risk you're willing to assume. 401k plans are for investments you won't cash in for many years. Because risk diminishes over time, that means most folks should be nearly 100% invested in stocks to grow the largest sum possible for retirement. Most 401k plans will offer a few stock funds, and the vast majority of them will not perform as well as the S&P 500 Index over the long haul. Therefore, Fools believe your best choice is to use an S&P 500 Index fund when that option is available within your 401k. It's virtually certain - but not guaranteed - that fund will outperform any other fund choice you'll have within the plan. You, though, must make that choice for yourself based on your comfort level.

As to how much you should contribute, I just answered a similar query from Musique. That answer is appropriate for you, too. You can read it at:

Regards….Pixy
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