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Subject:  Re: 401k ALLOCATION????? Date:  10/7/1998  9:05 AM
Author:  rustedSoul Number:  5899 of 105964

I am 30 years old and have been investing in my 401K since I was 24. I recommend you do the following:

- Put the maximum contribution into the 401K for the first 5 years. After the first 5 years (or longer if you chose) decrease your investment. Obviously, don't put in any amount less than what your company will match. (I have been putting the maximum into my plan which is 16% + 4% company match).
- Immediately open a Roth IRA. Since this investment yields tax-free returns, it is preferable to a 401K. Put $2000 in every year. Be aggressive with this investment.
- Lobby your HR department to get better investment options. Ask for at least and index fund and an aggressve growth fund.
- Look at each of the funds. Rule out any that are not 100% equities + cash. Look up their long term performance - 10+ years (most charting sites can give your a chart which compares against S&P500).

The trick with any investment is not so much the amount you put in, but how early you invest the money. (This is very easy to show with a spreadsheet). A small amount of money invested early on will easily outperform 2x/3x the amount which is invested 10 years later. Your income will increase over time which will enable you to put more dollars into the plan. But the initial dollars are the ones which will reap the highest return.

I know that when I was 25, I tended to look in the present (when it came to money) instead of the future.
You may have to forgo some luxuries initially to do this, but it will be well worth it. Even if you do this plan for only 5 years.

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