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Subject:  401(k) allocation Date:  1/8/2004  11:11 AM
Author:  KernelSanders Number:  38412 of 101522

Hopefully I'm not beating a dead topic here, but I am preparing to make my first 401(k)contibutions. I'm 26, earn about 45k (i'm a paralegal, and generally supplement my 35k salary with significant overtime, although it is hard to predict the annual compensation ahead of time.)

Luckily, we do have the Vanguard Tot Stock Market fund available, which will likely be the core of my contribution. The other appealling funds are:

Janus Small Cap Value (0.82 ER, 39% turnover)
Legg Mason Value Trust (0.72 ER, 25% turnover)
Columbia Real Estate Equity (0.94 ER, 53% turnover)

we also have a few internationals that I would consider, one called Artisan and another from Templeton.

Basically, I am having a real hard time seeing a 100% index contribution as the "right" move for me. I am fairly new to investing, and brand new to fund investing. These active funds (particularly Legg Mason) have established histories of beating the market, and seem to have relatively low fees. I have read the Foolish articles on index investing over and over and am still not 100% convinced that I should ignore these seemingly great funds at my disposal. I realize that I am in a bit of a unique situation because my firm does happen to offer really great fund options. (in my naive uninformed opinion.) Maybe someone could shed a little light on my clouded mind regarding why I should still stick with the Vanguard index fund (despite my heart telling me to put 50% or so in some of the active funds.)

The other problem i'm facing is that I am very excited to put away money for the future, but am nervous that I may be "saving too much." If my goal is to work hard now, invest responsibly and retire comfortably, and hopefully a little early, then it is a little scary that I cannot touch this money (without penalty/interest) until age 59. Maybe someone could assuage my fears that I will regret making large contributions to a 401(k) with money that I could otherwise be investing with a discount broker for use in my 30's and 40's .... Thanks for all of your Foolish help, Joel

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