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Greetings, Barton18, and welcome. You wrote:

I'm wondering how I should best invest the money I'm putting into a 401(k) plan at work. I would like to put it into a S&P 500 index fund, but the plan doesn't offer one. What it does offer is a number of mutual funds from the Columbia Funds family, ranging from a money-market fund to a U.S. government bond fund to a small-cap stock fund. One theory I've read is that you should subtract your age from 100, invest that percentage in stocks, and the rest in bonds and/or cash. I'm 28, so following that approach would mean I should have 72% of the 401 (k) money invested in stock funds. If anyone out there has thoughts on how someone my age should allocate money in a 401(k) plan, I'm interested in hearing your ideas.

Others have already mentioned that at your age, stocks will almost certainly give you the best bang for your long-term investment dollar. I'll simply point out that the old rule of thumb you cited has widely fallen out of favor with most financial planning professionals in the last 15 years. The fact of the matter is the percentage you should invest in stocks at any age is limited only by how well you sleep at night. Everyone has a different tolerance for the ups and downs of the stock market, and that's what should dictate how much of one's portfolio is devoted to that entity. Even at age 80 it's still prudent to have some exposure to the market simply to protect one's purchasing power. Obviously, the younger you are the greater that exposure can be, but even in old age some stock investment remains prudent. How great, though, is a personal choice.

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