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I've been trying to determine the best course of action for investing for my retirement, and thought that some input could be in order. I am currently 20 years old, and live in a state that won't let me invest in stocks yet (have to be 21 or some such nonsense--at least that is what tells me.)
I have a 401k at work, and am putting in 3%, which is the maximum matched by my employer. My employer (UPS) matches my contributions with their stock. I have been looking at the possibility of a Roth IRA as well. But, can I open one of those before I'm 21? Also, it is my understanding that one can still put the full $2000 in for the year 2000 as long as they do so by April 16th(?). I would like to do this, as any year lost is just that--lost. I would like to do that in addition to putting in $2000 for 2001.
Also, are there any suggestions on how best to invest my 401k contributions? I currently am putting 40% in an S&P 500 fund, 40% in a Russell 2000 fund, and 20% in an Aggressive Growth Fund--Bright Horizon 2035. I wonder if it is best for me to concentrate on, say, the S&P 500 fund instead of spreading my money about as I am.
The funds available to me are as follows (With expenses in parentheses):
Government STIF (0.15%)
Stable Value (0.11%)
Balanced (0.16%)
S&P 500 (0.03%)
Russell 2000 (0.06%)
EAFE Index Int'l Fund (0.15%)
Fidelity Magellan (0.60%)
Bright Horizon 2005 (0.45%)
Bright Horizon 2015 (0.45%)
Bright Horizon 2025 (0.45%)
Bright Horizon 2035 (0.45%)
I appreciate any feedback and look forward to your responses. Thank you in advance.

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It's great that one of your age is interested in saving for retirement rather than blowing it all on trinkets!
I don't understand why you aren't able to buy stocks in your state. You can buy mutual funds? Mutual funds that invest in stocks?
Yes, you can have a Roth IRA, and you can put your Y2K contribution in until April 16, 2001. So you can put in $4000 now if you wish.
If you can't own stocks, talk to Vanguard and set up your Roth with them. Start with your choice of funds--the Specialized Health Care did great last year, but consistently the S&P has done well. Keep your account in mutual funds until you have $10000 to $15000, then you can consider switching to individual stocks. Or you could set up an account with BuyandHold when you are 21.
You can have more than one Roth but you can only contribute a total of $2000 annually.
Best wishes, Chris
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I must admit I was just taken back a bit when you said you couldnt purchase stocks because of your age. But I will say that you are absolutely correct about losing a year. If its means opening a passbook savings account and designating it your IRA until you are 21 it would be worth doing. Of course I say that in jest, I am sure there are many better alternatives. I would definitely put in the full $4K for this year and last year since you have it.

You ask about the funding of your 401K and is there a better way to distribute it. There is only person that can answer that question and I think you know who that is. Most people consider 20 an age at which you can take more risks and would consequently put most of their funds in the Aggessive Growth. But there are also those that say by starting at age 20 you need not take any risks at all and should only invest in the S&P and hope that the past returns of approximately 11% will continue in the future.

The bottom line is you will have to determine your own risk tolerance and then make the decisions that allow you to sleep well at night.

Good luck to all.

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