No. of Recommendations: 1
Just my own prejudice here, but if you are talking a 401K with limited choices, many people would advise you to have 100% stocks, and higher risk funds while you're at it! Many people (you perhaps?) are entirely too conservative with what should be money that's going to be invested for decades. So lose the cash and the bond funds.

Another less common prejudice is mine: against risky debt. Junk bonds are so called for a reason. The biggest argument against them (above), but a second one is the "risk premium". From everything I've heard, the risk spread between Treasury and most lesser debt is very small now. If you buy "junk" the best time is during a recession, when the spreads can be several percent (look up data from 1982 or 1990 and you will see what I mean.) Of course, your stock funds might have dropped 40% (remember 2002???) but that's why they call it a "recession."

Personally, I've been battling a family Trust (effectively, my own retirement fund), who generally invests conservatively, asset allocating, but a chunk of that is in "high-yeild" or mortgage backed securities. Not my first choices.

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