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Welcome to the 401k board!

Let me see if I can help. You say that your plan allows you to contribute up to 10% of your salary. However, you don't mention whether or not your company offers a match to your 401k contributions. If they do, your first priority is to contribute enough to get the maximum match. That's free money!

Let's look at a sample plan:

If your maximum company match occurs at 6%, then contribute that. Then you should consider putting the balance into a Roth IRA. If you still have money left that you want to invest, then ramp up your 401k contributions to 10%. THEN, if you still have some extra cash, buy stocks to hold for a good long time or buy a tax-advantaged mutual fund, like an index fund.

Hope that helps.

Phoebesnow
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