Fund managers like to blend things so you do not loose money. Not a bad idea, but you will loose all the high performers. A good growth stock fund may be the best bet. The only bond funds you want are junk bond funds that get 7% return. There is money in trash. That is where Warren Buffet got started.
The 547 plans are for high earners.
These days, much of the growth will be overseas. So lots of multinational and international stuff.
The greatest mistake you can make is waiting.
My sister lost half of everything in 2008 and got out. I lost more, stayed in and made more than ever.
Both programs are retirement plans. The key differences are:
1) If you plan to retire before age 55 and begin withdrawals immediately, you should know that early withdrawal penalties apply to the 401(k), but not the 456 plan.
2) You can withdrawal funds from the 401(k) for a home purchase or college tuition, but not from a 457 plan
3) The 457 plan contains a "catch up" provision that allows you to contribute a higher amount to make up for the years you were eligible to contribute to a retirement plan but didn't. The 401(k) plan doesn't have such a provision.
For people that don't know a lot about investing, your company is offering a short horizon, medium horizon, and long horizon. At your age, you would select long horizon. If you do decide to invest in their mutual fund offerings, I suggest you lean towards INDEX funds (if available). Also, since you are young, you probably want to lean on equity funds rather than Bond funds. I would put 10% in bonds, and the other 90% into equities. If you have a choice between Large, Medium, and Small Cap stocks, you can split these up fairly evenly. If you think Large companies will perform better, you can put a higher percentage of your savings there. I tend to think small companies perform better, so I allocate more to the small companies than large companies.
Remember, you can always make changes as you learn more about investing and/or as you witness your performance.
You need to read the enrollment packages thoroughly for each of the plans. These packages are required by the Department of Labor that governs both plans, although the 401k is also govern by ERISA to given to you. In fact in your orientation you should have been required to sign a form that you received them and read them. All the details regarding plan specific rules, fees, investment options, contribution and distribution, and contact information for advice needs to be in there. To maintain flexibility for tax and distribution purposes, you may want to use both. Because often employment now means moving between many employers, you may want to also use both types of plans.
Ask your supervisor if the company has an "expert" you can meet with to explain your options and answer questions.
Investing is not rocket science as long as you understand that investing is a long term proposition. You want high quality, dividend paying stocks. Reinvest the dividends. Add to them on a timely basis and retire wealthy.
If you would go to Yahoo Finance, spend a little time (say like a week or so) follow the links, read and pay attention, and you will learn all you need to know.
good luck!
Please give more details. Do you work for the government? When do you plan to retire? Are the investment lineups the same in both?
I started a new career and I'll be completely honest, I don't have a clue about 401k's. They offer a 401k and a 457 plan, I have had a 401k before but it was setup by the actual retirement company through my employer. I've never heard of 457. The 401k offers a short horizon, medium horizon, and long horizon. And it has percentages. Then it has all the individual funds with percentages next to each of them. And I'm lost. I don't have a clue what to do. I'm only 28 so I have a long career ahead of me. HELP!!!
