Posted by: Kiddo March 16, 2015
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Hello Choila
First of all, it's very highly recommended that you, at the minimum, contribute the maximum that your employer will match. So if they match, say 3 %, then contribute at least 3%.
How much more you want to contribute depends upon your future plans. I could recommend more if you tell me your plans and when (and where) you plan to retire.
401k also has max limit (I believe for 2014 it is 18k). You might want to consider other vehicles for retirement savings such as IRA (your contributions/earnings will be pre-tax) or Roth IRA (contributions will be post-tax and earnings won't be taxed). Remember though, if you withdraw your 401k, IRA or Roth IRA prematurely, you will be penalized. 401k and IRA will tax you and then impose around 10% penalty if you withdraw before you turn 59.5 (you might want to check this number). Roth will not penalize you and will only tax your earnings if you withdraw before maturity.
Now how to allocate also depends upon your goals. If you aren't certain, Vanguard offers age-indexed funds (like 35, 45 yrs) - the longer you have the more allocation in equities (stocks) than bonds/mutual-funds.
The best way to invest for long is to diversify. Currency devaluation is a big concern, as is market condition. So, you don't just want to invest in various sector within US, but might want to include some portfolios from Euro, Asia and emerging markets. This will hedge you against inflation and currency fluctuations.
First of all, it's very highly recommended that you, at the minimum, contribute the maximum that your employer will match. So if they match, say 3 %, then contribute at least 3%.
How much more you want to contribute depends upon your future plans. I could recommend more if you tell me your plans and when (and where) you plan to retire.
401k also has max limit (I believe for 2014 it is 18k). You might want to consider other vehicles for retirement savings such as IRA (your contributions/earnings will be pre-tax) or Roth IRA (contributions will be post-tax and earnings won't be taxed). Remember though, if you withdraw your 401k, IRA or Roth IRA prematurely, you will be penalized. 401k and IRA will tax you and then impose around 10% penalty if you withdraw before you turn 59.5 (you might want to check this number). Roth will not penalize you and will only tax your earnings if you withdraw before maturity.
Now how to allocate also depends upon your goals. If you aren't certain, Vanguard offers age-indexed funds (like 35, 45 yrs) - the longer you have the more allocation in equities (stocks) than bonds/mutual-funds.
The best way to invest for long is to diversify. Currency devaluation is a big concern, as is market condition. So, you don't just want to invest in various sector within US, but might want to include some portfolios from Euro, Asia and emerging markets. This will hedge you against inflation and currency fluctuations.