Recently I spoke to a friend about his retirement savings, and we ended up looking at his 401k portfolio. Although he isn’t able to contribute the maximum amount each year, he contributes enough to take full advantage of the company match. However, when I looked at his investment asset allocation, I was horrified. This was what I saw:
This friend is in his early 30s and this is his current 401k allocation:
- 25% Target Retirement Fund 2020
- 25% Bond Fund
- 25% International Equity Fund
- 25% Company Stock Fund
Can you point out some of things that are wrong? I wonder how many people are religious about contributing to their 401k plans, but make poor choices about investing that money.
Pinyo is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.