Finance Questions

Question: How/Where should I invest my 401(K)?

I'm trying to figure out how I want to invest in my 401(K) and it all looks like gibberish to me. I'm not savvy in anything Stock Market/Finance Related, so I'm coming up a little short here. My options for investment are:

Am Century Income & Growth Adv
Dreyfus Emerging Leaders
Dreyfus Premier Core Bond Fund
Fidelity Advisor Equity Growth A
Franklin Small Cap Growth Fund I-A
Growth Fund of America R3
Gartmore Money Market
Gartmore Gov’t Bond
Van Kampen Equity
Gartmore S&P 500 Index SC
Janus Adviser International Growth Fund
Oppenheimer Global Fund Cls A
AIM Intl SmComp Fnd Cls A
AllianzRCM Glbl Tech Cls A
WFAF Hi Income Fnd Inv Clsp
DiamondHill SmCp Fd Cls A
Van Kampen Growth and Income

My goal is low risk, high return...obviously. Suggestions PLEASE!

Answer: Unfortunately there aren't any investments that I am aware of that offer low risk and high return. The way the market works is that your get "rewarded" for taking on more risk. Of course, there is the downside of greater losses for taking on more risk as well.

I cannot, and most likely no one here on this site will tell you which specific funds you listed you should invest in. I will however, provide some general guidance. First, you should invest at least enough to get your employer's match, assuming they match. So, if they will match the first 4% you contribute, you should contribute at least this amount. The match they are giving you is the equivalent to free money.

Additionally, if you work for a larger company, they should have a representative that deals with the retirement plan's for the company and can provide you with guidance. Contact your HR department. They should be able to guide you to the right person. They will also be able to tell you the company match percentage as well, if you do not know what it is.

Without knowing your age, the younger you are, the more risk you can take because the longer your money has to grow. When the market drops, don't view it as you losing money, but as a buying opportunity. You will be buying more shares at low prices, which allows for greater returns.

Lastly, of the funds you list, the money market and bond funds are low risk, but won't provide much return either. The small cap funds and international funds offer higher returns, but also carry higher risk as well. The growth and income funds offer modest return for modest risk. The S&P 500 fund simply tracks the market, so that fund also gives you average risk for average return.

Whatever you do, don't put off investing in the plan simply because you do not understand what you are doing. Investing in any one of the funds is better than doing nothing. By investing your money it at least has the chance to grow.

I hope this helps!!

Finance Video about 401 K disaster-- animation