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A Look Into My 401(k) Plan

By Erik Folgate

I started investing in my 401(k) plan about 14 months ago.  In 2006, my portfolio earned about 11% which is outstanding, well, good enough for me to be happy.  Some of you might think that’s a waste.  But, this is a retirement account, so if it averages 11%, i’ll be very happy.  I invest in 5 different mutual funds.  They are listed below:

  1. American Capital World Growth and Income (CWGIX)
  2. American Growth Fund A (AGTHX)
  3. Calamos Growth Fund A (CVGRX)
  4. American Europacific Fund (AEPGX)
  5. Davis – New York Venture A (NYVTX)

American Growth and Calamos are the most aggressive mutual growth stock funds.  I could win big on them, or lose big, but their 10 year track records are great.  Remember, it’s not about the 1 and 3 year rates of return.  Look towards the long term track record when picking a mutual fund.  Davis and Capital Growth and Income have a mixture of Stock and Bonds to give the portfolio a little more balance, and I threw a very good international fund in there to stabilize my portfolio when the US market is not performing well.

This mixture of funds has worked well for me so far.  I’m young, so I can be more aggressive with my investments.  If you are over 50, then you need to start worrying about HOW MUCH you’re putting in, rather than where it’s going.  I’ve heard financial advisors say that 15% of your income is a healthy savings amount for retirement.  If you put away $750 a month into a retirement account from age 25 to 60, you’ll have 2.8 million dollars by the time you are 60!  You could live off of the interest alone and bring in $250,000 a year.  Imagine making that kind of income just by sitting on your butt all day!  Now that should give us all a reason to contribute as much as we can to our retirement accounts.  If your company matches your contributions like mine does, then you NEED to take advantage of that.  Postpone funding the Roth IRA until you get the full match out of your employer.

Becoming a millionaire is only a little discipline and a few hundred dollars a month away from reality.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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