[caola]

The stock market has been so disappointing,we keep hearing bad news in economies.should I continue to put my money into 401K ? Will my money in 401K be
Shrunk ? If 401k is still best way for building nest egg for retirement, how should I
Allocate the money ? I will have 10 - 11 year to retirement.

[ScottGem]

Yes you should be putting your money into a 401K. But maybe not into a stock fund. Most 401Ks offer a selection of investment vehicles. You need to look at what is offered and decide what's best for you.

[ebaines]

Yes - stay with your 401(k)! One big advantage is to a 401(k) is that it forces you to invest every month, which automatically builds in a dollar-cost-averaging technique. This is an excellent strategy for being sure that you buy when the market is low as well as when the market is high. By investing over time you virtually guarantee yourself a better overall return than if you attempted to time the market. I disagree with ScottGem here - do not try to outguess the market - it has been shown over and over again that few people are wise enough to consistently pick the highs and the lows, and consequently most active investors do worse than those who invest a set amount every month over a period of years. It's important to set your strategy and stick with it. Given that you have 10-11 years until retirement, I would suggest an investment mix of stocks and bonds, and that includes a foreign investment component. Personally, I would invest about 50% in domestic stocks (split about 35% large cap and 15% small cap, and evenly between value and growth components), 15% foreign stocks, and 35% bonds. Keep in mind that while you will retire in 10 years, you will need these investments to be there for perhaps 30 years or more - so being too conservative runs the risk of your investments not keeping up with inflation over the long haul. But the actual mix you pick must be something you are comfortable with, because once you settle on a particular strategy you must stay with it for years. To help, many of the large investment houses have on-line tools you can use to evaluate your particular aversion to investment risk, and hence what you are comfortable with. Check out Fidelity, T. Rowe Price, and Vanguard.

[ScottGem]

Actually ebaines and I don't disagree here. But you appear to have a low risk tolerance. So your investments should reflect that. Because of your risk tolerance and how close you are to retirement you should be moving your investments towards lower risk (but also lower yielding) investments. These could be bonds ro mutual funds that stress safetly, etc.

[caola]

Very helpful

[caola]

Very helpful