Apparently, someone doesn't understand the concept behind a mutual fund. How do you "monitor" a mutual fund? You don't! Mutual funds are vehicles for long-term investing, and overall success depends on proper allocation, faithful dollar cost averaging and rebalancing. Specific investment performance is of ironically low importance in achieving long-term success. Mutual funds should be purchased based on research of investment philosophy, credentials of the fund manager, fees, and past performance. Then they should be pretty much ignored. The most "monitoring" that should be done is a brief glance at your quarterly statement, and even that should be largely disregarded. Of course, if your fund proves to be a dog over the long term (at least several months, if not years), relative to funds in the same risk class, you may need to reevaluate; but don't be hasty to do so. Investors with a short-term perspective don't belong in mutual funds.
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The purpose of your 401(k) is to maximize your investing power through company matches and tax deferral. Initially, one should only contribute the minimum necessary to maximize the company match (free money is the best money). Then, other tax-advantaged investments should be considered before increasing the 401(k) contribution. Roth IRAs allow TAX-FREE growth, and a myriad of other choices offer tax deferral while possibly giving the investor greater choice than his 401(k). Most importantly, keep an expert in the loop. The best way to plan for your financial future is to hire a qualified financial advisor or planner. And it's easy to find many who will offer their services at no cost! Rob Drury, rob@safemoneyconcept.com
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Novice
100 Points
