That little white space is crucial. The purple line represents the value of my 401k. The blue line represents the contributions I’ve (my employer) made to my 401k. That space in between is the wonderfully magical money my investments have made for me.
You’ll notice, that white space has not existed very long – not nearly as long as it should have. Unfortunately, I thought I had allocated money into the stock market way back and it turns out I didn’t quite complete the process. Back in October, I fixed that so that a much higher percentage of my contributions went to stocks instead of money markets. Finally, just recently I was toying around and found how to easily move funds from one allocation to another. Now, nearly a year later, I have the asset allocation I want. Unfortunately, that means I missed out a bit on the huge year stocks had, but at least it is fixed.
This comes to mind after reading CNN’s recent article 4 money resolutions to make now.
It’s an easy and quick read – check it out. The first resolution is don’t be too risky with your investments. The article mentions a rule I had not heard of before:
One rule of thumb: subtract your age from 120 to determine how much of your investments should be in stocks.
According to that, I should have 94% of my 401k invested in the stock market!!!! Seems a little high. After finally fixing my 401k allocation, I have about 55% of my 401k invested in stocks and equities. That should creep closer to 60% and eventually 70% over the next year. Gotta get that money to work a little better for me! Now if I can follow the article’s second resolution…
2. Stop checking your statements so often