First decide if you want to actively manage your account or not. If
you do then get a couple of investing books and go to the library to
learn about investing. Consider mutual fund newsletters that provide
suggested portfolios. If you don't, then invest in Index Funds.

Ask yourself if you are comfortable with market risk. If you can't
sleep at night because your portfolio dropped 20% over the last 6
months, then plan on a conservative asset allocation.

If you can handle the risk thing, then, at your age, go for growth and
keep the bond allocation low, say 15%.

Frank


last_known_address[at]yahoo.com wrote:
- quote -

#2 is the best. Just rebalance annually or so... qrtrly is too much
work for you (See the end of strategy #1) and won't make a huge
difference.

Put about 20-27% in Foreign.

Do all this at your own risk... as long as you're comfortable with a
little volatility (less than S&P 500) and you don't plan to take the $$
out within at least 5+ yrs you'll do fine.

Good for you for actually trying to do the right thing. Just remember,
your biggest enemy isn't picking the right allocation (although you're
on track), rather it's failing to contribute to the plan -- sounds like
you're on track there also.

- quote -

Your strategy (4) sounds like the "1/n diversification heuristic" that
academics have found to be commonly employed but suboptimal -- see
http://papers.ssrn.com/sol3/papers.c...ract_id=625942 .

- quote -

I don't understand this statement. I doubt that most fund families or
401(k) plans require exchanges to be larger than $1000 (and the
smallest allowable exchange is probably lower). If the amount you need
to rebalance is less than $1000, it makes little difference whether you
rebalance or not.

It is very hard to rebalance quarterly on your own. If your target
allocation is 65% stocks/35% bonds than stocks have to underperform by
a lot for you to sell some bonds and buy some stocks.

I would rather invest in a balanced fund like vanguard wellington,
which re-balances automatically.

http://therealreturns.blogspot.com/

beliavsky[at]aol.com wrote:

- quote -

Many asset allocations use a middle category between growth and value,
often called "blend" or "core" ("blend" is an overloaded term, I've seen
it used for funds that invest in both stocks and bonds as well). In the
allocations I have seen that use this category, I also often see an
equal weighting between value and growth, with a different (usually
lower) weighting for core. For example, 30% large-cap growth, 20%
large-cap core, 30% large-cap value. This seems nonsensical to me. Any
thoughts?

- quote -

But there is some indication that growth funds with low Morningstar
ratings continue to do poorly. See
http://papers.ssrn.com/sol3/papers.c...ract_id=168668

-Will

- quote -

Reasonable, but a fund that tracks the Wilshire 500 or S&P 1500, which
are broader indices including mid-cap and small-cap stocks, would be
even better.

- quote -

An index fund will own both "value" and "growth" stocks. It's not clear
to me that putting an equal amount in value and growth funds is better
than
just owning an index fund, unless you are confident that you can find
value and growth managers who will outperform their style indices.
Finding such funds is not easy.

- quote -

I do not recall any studies showing that Mornginstar fund rated 4 and 5
stars outperform their benchmark indices, AFTER the ratings are
published.

- quote -

Not good, I'm afraid. The problem is that you are allowing you
employer's choice of what mutual funds to offer determine your asset
allocation. If your employer adds 5 bond funds to your 401(k) choices,
that probably should NOT result in a drastic increase in your bond
allocation.

Looking for any advice on how to select 401(k) asset allocation
strategies, evaluate mutual funds and when to rebalance. I have more
than 35 years to retirement.

Some of the advice I have tried, seen or been given so far:

1) "Leave your money in the [fund that is most like an S&P 500 index
fund] for a couple of decades, don't worry about it, and go out and
enjoy life." Fool.com

2) Maintain an allocation of approximately 90% stocks to 10% bonds for
now, put approximately half in large cap stocks, splitting between
value and growth strategies, divide the remaining 40% among small cap,
mid-cap and international stocks. Rebalance quarterly. (From my
employer's 401k representative.)

3) Review the Morningstar ratings for mutual funds. Don't invest in
anything with a Morningstar rating below 3. (Friend)

4) Split contributions equally through a large number of funds in the
plan. (This is my current strategy because I haven't known what else
to do. Typically half my funds do well and the other half are awful.)
Thanks in advance!