Conference nyoss1::market_investing

    I heard this one...
    
    take 100 - your current age = % to put into growth related funds.
    
    So if you are 40, than put 100 - 40 = 60% into growth funds.
    I'd probably then do 30% Templeton, 30% Magellan, 20% S&P Index,
    10% Asset, 10% Money Market (unless you already have an emergency
    fund set up somewhere, which you should have = 2-3 months income)
    

>   10% Asset, 10% Money Market (unless you already have an emergency
>   fund set up somewhere, which you should have = 2-3 months income)

Using 401(K) (or IRA) funds for cash-flow emergencies can be an expensive
proposition: 28% federal income tax on distribution + 10% federal penalty on
distribution + x% state income tax on distribution can easily amount to 40%+ of
the amount you withdraw to cover the emergency.

Your emergency funds probably ought to come from a reasonably (very?) safe
non-tax-sheltered investment vehicle, possibly including a regular passbook
savings account.

You can often borrow against 401(K) savings (assuming you can wait several weeks
for the check), but not against IRA savings. In this case (at least at Digital),
it's immaterial whether your account(s) include a money market fund - the
withdrawal is split among all your funds (not sure whether the split involves
current contribution rates or equal amounts taken from all accounts). The
problems with borrowing are that: the borrowed funds have to be repaid (may be
difficult if you're borrowing to cover an ongoing emergency), and you're
ultimately taxed twice on the interest you pay on the loan (incidentally, this
is interest you pay to yourself) - interest payments come out of ordinary income
and are not tax-deductible, and the amount repaid as interest is taxed again as
ordinary income when distributed from the 401(K). Anyway, you ought to check
with Quantum to see exactly what policies they have around borrowing against
401(K) funds.
    

    You do have the ability to leave your money the Digital 401k for
    sometime after you leave. this may be the appropriate position to 
    take at present. This would allow you time to research the other 
    funds offered by quantum. 
    
    Money markets: have a low interest rate about the same or higher than 
    good CD. No a long term investment. Cost of living will eat up any
    increase
    
    Asset allocation: If this is like most balanced funds it will do better
    than a CD but not as well as most Mutual Funds
    
    S&P 500 Track the 500 largest companies must better rates but not
    without risk. Market goes down so does mutual fund, but over the long
    haul this may be an excellent fund.
    
    Magellan: This is a fund which has a good past track record. It is
    under a new manager for the last several years, after Peter Lynch 
    retired. The manager has been more conservative that Lynch and held
    more in cash. Still an agressive fund.
    
    Templeton foreign:  This fund need to be looked at more closely. Is all
    the holdings offshore or is part also invested in the US. Remember if
    allassets are foreign and a ression hits europe it may be a looser, the 
    vis-a-vers-a can also. If the US is also included it is then more 
    diversified and can handle ressions more easily.
    
    My advice= Research all the funds. Know how long fund managers have
    been in charge. Get the last annual report. Forget Money Markets, this
    is not an emergency fund, you'll lose money over the years. A little 
    research can reap large rewards$$$
      

    
    >> Asset allocation: If this is like most balanced funds it will do
    >> better than a CD but not as well as most Mutual Funds
    
    the idea here is that you're supposed to get better *risk adjusted*
    returns.  As long as the expected return is higher than the rate that
    you can borrow money at, then "in theory" you should be able to borrow
    money, reinvest, and _still_ have lower risk than you would in a more
    aggressive fund that has lower risk-adjusted return.  looking at the
    returns without adjusting for risk can be quite misleading.
    
    /jim
    

>    You do have the ability to leave your money the Digital 401k for
>    sometime after you leave. this may be the appropriate position to 
>    take at present. This would allow you time to research the other 
>    funds offered by quantum. 
>
    
    Nope.  We're being told we cannot leave funds with Digital.  We must
    transfer.  This is interesting because it differs from any other
    resignation.
    
    L.

    The Templeton Foreign fund has a load of 4% (4.17% of Net Asset Value),
    reduced from the "normal" 5.75% charge.

    The Magellan loads (normally 3%) are waived.

    In general, I don't like the idea of paying loads, but I like the
    Templeton fund, and was considering investing 20-25% of my 401(k)
    portfolio.

    Perhaps, it a psychological trap - but I don't like the notion of
    starting off in the hole, and requiring a 4.17% increase before
    break-even.

    Advice ?

    L.

    
    re: .5
    
    >Nope.  We're being told we cannot leave funds with Digital.  We must
    >transfer.  This is interesting because it differs from any other
    >resignation.
    
    I was told that if you had $3,500 or more in SAVE, you can leave it
    there; for anything less, you must transfer it out.
    
    Dennis
    

    I purchased Magellan in Dec 1989 against the recommendation of many and
    I have been averaging 18% per year. Lipper says it has been in the top 20%
    of  of all growth funds over the last 5 years. I am very pleased and
    continue to hold the fund.