Where to Invest Your 401(k) Money

The past week I've been doing TAG's quarterly 401(k) enrollment meetings, and the question I always get is: "Hey, I'm thrilled to be finally starting a 401(k), but where do I put my money?..." I'm not a financial planner, but I've had to read a ton of books (out of self defense) and talk to a load of experts, and here -- in a nutshell -- is what I've gleaned: 1) Diversify. Stocks, foreign and domestic. Stocks, large, small and middle size companies. Bonds. Real estate. (okay, I know TAG's Plan doesn't offer a real estate option, but you can invest in this elsewhere.) 2) Asset allocate. A chunk of dough in each of the above categories. Rebalance every six or twelve months (in other words, bring you allocations back to their original percentages: 25% foreign, 25% domestic large cap, 25% doomestic small cap, 25% bonds.) 3) Learn about investing. As you gain knowledge, you'll discover that the "experts" don't do any better than the average, in-the-know investor. (I had a "financial advisor for years and years who took 2% off the top. I finally dropped him when I realized that the INDEX FUND into which I'd put money without his help outperformed his complicated, computerized stock models. When he took his 2% cut, he couldn't compete with a low-cost S & P 500 Index Fund. The point spread was just too much.) Here are a few web suggestions for growing your investment savvy: www.efficientfrontier.com -- scroll down this site and click on "Reading List." You'll get great tips on books that can teach you what investing is all about. (The website is operated by Dr. William Bernstein, an Oregon neurologist who also is a full time financial consultant.) www.bigpicture.typepad.com -- financial analyst Barry Ritholtz with one of the most entertaining financial blogs around. www.morningstar.com -- this site rates stocks and mutual funds. Morningstar also has a series of great books on Stock, Eschange Traded Funds and Mutual Funds -- available at fine bookstores everywhere.