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401K Investing: (How Should I Invest In my 401K?) Real Example Of 401K Portfolio and Allocations - YouTube
Channel: Money and Life TV
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what is up my YouTube brothers and
sisters how are you guys doing out there
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I have a very special video for you guys
today as we're gonna talk about my
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actual 401k investments and why I chose
them just so you guys know this actually
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comes from a subscriber question from
mr. Jules so big shout out to mr. Jules
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thanks for recommending this topic I
think it's a fun one and a good one to
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talk about and he basically asked me he
said Mike can you share what 401k
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investments you are currently invested
in and kind of your thought process and
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why you picked them and I'm like sure
why not in this video I'm gonna be super
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transparent with you guys regarding my
investments in my 401k and how I chose
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them I'm gonna be almost as transparent
with you as a ghost!
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let's kick this off with how many funds
am i invested in in my 401k how many
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mutual funds do I own well currently
it's very obvious you guys can see I
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have five different funds within my 401k
plan that I'm contributing money to on a
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monthly basis now I used to own for
about a year ago or late late last year
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but early as of early this year the
financial advisor comes to my company
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he really strongly encouraged me to
invest in an international fund so
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that's why I've added the Templeton
world fund to my investment mix just to
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get a little bit of international
exposure and move away a bit from the US
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markets now now guys I understand each
person's gonna have a different 401k so
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your investment choices are gonna be
different but like I'm not kidding you
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these are my real investments and these
are my real asset allocations currently
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so speaking of asset allocations let's
talk about that next as you guys can see
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about 80% of my holdings are in large
cap growth type of funds so if I add up
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this one this one whoops this one this
one and this one as you guys can see
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down here well I don't know if you can
see it but it's about 80% so really
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large growth type of funds is what I'm
primarily invested in all right these
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mutual funds owned primarily large blue
chip type of stocks that's what these
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are invested in and I'll go in a little
bit I'll cover why I'm invested this way
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our allocating my money currently this
way well we'll get to that in a bit so
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if you if you look at my investments if
you were to dive in the detail which
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I've included the detail in each of
these tabs of each of these funds I'm
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not gonna go over this with you guys
because you can look at this in your own
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time and I would I don't wanna make this
like a super long video or I want to
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keep this as short as possible but you
can feel free to look over this
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information when you have time and in
studies investments ninety percent of my
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holdings are in stocks I'm not a big
believer in bonds at the moment I really
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am kind of shine away from bonds for the
most part so 97% of my holdings are in
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equities so what are these mutual funds
owned these mutual funds
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I feel like if you look in the detail on
these things it owns companies like
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Amazon Facebook Google United Healthcare
Visa MasterCard sells force I mean I can
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go on and on I think they own like Home
Depot or Lowe's so there's all these
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large blue-chip type of companies within
these mutual funds now I'll be honest
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there's definitely some overlap like if
you look at the holdings of these funds
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there's definitely overlap in my overlap
I mean they own similar stocks so like
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Jay IBC X and the fidelity contra fund
they both own Facebook and they both on
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Amazon for example but I'm okay with
this overlap and the reason that is is
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because as long as I feel strongly about
the individual companies these mutual
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funds owned I don't I'm not worried so
much about the overlap I know that it's
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not really diversify that way but I'm
still at this moment I'm okay with the
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overlap because I strongly believe those
companies are gonna do well and continue
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to do well in the future so you're
probably wondering Oh Mike why are you
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invested this way so I think it's good
that we take a moment and we talk about
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that let's talk about my mindset and why
I'm currently invested this way in my
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401k
the first reason I'm invested this way
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is because at the time of making this
video I'm only 33 years old so I have
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time for the money to grow I have time
to take risks and I need this money to
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grow because I'll probably plan on
working another twenty thirty years or
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even more because I like working I don't
mind working as long as I like what I'm
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doing and so that's one reason I'm
invested in a very aggressive growth
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type of strategy or in a type of heavy
growth allocation so that's that's the
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first reason the second reason I'm
invested this way is because my wife and
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I live other investments so we have
another brokerage account and two Roth
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IRAs and plus she has her 401k which I'm
not gonna even talk about that in this
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video but so we have other investments
and those other investments are invested
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in things like our more conservatively
okay so this this 401k that you're
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seeing on screen is very aggressive on
growth but our other investments are
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more conservative where we focus on
dividend paying blue chip stocks where
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we love investing for dividends and so
that's why in my other accounts
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try to do more conservative types of
investments we have you know investments
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and REITs utility stocks and things like
that okay so what are some of the
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downsides of this investment allocation
the first downside is that my portfolio
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is heavily invested in equities ninety
percent or more which means if the stock
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market tanks which I'm waiting for to do
since we've been in a bull market for
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the last ten years when it tanks my 401k
portfolio is probably gonna go down hard
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now the overall beta which measures how
volatile a portfolio is in comparison
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with the S&P 500 is slightly higher than
the S&P 500 so it means it's I think my
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beta on this portfolio is around
currently 1.06 so it's not too much
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above the S&P 500 but basically what
that means in plain English is that so
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if the SP 500 let's say goes down ten
percent okay
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this portfolio will go down eleven
percent so it's probably gonna go down a
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little bit more heavily than the S&P 500
will if the market crashes or has a
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major correction I since I'm still on
the younger side I would actually would
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prefer a crash to happen now and if it
does I'm not gonna worry about it I'm
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just gonna keep investing anyways
because I have plenty the time for the
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investments to come back and I would
much rather buy and purchase these
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investments at a lower cost than at a
higher cost so I look forward to a
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market crashed if it's going to happen
I'm gonna keep investing either ways
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because I found for myself it's
extremely hard to time the market and
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all only very few people can do it and
I'm not one of them so I'm going to keep
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investing anyways the good news is is
that my Sharpe ratio on my portfolio is
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slightly better than the S&P 500 and the
Sharpe ratio if you guys don't know it
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measures your risk relative to returns
and so for the amount of returns I'm
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getting relative to our risks I'm
actually doing better than the S&P 500
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so I'm really happy about that let's
let's move on okay let's talk about how
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these funds are performing and based on
you know how these how I have this money
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allocated in these investments so as you
guys know because we just talked about
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we've been in a bull market for a long
times but so things have been doing
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pretty well so
last year I actually had a return on my
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portfolio of about 28% this year year
today as of June I just checked the
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other day my my important folio or this
portfolio was up about 10% for the year
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which is not bad considering we had a
pretty major pullback at the start of
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the year so things are looking pretty
good so on average every year I've been
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able to get a 10 percent return or
higher on these investments in my 401k
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I know those results won't last forever
but hey if they want to stick around
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longer I'm cool with it so how much do I
contribute per month so currently and I
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have this information down here so
currently I'm contributing about $1,000
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per month to my 401k yeah I didn't start
out like that when I first started I
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think I only contributed like two or
three hundred per month to my 401k but
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over now I've been with my company for
about six or seven years now
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so over it's over that time span I just
kept allocating more and more money to
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my 401k plan each year and I will plan
to continue to do so as time goes on now
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you might be wondering well Mike why
don't you just max out your 401k if you
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can well well let you guys know like I
could max it out we're in the financial
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position where we could max out the 401k
but really we we want to stay flexible
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with our investment choices I don't want
to have all of my money locked up in my
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401k and so I have other investment
alternatives but I'm not really gonna go
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into crazy amounts of detail on that we
can save that for a whole nother video a
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whole other day just know that there's
other reasons why I'm not currently
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maxing out my 401k another question you
might ask is will Mike do you plan to
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have this investment allocation forever
and my answer is no I wouldn't think so
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so I mean as time goes on I would expect
these allocations to change I'll
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probably move the money around a you
know as as I see fit you know I want to
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get involved in some smaller growth cap
type of stocks I want to move some of
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the money out of some of these other
funds into some small cap growth because
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some small caps are doing fantastic this
year if you guys haven't noticed but so
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there but but basically I'm gonna be
changing these allocations over time so
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but I don't know what or when or what
all invest in at the moment all right
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guys this is really important to me but
I want to talk about some other major
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factors we
think about before contributing to my
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401k
so that's just just so you guys know
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more of my thought process so there's a
few things that are really important to
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me that I think about before ever
investing any money in my 401k the first
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thing is is that we like to be in a
position where we can save anywhere from
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twenty five to fifty percent of our net
monthly income and that's after the 401k
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contribution okay so let me say that one
more time we want to be in a position
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where we can save twenty five to fifty
percent of our net monthly income after
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401k contributions are taken into
account so being able to do that's
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really important for us so that's part
of the reason why we're not maxing this
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out at the moment the other reason
that's really important that those in
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those numbers is because I know from
studying and reading books that if
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you're if a person can save around fifty
percent of their income per month they
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have a good chance at developing and
building wealth throughout the course of
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their life the other factor we take into
consideration is debt now we currently
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only have mortgage debt I think we owe
like around around ninety five thousand
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at the moment on our mortgage but with
the point being is if we had debt if we
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had a lot of debt like let's say like
car loans or credit card debt or
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whatever then I would I would really
reconsider how much I'm contributing to
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the 401 K and I would probably want to
pay down our pay off that debt first
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so that would change how much we
contribute every month and maybe how I'm
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invested in my portfolio so I take debt
into consideration the other major
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factor guys is that we do have a good
cash position so we have liquid funds
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okay where are all of our money's not
tied up into investments which is nice
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so 20 percent of our net worth is in
cash so regardless of what happens to
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our jobs the market we still have cash
available if we need it and so that's
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another thing I think do account is we
like to have a good amount of cash
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reserves alright guys I really hope this
information helped hopefully you can see
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that because we're young we're willing
to take more risks and invest in more
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aggressive growth cap type of stocks and
I've kind of went over why I get how
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much I contribute and why I don't max
out our 401 K I talked about the other
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considerations such as being able to
save 50% of our monthly income or having
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you know having a cash position
emergency fund things like that so we
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talked about debt so those are all the
factors that I consider before choosing
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and before investing in my 401k and I
would encourage you to consider all
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those things as well figure out like
look at how old are you you know how
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much risk are you willing to take what
how far are you away from retirement you
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know are you in debt do you how much of
your money every month are you able to
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save how because that's really important
so you want to kind of think about all
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those different factors in my opinion if
I were to give you some general advice
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just think about all those things before
deciding what investment choices you
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make how much you contribute to your
401k and how fast you pay after debt or
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whatever think about those things guys
really consider it and then go from
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there and build a strategy that works
for you now obviously you're gonna have
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different investment choices then that I
will because you have a different you
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work for a different company and each
company's 401k plan is is pretty
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different now in my 401k fund there's
like 60 choices but in some people's
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401k fund there's only 20 so you just
have to pick the investments that are
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there and and and choose what makes the
most sense but also take into
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consideration that you you want to
invest outside of your 401k and things
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like real estate or you know in a Roth
IRA or other other investment vehicles
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so these are all factors I consider
before investing in my 401k at the end
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of the day guys this video is really not
telling you what to invest in because
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there's no way I could do that I mean
you have to ultimately decide what to
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invest in and how to allocate your money
but hopefully by thinking through these
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different things we just talked about
hopefully this will allow you to make
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better investment choices within your
own 401k now like I said my performance
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has been really good in my 401k over the
past five years but I know we haven't
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had a bear market in a long time
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so I expect that to change but either
way I'm still gonna keep investing I'm
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not gonna stop investing because the
best deals most money is made at the
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bottom not at the top and just look at
Warren Buffett you know when's the best
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time to buy if the so the market crashes
I'm all-in
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I'll be very happy so I can buy more and
more investment accumulate wealth faster
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at a lower price I encourage you guys to
check out this spreadsheet I've included
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a research tab just so you guys can see
kind of what I look at before making
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investment choices and I've included the
summary of each investments you know
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when you're picking your investments
your 401 K make sure you know what
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you're invested in or if you if you're
an uncertain of what your options are
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talk to the financial advisor or
somebody at your company to help you
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learn once your investment choices are
because some a lot of the investments
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then your 401 K might be duds so I took
the time to and I've mentioned this in
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one of my previous 401 K videos but it's
so worth your time to take the time to
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figure out what if estimate choices you
have and what makes sense for you
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because if you can get a higher rate of
return on your portfolio every year it
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could mean thousands and even tens or
hundreds of thousands of dollars in
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growth difference had you not made
better investment choices so just keep
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that in mind guys all right guys well I
think I'm done talking for the day
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hopefully you found this information
helpful and if you have questions which
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I'm sure you will I mean if I've missed
anything or if there's something else
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you would want to know more about please
let me know just leave a question in the
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comment section down below and I will
definitely get back to you as soon as
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soon as I can and I because I am plus I
just love reading your guys comments and
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it means so much to me when you drop a
comment so please leave one down below
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before you leave if you guys liked the
video make sure you let me know by
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hitting the like button especially if
you want to see more topics and videos
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about investing like this especially
with like 401 k investing and things
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like that or if you have any other
topics II would like to say you just let
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me know and if you're new here today is
the first time you ever checking out one
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of her videos on money in life TV
welcome to the channel be sure to
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subscribe so you do not miss any of our
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this channel money life TV is all about
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fiscally fit because we teach finances
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regular basis okay guys that's all the
information I have for you guys today
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download the spreadsheet before you
leave and you can review all this stuff
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at any time you'd like and you can just
do some stuff study on this stuff
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because that's the best way to learn and
I will see you guys in the next video so
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thank you so much for hanging out with
me I love you all and until next time I
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hope you guys have a wonderful week and
use this information to live your life
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on Kage I'll see you guys in the next
video peace
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