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Don't Fall Into the 'Playing It Safe' Trap
By JEFF D. OPDYKE
November 15, 2006; Page D1
If you're in your 20s, you could be missing out on what may be your best chance to kick-start your nest egg.
With so many 20-somethings burdened by college debt, buying houses, starting families and generous spending habits, it's something of a marvel that they are contributing to their 401(k) accounts at all -- but, by and large, they are.
The problem is, many of them don't put much thought into where they're investing their money. You're not going to build much of a nest egg with your money stuffed into low-yielding bond and money-market mutual funds, which is where too much of it sits.
A recent Fidelity Investments study of nine million 401(k) participants found that 16% of workers in their 20s have no money in stocks. Separately, many have all of their money in just one investment, and of those nearly 40% have all their assets in conservative investments, such as "stable-value" funds, which are little more than glorified money-market funds, or fixed-income funds.

401(K) BASICS


• Max out: Contribute enough to capture your employer's maximum matching contribution.
• Allocate: People in their 20s should generally have at least 70% of their account in stocks. You have a long time to save; don't fret about market volatility.
• Don't default: Avoid your plan's default option if it's a money-market or stable-value fund. The low returns won't serve you well over time.

The youngest generation of workers has the most to gain and the most to lose when it comes to retirement savings. They have the longest period of time to benefit from compounded returns. Yet they're also the group most likely to suffer if Social Security is ever scaled back. And the chances of living off of a meaningful corporate pension 40 years from now are dim, to say the least.
That's why it's urgent to take control of your...