Investing for 20-Somethings

There was a good article in the Wall Street Journal yesterday about retirement planning for 20-somethings. Here's a link to the full article. The article makes a few basic points:

• A Fidelity Investments study shows 16% of 20-somethings have no stock exposure
• Many 20's workers have all of their money in "stable-value" funds, which are glorified money-market funds
• You should always max out your employer's matching contribution
• Young people should have the majority of their money in stocks
• Vanguard's Target Retirement 2050 Fund is invested 90% in stocks
• The majority of your money should be in large-cap stocks like the S&P 500 Index
• Consider 10% in small and 10% mid-cap stocks
• Younger people are underserved by investment advisors because of their few assets

My recommendations to you, is that no one should have any retirement savings money in stable-value or money market funds unless you are within 10 years of retirement - and even then the percentage should be small. If you are more conservative, and you are in your 20's then you can consider investing up to 20% of your savings in bond funds - but don't expect to have as much money when you retire if you do.

Keep your eye on your goal - to have enough to retire on when you reach your target age. People who invest their money too conservatively will not have enough to reach that goal.