Does this sound like a reasonable set-up for my 401k?

I'm 21 years old, and this is my first time setting up a 401k, so I'm not quite sure how to do this most effectively. The 401k will be used by both me and my fiance who is 33. I'm not a risk taker (especially in this market). I plan on monitoring how I'm doing and switching around if it's not working out well... but here is what I have so far.

60%- stable fund
15%- aggressive fund
25%- dodge & cox fund

Does this sound good or bad? We're not rich (make around 60,000 a year between us, w/out a lot of extra money to spare. Would you change this is any way?

By us both using it, I meant that he doesn't have his own anymore, since he started working for a new company that doesn't offer benefits. So when I retire and start getting money from it, it will be used to support us both, since he will not have an income anymore either. I realize that we both can't be vested in it together, he just doesn't have his own so we're contributing into mine what we normally contribute to both.

Any good investment adviser will steer you away from being so conservative at your age. You probably need to talk to one.

You say you are not a "risk taker." However, investing is not about risk aversion, but rather risk management. As the Rolling Stones song says, time is on your side.

And speaking of safe, if you think a stable value fund is "safe," you are kidding yourself. What about inflation? Taking inflation into account, the so-called stable value fund could very well be draining the money you have worked so hard for! Stable funds are for older folks who can't stand the volatility. I suggest you go heavily toward aggressive funds, partially a mid cap fund, small cap fund, and International fund such as Dodge and Cox International.

The key is to not worry if you lose money in a given week, month, or even year. (Hey, I lost over 20 grand last week. So what? It will come back and then some. It always does eventually. The key to investing is focusing on what will happen in the long run.)

The fact that you are starting your 401K so young is very, very good. If you stay out of debt and keep investing, you will be wealthy some day.

It does depending on what you mean by "stable", "aggressive" and which Dodge & Cox fund. Since you have decades to go before retirement, you probably want to be fairly aggressive for growth, which means about 80%allocated to stocks and 20% to bonds (Dodge & Cox Income Fund is a good one).

Within the stock allocation, you should have a good proportion (30-35%) allocated to international stocks and the rest to large-cap domestic stocks. If you want to be aggressive with a sector-specific fund (precious metals, energy, etc.), keep it to about 5% of your total portfolio.

If I were 21 and know what I know now, I would go for one of the Target Funds, in your case the 2045, that you are likely offered 100%. Since you won't be using this money (and you should never cash it out) for 45 years, you can take risks and that is the only way to grow the amount you put in to something you can live on in the distant future. Make no mistake, for someone your age, Social Security won't be there when you're 67. There are too many people living longer and staying on Social Security much longer than was ever expected back in 1933 when it was devised. If you leave your job, you can ROLLOVER your 401(k) to a mutual fund company or do a ROLL-IN to your new employer's plan. Understand that cashing it out is robbing yourself in the future and borrowing from it is very risky - if you lose your job, you must pay it back immediately. If a Target Date fund is not offered, I would say 80% Dodge & Cox Fund and 20% Stable Value which will help you sleep at night. :) Good Luck!

That might be overly conservative for a 21 year old, but if you aren't comfortable with anything more aggressive, that's OK. The problem is that over the years, inflation will eat badly into your stable value fund money - at your age, you need something that will grow more than the stable value funds do. And be careful not to switch around too often - you could end up buying into whatever's high, and getting out of whatever's low, a sure way to lose.

Not sure what you mean that the 401K will be used by both you and your fiance. You can EACH have a 401K, but can't share one, and couldn't even after you are married.

Since you are over 30 years from retirement, going with a stable fund is risk averse and you may not have enough saved when you retire. You should have your money spread out in many different funds (it's called diversification) to reduce your overall risk in the market. Large cap growth and value funds, Mid-cap growth and value funds, Small-cap growth and value funds, and international funds would round out a good portfolio. Do some research with the funds that you have available in your 401K. Yahoo finance has tools that you can learn more about the market.