Help Me Allocate My 401(k)!

It may be one of the most common -- and costly -- mistakes in workplaces across America. Amid all the handshaking, name-forgetting, and form-signing on your first day at work, you're given a paper asking how you want your 401(k) contributions divided up.

Hurried decisions made in the early days of employment -- and each year at reallocation time -- can put a big damper on your retirement picture. But few among us have the necessary background to make savvy financial choices right out of the gate.

Motley Fool Champion Funds advisor Shannon Zimmerman tells the story of his first "real" job, when he was given about 15 minutes for his retirement-plan choices. "Wet-behind-the-ears whippersnapper that I was," he says, "I elected to invest equal amounts in each of the plan's choices, giving me a supersized allocation to the plan's bond-fund pick despite my decades-long investing timeline."

That was a big mistake, as Shannon readily admits. Now he knows better.

Which model is right for you?
There are two issues here. One is how to divide your money between different asset classes (stock funds, bond funds, money market instruments, etc.), and the other is which specific funds to choose.

Although you are the only person capable of determining your proper allocation mix, Champion Funds provides plenty of guidance for both issues. Shannon has three model portfolios designed for investors with different temperaments and different timeframes until retirement. The Aggressive, Moderate, and Conservative portfolios are a good starting place to determine your ideal mix.

If you have at least a 10-year timeframe, for instance, you might opt to use the Aggressive model as a guide. There you'll find greater emphasis on names such as the iShares S&P MidCap 400 Index fund, which counts Whole Foods (Nasdaq: WFMI  ) , SanDisk (Nasdaq: SNDK  ) , Chico's FAS (NYSE: CHS  ) , and Legg Mason (NYSE: LM  ) among its top holdings.

Those with a shorter timeline and less risk tolerance should look toward the Conservative model, with greater bond exposure and stock funds like the stable Vanguard Windsor II (top holdings include ConocoPhillips (NYSE: COP  ) , Occidental Petroleum (NYSE: OXY  ) , and Altria (NYSE: MO  ) ). Needless to say, the Moderate portfolio is a fine compromise between the two.

Picking on your own
If some of Shannon's recommended funds aren't offered in your 401(k) plan, no problem. For your best chance at solid performance, you should concentrate on these key areas among the funds you can choose from: low fees, long managerial tenure, and long-term performance. Though there's more to good fund picking than that, getting at least these three right will give you a leg up on most other investors.

For a look at all of Shannon's fund picks and model portfolios, try a full-access, 30-day free trial to Champion Funds.

Rex Moore is hoping for a Three Dog Night comeback tour. He owned no companies mentioned in the article at time of publication. Whole Foods is a Motley Fool Stock Advisor pick. The Motley Fool is investors writing for investors.