Author Topic: 26, Help with 401k investment selection  (Read 5089 times)

SecondHandCondom

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26, Help with 401k investment selection
« on: August 29, 2014, 08:56:55 AM »
Hi I'm a 26 y/o with a new company that provides 401k matching through MassMutual.  Iím looking for help on which funds to invest in.

Here are the funds available(not sure where to find expense ratios, but I'll get them as soon as I'm out of work):
Fixed Interest
MassMutual Select PIMCO Total Return Fund
Northern Bond Index Fund
American Funds Income Fund of America Fund
JP Morgan SmartRetirement Income Fund
JP Morgan SmartRetirement 2015 Fund
JP Morgan SmartRetirement 2020 Fund
JP Morgan SmartRetirement 2025 Fund
JP Morgan SmartRetirement 2030 Fund
JP Morgan SmartRetirement 2035 Fund
JP Morgan SmartRetirement 2040 Fund
JP Morgan SmartRetirement 2045 Fund
JP Morgan SmartRetirement 2050 Fund
JP Morgan SmartRetirement 2055 Fund
American Funds Washington Mutual Investors Fund
MM S&P 500 Index Fund
Neuberger Berman Socially Responsive Fund
Sel Gr Opportunities Fd (Sands/JSP)
Fidelity Contrafund
Victory Established Value Fund
Columbia Mid Cap Index Fund
Select Mid Cap Gr Eq II Fd (TRP/Frontier)
Franklin Small Cap Value Fund
Columbia Small Cap Index Fund
Invesco Small Cap Growth Fund
American Funds EuroPacific Growth Fund
Ridgeworth International Equity Index Fund
Oppenheimer Developing Markets Fund
 
« Last Edit: August 29, 2014, 10:29:17 AM by SecondHandCondom »

soccerluvof4

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Re: 26, Help with 401k investment selection
« Reply #1 on: August 29, 2014, 09:20:15 AM »
You need to list the funds and expense ratios they offer for anyone to even begin giving suggestions.

ioseftavi

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Re: 26, Help with 401k investment selection
« Reply #2 on: August 29, 2014, 09:39:16 AM »
What soccerluv said.  And holy shit, your username makes me cringelaugh.

ioseftavi

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Re: 26, Help with 401k investment selection
« Reply #3 on: August 29, 2014, 10:58:24 AM »
If you want simple: Pick the JPMorgan 2050 or 2055, put in 100% of your investments in there, and forget about it.  If you are unfamiliar with these investments, they are like a pre-made portfolio in a single fund - they include all of the little food groups of investments you need, in the right proportions.  Expense ratio is 0.75% net, which is high but not as bad as it could be.

If you want complicated: OK, I've come up with an 85/15 asset allocation portfolio that includes forget this.  My portfolio only saves you about 0.11% in fees per year, mostly because your index funds actually range in costs from 0.65% to 1.2% (I looked up the expense ratios). 

For the amount of money you'll be investing and the amount of headache it will create, forget it.  The age-based funds are fine. 

SecondHandCondom

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Re: 26, Help with 401k investment selection
« Reply #4 on: August 29, 2014, 11:24:52 AM »
Good stuff, ioseftavi.  I' was worried because the 'automatic investment planning tool' enrolled me in 12 different funds and that didn't fly with me. I'm probably going to do just that.

Chuck

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Re: 26, Help with 401k investment selection
« Reply #5 on: August 29, 2014, 01:35:33 PM »
I'm jealous of your fees. I have to pay 1.1% for my plan's total stock index.

eyePod

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Re: 26, Help with 401k investment selection
« Reply #6 on: September 03, 2014, 02:05:10 PM »
I've got a similar question. I'm 28, and debating between some funds within my Fidelity 401k.

Here are the reasonable options, given my age and risk appetite.

Name1 year3 year5 year10 Year/LOFExpense ratio
VANGUARD TARGET 205014.81%12.42%13.87%5.13%0.0825%
VANGUARD TARGET 205514.79%12.44%N/A12.90%0.0825%
VANG INST INDEX PLUS (VIIIX)16.92%16.84%16.79%8.03%   0.0200%
VANG MD CP IDX IS PL (VMCPX)16.52%15.76%19.32%10.60%0.0600%
VANG SM CAP IDX INST (VSCIX)12.75%   15.71%18.90%10.36%0.0800%
SSGA WORLD EX US IDX15.19%7.61%9.44%2.84%0.0920%
SSGA EMRG MKTS INDEX14.52%-0.03%6.79%11.75%0.2030%

My major questions are:
  • Should I just throw everything in one of the Target funds (probably 2055), or try to approximate the same thing with a combination of the large/mid/small cap Vanguard funds that have lower expense ratios?
  • The Emerging Markets fund has the highest expense ratio, though the long-term results seem to justify it. (And it's still only 0.2%, so it's not like it's outrageous.) Would it make sense to keep this as a fraction of the overall account?

The reason the EM fund is highest returns is because it has the most risk (similar to the 2055 which is more stocks recently)_. It's also done terribly when the rest of the market is higher. I think you're over-thinking everything. Set it and forget it in some large cap/S&P500 index and enjoy your rotisserie when you retire!

skyrefuge

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Re: 26, Help with 401k investment selection
« Reply #7 on: September 03, 2014, 02:34:25 PM »
mostly because your index funds actually range in costs from 0.65% to 1.2% (I looked up the expense ratios).

The expense ratio for a fund purchased independently is not necessarily the same as the expense ratio for that fund in a 401(k). The 401(k) administrator/custodian can add expenses on top of that. For example, I had one 401(k) that offered some Vanguard funds, but then tacked an extra 0.40% onto their base expense ratios. And in another 401(k), the S&P500 index fund was a 401(k)-only version of Dreyfus fund with a different ER than the non-401(k) version.

I'm not sure whether the fact that the OP couldn't easily find the ERs means that they're simply the raw fund rate, or if the 401(k) administrator is intentionally making it difficult to find the real ERs.