The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: Colgate_Toothpaste on September 05, 2014, 05:05:21 PM

Title: 401(k) w/ Limited Choices vs Other Options?
Post by: Colgate_Toothpaste on September 05, 2014, 05:05:21 PM

Hello all,

I have no problem admitting my mistakes, so here it goes...  I got a late start in a 401(k) / investments in general because I was stupid and "invested" in a risky "pie in the sky" idea that backfired.  I'm 25 now, and I've been trying to play catch-up for the past 3 years.  Had I been smarter, I'd be well in the 6-figures by now.   

The company I work for offers up to 3% matching on 401(k) and no matching on post-tax Roth options.  The options are extremely limited, but HR is recommending TROWE at 1.28% AGER.  Now that I'm starting to beat the crap out of my debt, I have opened some bandwidth to invest more.  I'm investing 8% in my 401(k), 2% to a Roth, and the rest is being used to obliterate debt.  I want to heavily increase those numbers now.

I don't really like any of the options listed in my 401(k) plan, so right now 100% is (by default) invested in TROWE 2055R (mixed asset).  It doesn't do badly, but I'm not sure if it's the best option based on what I am reading on here.  I got 15% last year, and 4% so far this year (got hit bad last month...).  Most of the other options are between 0.90% AGER and 2%, with similar "gains."

Based on this, should I drop my 401(k) to the minimum to get the 3% match and invest post-tax on the side?  Am I ok where I am at?  I really want to have some safe, solid investments with a low expense ratio and some "fun money" on the side for stocks.

What would you do if you were in my shoes?

Any and all help is greatly appreciated!

Title: Re: 401(k) w/ Limited Choices vs Other Options?
Post by: NorCal on September 06, 2014, 06:40:57 PM

Be sure you get the match no matter what.  Quite honestly, the TROWE option doesn't sound that bad. I wouldn't choose it given more options, but I wouldn't feel bad about putting money there either.

Look into whether your 401k has a brokerage account option.  Not all plans have them, but they're not typically well advertised either.  You could potentially put your 401k into a self directed brokerage account and buy whatever you want.