Author Topic: 401k investment options help  (Read 336 times)

erutio

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401k investment options help
« on: June 09, 2018, 08:06:15 PM »
My wife just started a new job and will soon be eligible to participate in the 401k.

We just got the documents about her investment options, and it seems pretty bad to me.

We previously worked for the same employer, and our retirement plans were through Fidelity with lots of Fidelity and Vanguard low cost options available. 
We used a simple 3 fund allocation, using Vanguard total stock market index (VITSX), total bond index (VBTLX), and total intl stock index (VTIAX), with bonds = Age-20, and a 60/40 US/Intl split in the stocks.   Worked for us, we kept it simple, and the low costs are great.  I'm now in the TSP, and my wife with this new plan. 

I've attached screenshots of the investment options.  We'd like to keep the same allocations, but are unsure with funds to use to approximate our previous plan.   I was thinking  80/20 TCLV/CSCI to approximate total US stock index, and use TCIE for Intl stocks, and TCBI for bonds?  When it was simple funds through fidelity or vanguard, it was easy for me, now all these crappy funds with high expenses are confusing me.  Thanks in advance.

erutio

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Re: 401k investment options help
« Reply #1 on: June 09, 2018, 08:07:54 PM »
Also, this was included in the list of fees.

Does this mean this company charges an additional 0.25% charge for assets under management?

MDM

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Re: 401k investment options help
« Reply #2 on: June 09, 2018, 08:49:13 PM »
We just got the documents about her investment options, and it seems pretty bad to me.
Compared with a good plan they are pretty bad.

But the tax-deferred advantage of the 401k still makes it worthwhile.  See To 401k or not to 401k? That is the question.

You proposed fund choice is reasonable.  No way to know in advance what is best. ;)

terran

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Re: 401k investment options help
« Reply #3 on: June 09, 2018, 09:08:00 PM »
I would probably use the state street S&P 500 fund and then even out you asset allocation in your other accounts. See https://www.bogleheads.org/wiki/Approximating_total_stock_market for how to approximate the total US stock market when investing in an S&P 500 fund. The short version is just add about 20% of an emerging markets fund (like vanguard VEXMX) to 80% S&P 500.

DreamFIRE

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Re: 401k investment options help
« Reply #4 on: June 09, 2018, 09:18:12 PM »

Your fees aren't as bad as where I work.

An S&P500 fund for me is  0.5% expense ratio, and my plan management fee is .34%.   It actually used to be .77% back in 2009.

What's the interest on the fixed fund?  Ours is 3%, and it's excluded from the plan management fee.

libertarian4321

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Re: 401k investment options help
« Reply #5 on: June 09, 2018, 09:57:41 PM »
Actually, by 401K standards, you are doing really well. 

The funds offered, while not among the very best, are very reasonable (I'm looking mostly at the TIAA funds, which tend to be very competitive).

More importantly, you aren't being completely raped by 401K "administrator."  This is where most people usually get really screwed- the manager charges ridiculous fees for basically just electronically transferring funds and sending 4 statements per year.  In other words, charging clients hundreds of dollars every quarter for doing next to nothing.

The 401k program, while good in theory, has largely morphed into a program to allow "administrators" to rob captive participants blind.  The government, in it's infinite lack of wisdom, subjects us to whatever bad program our employer chooses. 

Yours looks pretty darned harmless compared to most I've seen.


radram

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Re: 401k investment options help
« Reply #6 on: June 09, 2018, 09:58:48 PM »
I like your selections, with the exception of your bond choice. Due to fees, I would not buy bonds given your choices. The exception would be the fixed fund, depending on the rate, due to no fees.


erutio

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Re: 401k investment options help
« Reply #7 on: June 18, 2018, 08:39:35 PM »
Thanks for the replies, though only one of you even tried to answer my question, haha.

I will have my wife put her 401k contributions 100% into the state street s&p 500, and then even out the AA with small cap, emerging markets, and bond index funds in our taxable and roth accounts. 

This is annoying though, because it takes us away from our simple 3 fund portfolio.  More micromanaging by me....ugh.