Author Topic: Help with 401k Elections.  (Read 5056 times)

JD2001svt

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Help with 401k Elections.
« on: January 13, 2014, 02:10:02 PM »
Hello.  I am currently contributing 4% of my income (my employer matches 100% up to 4%)  to MFS Lifetime 2050 Target Retirment Fund.  I am about to increase this up to 15% but would like some feedback on the other options available before I do.  MFS lifetime 2050 has an expense ratio of .81%, which is pretty high.   I'm not sure if I should stick with this or try something else.  Here are the funds I have available.  I'm thinking maybe 70% VIFSX with 30% bonds.

A little background about me
33 single male with no children.
Annal Gross income of 50,000
11,000 of debt on auto loan at 3.9%.  Car is low miles worth 20,000+ and I may be selling it soon.
No Other debt
580.00 per month apartment. All bills paid.
Contribute MAX to Vangard Roth IRA Target 2045  currently at 12,500
Contribute 4% to Company 401k. Currently at 25,500
Started late to the game, but super serious about growing some wealth through investing and low cost living.

Here are the elections.  This is through Nest Egg EDU.

American Century Inflat-Adj Bond Instl     .27        BOND    AIANX    
Federated Ultra Short Bond                 .35       BOND     FULIX    
PIMCO Total Return Bond                .46       BOND     PTTRX    
Federated Funds for Capital Preservation .43      STABLE FD30CP    
Dodge & Cox International Stock           .64     STOCK  DODFX    
Harbor International Instl                 .77      STOCK  HAINX    
Invesco Small Cap Value Y                  .90     STOCK  VSMIX    
John Hancock Disciplined Value R6                .82    STOCK  JDVWX    
MFS International New Discovery I    STOCK  1.14  MWNIX    
Oppenheimer Developing Markets Y        1.03  STOCK  ODVYX    
Principal Mid Cap Value III                   .74    STOCK  PVUIX    
T Rowe Price Mid-Cap Growth                     .80   STOCK  RPMGX    
T. Rowe Price Growth Fund                     .70   STOCK  PRGFX    
T. Rowe Price Real EstateView                     .78   STOCK  TRREX    
Vanguard 500 Index Signal                         .05    STOCK  VIFSX    
Vanguard Developed Markets                     .10    STOCK  VDMA X    
Vanguard Mid Capitalization Index Signal   .10    STOCK  VMISX    
Vanguard Small Cap Growth Index                .24    STOCK VISGX    
Vanguard Small Cap Index Signal                .10    STOCK VSISX    
MFS Lifetime 2020 R4                  TARGET RETIREMENT  MFLJX    
MFS Lifetime 2030 R4                  TARGET RETIREMENT   MLTJX    
MFS Lifetime 2040 R4                  TARGET RETIREMENT   MLFJX    
MFS Lifetime 2050 R4        .81         TARGET RETIREMENT  MFFPX     current election 100%
MFS Lifetime Retirement Income R4   TARGET RETIREMENT        

hoppy08520

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Re: Help with 401k Elections.
« Reply #1 on: January 13, 2014, 07:13:26 PM »
I'd add Vanguard Small Cap Index and dodge and cox international for more diversification.  If you want to be 70% stocks then consider putting 20% in Dodge & Cox intl, 10% in Vanguard Small Cap Index and 40% in S&P 500 index and 30% in bonds.

wtjbatman

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Re: Help with 401k Elections.
« Reply #2 on: January 13, 2014, 10:15:46 PM »
I would definitely try something else. The expense ratio of that fund is too high. If you're thinking 70/30 stocks/bonds, and with those options, I would do something like...

40% VIFSX (Vanguard 500 Index)
20% VMISX (Vanguard Mid Cap)
10% VSISX (Vanguard Small Cap)
30% PTTRX (PIMCO Total Return Bonds)

There's no cheap international fund, so I wouldn't even worry about it. Most of the S&P 500 (which the Vanguard 500 index tracks) does significant business overseas, and so you will get a lot of international exposure through that fund alone (46%, according to this 2 year old article).

Will

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Re: Help with 401k Elections.
« Reply #3 on: January 13, 2014, 11:37:03 PM »
There's no cheap international fund, so I wouldn't even worry about it.

VDMAX looks pretty cheap here to me.  Developed Markets is Large Foreign Blend.

wtjbatman

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Re: Help with 401k Elections.
« Reply #4 on: January 14, 2014, 12:04:34 AM »
There's no cheap international fund, so I wouldn't even worry about it.

VDMAX looks pretty cheap here to me.  Developed Markets is Large Foreign Blend.

Good call, not sure how I missed that one. If you need a fund in your portfolio that features exclusively international stocks, that one would definitely work.

I still wouldn't worry about it. But that's JMO :)

JD2001svt

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Re: Help with 401k Elections.
« Reply #5 on: January 14, 2014, 07:29:29 AM »
Thanks for the advice everyone.  The reason I am wanting to go with 30% or so bonds is because I remember reading on bogleleads that a general rule of thumb is to stick with "your age number in bonds".   30 just seemed like a solid number to start with.  I'm glad I'm changing this NOW.  Since I've started learning more about investing, I was able to see that my current fund selection may not have been the best idea!   Aftering reading the advice given thus far, here's what I have come up with.
Vanguard 500 Index Signal                         .05    STOCK  VIFSX      50%
Vanguard Developed Markets                     .10    STOCK  VDMA X    20%
American Century Inflat-Adj Bond Instl     .27        BOND    AIANX    30%

If this is a solid choice, I'd like to start contributing as much s 25% of my paycheck to this 401k.   

hoppy08520

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Re: Help with 401k Elections.
« Reply #6 on: January 14, 2014, 12:43:27 PM »
Thanks for the advice everyone.  The reason I am wanting to go with 30% or so bonds is because I remember reading on bogleleads that a general rule of thumb is to stick with "your age number in bonds".   30 just seemed like a solid number to start with.  I'm glad I'm changing this NOW.  Since I've started learning more about investing, I was able to see that my current fund selection may not have been the best idea!   Aftering reading the advice given thus far, here's what I have come up with.
Vanguard 500 Index Signal                         .05    STOCK  VIFSX      50%
Vanguard Developed Markets                     .10    STOCK  VDMA X    20%
American Century Inflat-Adj Bond Instl     .27        BOND    AIANX    30%

If this is a solid choice, I'd like to start contributing as much s 25% of my paycheck to this 401k.
I do think this is a solid choice. AA (stocks vs bonds) is personal for everyone and don't feel pressured to lower  your fixed-income percentage beyond what you're comfortable with.

I'll say again that rather than this exclusively for US Stocks:
Vanguard 500 Index Signal                         .05    STOCK  VIFSX      50%

I'd broaden this out how wtjbatman or I mentioned earlier.  Do either this:

40% Vanguard 500 Index Signal   
10% VSISX (Vanguard Small Cap)

OR

35% VIFSX (Vanguard 500 Index)
10% VMISX (Vanguard Mid Cap)
5% VSISX (Vanguard Small Cap)

These choices come closer to replicating a total stock market fund to capture the complete returns of the US stock market.

JD2001svt

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Re: Help with 401k Elections.
« Reply #7 on: January 14, 2014, 02:06:40 PM »
I like this idea:

35% VIFSX (Vanguard 500 Index)
10% VMISX (Vanguard Mid Cap)
5% VSISX (Vanguard Small Cap)
20 % Vanguard Developed Markets                     .10    STOCK  VDMA X   
30% American Century Inflat-Adj Bond Instl     .27        BOND    AIANX   

Thank you guys for your help!  I'm going to start with bumping my contributions to 15%. I may increase more a little later.

wtjbatman

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Re: Help with 401k Elections.
« Reply #8 on: January 14, 2014, 07:21:38 PM »
I like this idea:

35% VIFSX (Vanguard 500 Index)
10% VMISX (Vanguard Mid Cap)
5% VSISX (Vanguard Small Cap)
20 % Vanguard Developed Markets                     .10    STOCK  VDMA X   
30% American Century Inflat-Adj Bond Instl     .27        BOND    AIANX   

Thank you guys for your help!  I'm going to start with bumping my contributions to 15%. I may increase more a little later.

Looks like you're on the right track. Good luck!