Investment Options, Especially in 401K

[A_P_]

Wanted to get some advice on my asset allocation in my 401K, especially concerning target date funds vs just going with straight indices.

I'm currently putting 6% into my 401K, which is the amount needed for full company match (they match 50% of that amount, so another 3% of my annual salary). The 401K is with Fidelity, and my contribution is currently going into TRRNX (TRP Retirement 2055 - I play to FIRE sooner than that, hopefully closer to 2034, but for now I'm okay with this because I plan to touch taxable accounts & Roth first). The company match goes straight into company stock. I've finally started paying closer attention to my 401K in general, and my allocation is way out of balance. I have 60% in the blended fund, and 40% in company stock (about 28K total in the plan - note, I'm 26 and have been with the company for 3.5 years).

I'm selling off a good chunk of the company stock to rebalance things... going to aim to keep the stock at 15-20% of the total allocation from now on. My questions: 1) Should I move that money into the target fund, or should I go with FXSIX or FSEVX, two index funds available to us? and 2) Should I consider moving future contributions or stick with the target fund? Note that the target fund has a .78% ER, while the two index funds are .05% and .07% respectively.

I'll have the same question about my wife's plan. It looks like her match can be directed how we want, but generally, the types of investments are the same. Right now, we have 75% of contributions going to a 2055 target fund (BlackRock LifePath), and the rest in a Vanguard index fund (can't remember which one).

If it helps to have a little additional info:
-I'm 26 as mentioned above, wife's 25
-Projecting FIRE in about 20 years, we've got around ~50K in our retirement accts right now... still working on aggressively paying student loan debt before really turning up the investments in two years.
-We are both contributing to get maximum company matches.
-Also putting $3000/yr into a Traditional IRA for her, and $3000 into a Roth for me. Both will be at Betterment shortly, just finished rolling over her old 401K and IRA's to Betterment. I'm dumping my Financial Advisor who currently has me in a JP Morgan fund with a 1.6% ER.
-We had Indexed Universal Life for about a year... oops, lesson learned, thanks in large part to a thread I read on this forum. They sold it to us as a retirement investment and I took the bait. ~$6000 lesson, but we're moving forward and using the money we were paying them monthly to fund the IRA's instead.
-Combined income of ~$150K... we are at a relatively low savings rate right now, especially by MMM standards, but we are going pretty hair on fire intense when it comes to our student loan debt. Once that's off the books (sometime in 2016, instead of 2032 which is what it would take w/ minimum payments), we should be at at least a 50% savings rate (about 35-40% of our monthly spending is going to student loans right now).

Thanks for reading! Really excited to be a part of this forum. The combination of starting to budget with YNAB in February and finding MMM shortly thereafter has improved our situation in a huge way, and changed the way we are thinking about retirement down the line.

[A_P_]

Just wanted to give this a bump.

Any thoughts on the target funds?

[Dodge]

My questions: 1) Should I move that money into the target fund, or should I go with FXSIX or FSEVX, two index funds available to us?

You're young, and it sounds like you have a long (at least multi-decade) time horizon.  For the near future, a large % of the gains your 401k will see, comes from your contributions.  Normally I would be on the fence on this, while I'm perfectly fine with a 100% stock allocation in this situation, I understand why people would want some bonds.  With a 0.78 ER however, I would run from that target date fund, and dedicate my 401k to the FXSIX (0.04 ER according to Morningstar).  With the Roth and IRA combined, you should be able to buy enough of a bond fund like Vanguard's 0.08 ER VBTLX, to meet your target asset allocation.

I wouldn't keep any of the company stock either, but you didn't ask about that :)

2) Should I consider moving future contributions or stick with the target fund? Note that the target fund has a .78% ER, while the two index funds are .05% and .07% respectively.

Same answer as above.  With these options, I would dedicate my 401k to the FXSIX.

Good luck!

[A_P_]

My questions: 1) Should I move that money into the target fund, or should I go with FXSIX or FSEVX, two index funds available to us?

You're young, and it sounds like you have a long (at least multi-decade) time horizon.  For the near future, a large % of the gains your 401k will see, comes from your contributions.  Normally I would be on the fence on this, while I'm perfectly fine with a 100% stock allocation in this situation, I understand why people would want some bonds.  With a 0.78 ER however, I would run from that target date fund, and dedicate my 401k to the FXSIX (0.04 ER according to Morningstar).  With the Roth and IRA combined, you should be able to buy enough of a bond fund like Vanguard's 0.08 ER VBTLX, to meet your target asset allocation.

I wouldn't keep any of the company stock either, but you didn't ask about that :)

2) Should I consider moving future contributions or stick with the target fund? Note that the target fund has a .78% ER, while the two index funds are .05% and .07% respectively.

Same answer as above.  With these options, I would dedicate my 401k to the FXSIX.

Good luck!

Thanks! I went ahead and moved everything from the target fund to FXSIX, and changed future elections as well. I'll get 100% of my wife's contributions into her Vanguard index as well.

I am going to keep my company stock in the 10-15% range as a part of my 401k. Historically it's done very well and I have the risk tolerance to do so at this point, so I don't mind leaving some in there. But I'll definitely keep a close eye on it (especially because I'm also putting 4% into an Employee Stock Purchase Plan, but I sell that quarterly to lock in the 15% discount).