Thanks in advance. I'm taking a new job and just got all of the fun 401k info. I'm very new to Mustachianism but one of my biggest takeaways thus far is to carefully analyze everything with #s; don't just do the easy, emotional, or popular thing. That being said, I still don't know anything about investing other than what I've learned here in past monthish about expense ratios, index funds, and Vanguard as the best. If you want to learn a little background about myself and/or the job change for some reason check out my other post here:
https://forum.mrmoneymustache.com/ask-a-mustachian/who-works-from-home-career-advice/I want to start out picking the right 401k funds instead of having to change later. I'm starting with saving 13%, but plan to increase this to 15, 20, etc as I start implementing Mustachian principles until I reach the 18,000 limit or whatever the limit is at that time.
Below I've listed my Vanguard options as well as their #s. I'm guessing a lot of you know about these specific funds and hold bookoo bucks in them yourselves. I think if I was doing this a year ago, I would have just picked the 2060 target fund; so obviously I'm a young guy :) My first impression about FIRE is that I don't care much about ER (could change), but I DO care about FI. That being said, let's just assume my FIRE date is waaaaay in the future. If I was picking these myself without your help, I'd probably do 50/50 VFIAX/VMVAX after looking at the below #s. I've listed 5 year data instead of 10 year, because half of them have an inception date of 2011/2012, after the recession. There are also several non-Vanguard options with worse returns and expense ratios, such as Lord Abbett, BlackRock, American Funds, DFA US (multiple options for each).
What do you think? Which Vanguard below would you choose? 100% in one? Or split it across multiple as a way to diversify? At what point does a high expense ratio justify higher returns? For example, is the math for or against the high return of VSEQX after adding in the higher expense ratio? Or is it just really as simple as choose the lowest ratio? Thanks!
Fund Ticker 1YR 3YR 5YR Expense Ratio
Target Retirement 2060 VTTSX 14.99 6.53 9.96 .16
500 Index VFIAX 17.87 10.44 13.63 .04
US Growth VWUAX 16.40 11.22 13.40 .32
Mid-Cap Value Index VMVAX 18.78 9.39 14.57 .07
Strategic Equity VSEQX 22.38 9.87 15.29 .18
Mid Cap Growth Index VMGMX 15.98 9.28 11.81 .07