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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: new2this on October 26, 2012, 02:12:52 PM

Title: 401k Investments
Post by: new2this on October 26, 2012, 02:12:52 PM
I know basically nothing about investing, but I've recently increased my Roth 401k contribution to 15% with a 5% match and I'm wondering if I should change the funds that I am contributing to. I've read several times that MMM suggests Vanguard index funds. The name he uses is not an option with my 401k program (I think VFINX), but I found one that I think may be similar. It is called VIF equity index. Anyone know if this is basically the same thing? Sorry if this is a ridiculous question, like I said, I've never payed attention to what my 401k was doing before.

Also wondering if the Roth 401k is a good choice or if I should start contributing to a traditional 401 instead. We are young, 26 and 29 so we are expecting to be earning more in the future than we are now.
Title: Re: 401k Investments
Post by: jpo on October 26, 2012, 02:15:20 PM
It looks like it's close to the same but with higher expense ratio: http://www.principal.com/allweb/docs/RIS/investments/factsheet/FV092.pdf
Title: Re: 401k Investments
Post by: new2this on October 26, 2012, 02:39:16 PM
It looks like it's close to the same but with higher expense ratio: http://www.principal.com/allweb/docs/RIS/investments/factsheet/FV092.pdf

Great, thanks! Also, are index funds diverse enough, or do I need to diversify further with a certain allocation to bonds, etc?
Title: Re: 401k Investments
Post by: jpo on October 26, 2012, 03:30:40 PM
It looks like it's close to the same but with higher expense ratio: http://www.principal.com/allweb/docs/RIS/investments/factsheet/FV092.pdf

Great, thanks! Also, are index funds diverse enough, or do I need to diversify further with a certain allocation to bonds, etc?
Sorry, I was comparing to VTSAX. It does look like the same expense ratio (https://personal.vanguard.com/us/FundsSnapshot?FundId=0040&FundIntExt=INT (https://personal.vanguard.com/us/FundsSnapshot?FundId=0040&FundIntExt=INT)).

Some people like to invest in bonds as well as stocks.. there are lots of different investment theories. A popular one is to have a (120 - age)% of your portfolio in bonds as opposed to stocks.
Title: Re: 401k Investments
Post by: Karl on October 26, 2012, 04:44:14 PM
Since you are just starting out, you may want to choose a lazy portfolio (http://www.marketwatch.com/lazyportfolio) as a starting point for diversifying your investments.  In terms of self-education, I respectfully suggest reading "A Random Walk Down Wall Street."   It is excellent that you have started thinking about investing this early in your lives.