Author Topic: Asset Allocation--Having Trouble Need Help  (Read 3442 times)

oldtoyota

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Asset Allocation--Having Trouble Need Help
« on: May 06, 2014, 08:37:54 PM »
Hey all!

My overall allocation for everything is:

93% stocks
7% bonds.

My goal is a 70-30 split.

For the past four months or so, I've been adding my entire IRA contribution into bonds. Spouse has not yet done this yet will start soon. My understanding is I do *not* want to buy bonds with a taxable account, so that is why I am purchasing via the IRA.

It's slow going because I am still contributing heavily to stocks via my 401K and via spouse's 401K. Overall, although I am adding more to bonds, I am still adding more to stocks. Since I am adding to both piles, the overall ratio of stocks to bonds is not improving and I am not reaching my goal.

Obviously, one part of the solution is to get spouse to start contributing to bonds via the IRA too.

Is the solution here to add more $$ to bonds via the 401ks?

Frankies Girl

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Re: Asset Allocation--Having Trouble Need Help
« Reply #1 on: May 06, 2014, 08:50:18 PM »

Is the solution here to add more $$ to bonds via the 401ks?

That's what I'd do. As long as they're in a tax deferred account, you don't have to worry about the inefficient nature of bond funds. The rub is going to be whether you have a decent bond fund available in your 401k offerings.

oldtoyota

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Re: Asset Allocation--Having Trouble Need Help
« Reply #2 on: May 07, 2014, 07:33:02 AM »

Is the solution here to add more $$ to bonds via the 401ks?

That's what I'd do. As long as they're in a tax deferred account, you don't have to worry about the inefficient nature of bond funds. The rub is going to be whether you have a decent bond fund available in your 401k offerings.

Thank you! They pretty much hide where our money is invested. It took quite a bit of doing to figure out who the company was behind the funds. This just adds to my desire to do away with the 401K and let us do it all on our own in a tax-deferred account. Grumble. Grumble.




Zamboni

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Re: Asset Allocation--Having Trouble Need Help
« Reply #3 on: May 07, 2014, 08:13:42 AM »
I hear where you are coming from on the opaque 401k.  My 401k has the added annoyance that they seem to revise our investment options every couple of years, with the default being their age-based plan if you're pouring into something they eliminate.  So, I do all this research to figure out where to invest in that plan, then they muck it up by doing away with the options I figured out and offering a new set instead.  After several cycles of this, I have concluded that they are never giving us "better" options, just different, from which I infer that someone is either getting kickbacks or a lot of free lunches for making these changes that affect and annoy the rest of us.

Good luck!

oldtoyota

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Re: Asset Allocation--Having Trouble Need Help
« Reply #4 on: May 07, 2014, 10:39:56 AM »
I hear where you are coming from on the opaque 401k.  My 401k has the added annoyance that they seem to revise our investment options every couple of years, with the default being their age-based plan if you're pouring into something they eliminate.  So, I do all this research to figure out where to invest in that plan, then they muck it up by doing away with the options I figured out and offering a new set instead.  After several cycles of this, I have concluded that they are never giving us "better" options, just different, from which I infer that someone is either getting kickbacks or a lot of free lunches for making these changes that affect and annoy the rest of us.

Good luck!

Holy cow. I did not know that they could switch companies on you. Who paid the fees for the switch? You, I bet. I wonder if that is happening to me/us where I am.

What a racket.

I had to dig a lot to find out the annual fees, too. This information should be up front.


ZiziPB

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Re: Asset Allocation--Having Trouble Need Help
« Reply #5 on: May 07, 2014, 02:01:05 PM »
I recently reallocated my portfolio as I didn't have enough in bonds.  I posted the bond offerings in my 401k in the Investor Alley forum and got some good help there.  Here is my thread in case you are interested.

http://forum.mrmoneymustache.com/investor-alley/muni-bonds-and-rebalancing/

brewer12345

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Re: Asset Allocation--Having Trouble Need Help
« Reply #6 on: May 07, 2014, 02:37:42 PM »

Is the solution here to add more $$ to bonds via the 401ks?

That's what I'd do. As long as they're in a tax deferred account, you don't have to worry about the inefficient nature of bond funds. The rub is going to be whether you have a decent bond fund available in your 401k offerings.

Thank you! They pretty much hide where our money is invested. It took quite a bit of doing to figure out who the company was behind the funds. This just adds to my desire to do away with the 401K and let us do it all on our own in a tax-deferred account. Grumble. Grumble.

Do some digging and see if you have access to a "stable value" fund in your 401k.  They are only available in some plans and you cannot buy this sort of thing in an IRA.  If you have one and it yields at least 1.5 to 2%, I would make that your choice for a bond fund in the 401k.