The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: frugalnacho on September 23, 2017, 02:04:56 PM
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new 401k plan at work and I need to pick my funds. Our IPS is 100% stocks, 60/40 VTSAX/VTIAX, or if those funds aren't available, the closest I can replicate them.
Fund options with reasonable ER:
FUSVX - fidelity 500 index fund - 0.05%
FSEVX - fidelity extended market index fund - 0.07%
FSIVX - fidelity international index fund - 0.08%
FSSVX - fidelity small cap index fund - 0.07%
My 401k plan has automatic re-balancing so I could go 60/40 in my 401k for simplicity, and then only have to rebalance our IRAs and taxable accounts to 60/40. However we currently have about $240k invested with vanguard, so I can go 100% domestic, or 100% international in my 401k and still maintain my desired AA, probably until FIRE.
How would I best replicate VTSAX or VTIAX?
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80% FUSVX and 20% FSEVX should approximate VTSAX fairly well. International is harder — FSIVX doesn't have Canada or emerging markets, so it doesn't approximate VTIAX quite as well.
If it works with your overall mix of assets, I'd say:
- New 401k: all domestic (use auto rebalancing to keep your 80/20 ratio of FUSVX/FSEVX)
- IRAs: mix of domestic & international as needed for your AA
- Taxable: all international (or as much as possible — obviously stick to your overall AA, and keep any existing domestic here if selling it would trigger a ton of taxes)
Having more international in taxable means you'll get more foreign tax credit. Not a huge deal, but a nice bonus if you can swing it.