Author Topic: 401K with Principal Financial - where to invest?  (Read 3447 times)

Credaholic

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401K with Principal Financial - where to invest?
« on: December 31, 2014, 12:01:38 PM »
We had a company plan recently switch from American Funds to Principal Financial. We were in the midst of having a baby at the time, so just left it the way it was automatically invested in a Target 2050 fund, but I'm not sure this is the best option. Here are ticker symbols of what we have available...

Large US Equity:
PEIOX
FALGX
OIEFX
PLFMX
PPUMX

Small/Mid US Equity:
PPNMX
ERSMX
FVFRX
GSQRX
PMFMX
PSSMX
PJPPX
PRERX

International Equity:
ABIRX
RNWCX
MEQRX
OIGNX
PIIOX

We are heavily invested in FSTVX in our other accounts (Fidelity's version of Vanguard's VTSMX) and so I'm leaning towards PLFMX or FALGX which seem similar. Not sure if we should choose one, or invest in both. Also not sure if we should diversify more into Small/Mid Cap or International. If we did I'm considering RNWCX or MEQRX, and PRERX or PJPPX or PMFMX. But open to suggestions!

MDM

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Re: 401K with Principal Financial - where to invest?
« Reply #1 on: December 31, 2014, 12:15:36 PM »
It would be worthwhile for you to check the expense ratios and historical performance of these funds. 

Regarding historical performance, you have to strike a balance between "past performance is no guarantee of future performance" vs. "something that has been a dog for the past 10 years is unlikely to become a winner next year".

Really can't give any credible advice without knowing the items in the first sentence....

Credaholic

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Re: 401K with Principal Financial - where to invest?
« Reply #2 on: December 31, 2014, 12:34:35 PM »
I'll break it down into the majors I'm considering:

PLFMX
15.9% - 1 year, 20.1% - 3 year, 7.27% - 10 year, .72% Net Expense Ratio

FALGX
14.46% - 1 year, 24.5% - 3 year, 9.03% - 10 year, 1.5% Net Expense Ratio

PRERX
13.74% - 1 year, 16.74% - 3 year, 9.08% - 10 year, 1.4% Net Expense Ratio

PJPPX
14.19% - 1 year, 23.78% - 3 year, 9.1% - 10 year, 1.26% Net Expense Ratio

PMFMX
11.38% - 1 year, 18.58% - 3 year, 9.23% - 10 year, .74% Net Expense Ratio

RNWCX
1.24% - 1 year, 8.79% - 3 year, 9.09% - 10 year, 1.34% Net Expense Ratio

MEQRX
7.65% - 1 year, 17.44% - 3 year, 8.47% - 10 year, 1.54% Net Expense Ratio

I will definitely be investing some in PLFMX based on performance and expenses, not to mention generally just following the MMM strategy of a total market index. My biggest question is should I put it all in that, or diversify more? Probably don't need to diversify much in Large US Equity funds, but maybe would be wise to choose a Small or Mid US Equity and an International Equity?

MDM

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Re: 401K with Principal Financial - where to invest?
« Reply #3 on: December 31, 2014, 03:21:43 PM »
I will definitely be investing some in PLFMX based on performance and expenses, not to mention generally just following the MMM strategy of a total market index. My biggest question is should I put it all in that, or diversify more? Probably don't need to diversify much in Large US Equity funds, but maybe would be wise to choose a Small or Mid US Equity and an International Equity?

Great questions.  Unfortunately, none will know the correct answer until they find their hindsight glasses.  Personally I like small and mid caps, and they have done well over the years, 2014 notwithstanding.  PMFMX would catch my eye.

If there are any you are not considering that have much lower expense ratios (e.g., ~0.2%), consider considering them....

Credaholic

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Re: 401K with Principal Financial - where to invest?
« Reply #4 on: January 01, 2015, 12:52:16 PM »
Yup, those hindsight glasses sure would be nice...

No other options with cheaper fees. Someone else commented here but then deleted it that they had some Small/Mid Cap Principal index funds with lower fees. Seems those are the R4 and I only have access to the R3.

I'm leaning towards the Principal Large Cap Index because the fees are half of the Fidelity version, but the average long term returns on Fidelity are a bit better. Which would you all choose given the fees and historical performance?

chasesfish

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Re: 401K with Principal Financial - where to invest?
« Reply #5 on: January 01, 2015, 01:28:41 PM »
Principal generally sucks as a 401k provider, my wife had them for a couple of years.

Your best option here is to just invest it in PLFMX, which is something close enough to an S&P 500 index fund that they steal 3/4% from you each year.

Use your Roth IRA and other investments to balance your portfolio.  If you try to do that through Principal, they'll just extort more of your money from you.