Author Topic: 401K advice  (Read 2452 times)

SOS

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401K advice
« on: June 18, 2018, 09:36:19 AM »
My work automatically assigned me with T Rowe Price mutual fund. I have a long list to choose from and have narrowed it down to VFIAX, HACAX,VGSLX, VMFXX. I'm leaning towards 100% to VFIAX that I would like to move to. Do you have any advice?

terran

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Re: 401K advice
« Reply #1 on: June 18, 2018, 09:57:07 AM »
Most people don't know the particulars (beyond a few) of mutual funds by ticker symbol, so it would be helpful if you could post the fund name and expense ratio along with the ticker for each of the investments you're considering.

radram

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Re: 401K advice
« Reply #2 on: June 18, 2018, 10:22:26 AM »
What do you mean "move to"?

Are you saying you were defaulted into a T Rowe Price mutual fund? Which one? What is the ticker? We need to know what it is in before we recommend moving it.

Or do you mean they signed you up for a T Rowe Price 401k plan(not a fund), and you need to select what to buy with it? If this is what happened, I vote VFIAX 100% for the entire accumulation phase.

HACAX fees are too high, but if you are looking to "beat the market", you selected a fund that outperformed it's 10 year benchmark( even though it did NOT outperform the entire S&P 500). In short, this fund is a "winner" in an under-performing benchmark. Many on this site (myself included), have very little interest in beating the market. Meeting the market with low fees is just fine.

VGSLX would have some promise, but adds unnecessary complication to a retirement allocation. If you want real estate is in your retirement allocation, this is a good index fund for that.

VMFXX is really just cash that will never keep up with inflation. Not a terrible place to put your emergency fund, but downright terrible for building a stashe, as it will have the opposite effect losing to inflation over time. Many plans will default to placing money here (or similar cash fund) if you do not specify where to put your money. Still better than not saving at all.

All the other choices you already filtered out. Based on what remain I see no need to go back to the entire list again.

One more comment: Kudo's to your company for their offerings. You have some great choices.

rugorak

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Re: 401K advice
« Reply #3 on: June 18, 2018, 11:19:17 AM »
Out of those choices I also vote for VFIAX. In fact I did go 100% VFIAX with my own work plan.

Make sure you check for any additional fees. My workplace plan automatically charges everyone .17% on top of whatever your investment funds have. So make sure you find out all the details so you are not surprised. Other than that just put in as much as you can and let time do the rest.

SOS

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Re: 401K advice
« Reply #4 on: June 18, 2018, 01:50:23 PM »
Most people don't know the particulars (beyond a few) of mutual funds by ticker symbol, so it would be helpful if you could post the fund name and expense ratio along with the ticker for each of the investments you're considering.

Sure..
VFIAX is Vanguard 500 Index Admiral, expense ratio is .04%

HACAX is Harbor Capital appreciation Instl, .66%

VGSLX is Vanguard Real Estate Index Admiral, .12%

VMFXX , Vanguard Federal Money Market Inv, .11%

VSMAX, Vanguard Small Cap Index ADM, .17%

VIMAX, Vanguard Mid Cap Index ADM, .23%

I googled the ticker symbols to get the expense ratio's today

SOS

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Re: 401K advice
« Reply #5 on: June 18, 2018, 01:58:43 PM »
What do you mean "move to"?

Are you saying you were defaulted into a T Rowe Price mutual fund? Which one? What is the ticker? We need to know what it is in before we recommend moving it.

Or do you mean they signed you up for a T Rowe Price 401k plan(not a fund), and you need to select what to buy with it? If this is what happened, I vote VFIAX 100% for the entire accumulation phase.

HACAX fees are too high, but if you are looking to "beat the market", you selected a fund that outperformed it's 10 year benchmark( even though it did NOT outperform the entire S&P 500). In short, this fund is a "winner" in an under-performing benchmark. Many on this site (myself included), have very little interest in beating the market. Meeting the market with low fees is just fine.

VGSLX would have some promise, but adds unnecessary complication to a retirement allocation. If you want real estate is in your retirement allocation, this is a good index fund for that.

VMFXX is really just cash that will never keep up with inflation. Not a terrible place to put your emergency fund, but downright terrible for building a stashe, as it will have the opposite effect losing to inflation over time. Many plans will default to placing money here (or similar cash fund) if you do not specify where to put your money. Still better than not saving at all.

All the other choices you already filtered out. Based on what remain I see no need to go back to the entire list again.

One more comment: Kudo's to your company for their offerings. You have some great choices.

The company that handles our 401K opened a T. Rowe price retirement 2040 plan for me. Ticker is Mutf: TRRDX. I think this is standard practice, since that's when they think I will retire.

SOS

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Re: 401K advice
« Reply #6 on: June 18, 2018, 02:00:00 PM »
When I said move to, I meant allocating what I contribute each pay check to my 401K plan.

SOS

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Re: 401K advice
« Reply #7 on: June 18, 2018, 02:04:22 PM »
Out of those choices I also vote for VFIAX. In fact I did go 100% VFIAX with my own work plan.

Make sure you check for any additional fees. My workplace plan automatically charges everyone .17% on top of whatever your investment funds have. So make sure you find out all the details so you are not surprised. Other than that just put in as much as you can and let time do the rest.

Thanks, I will..
The way the representative explained it was max out on the 401K and then if I could spare an extra $100 each paycheck, to come back and open a Roth IRA.

radram

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Re: 401K advice
« Reply #8 on: June 18, 2018, 02:44:10 PM »
What do you mean "move to"?

Are you saying you were defaulted into a T Rowe Price mutual fund? Which one? What is the ticker? We need to know what it is in before we recommend moving it.

Or do you mean they signed you up for a T Rowe Price 401k plan(not a fund), and you need to select what to buy with it? If this is what happened, I vote VFIAX 100% for the entire accumulation phase.

HACAX fees are too high, but if you are looking to "beat the market", you selected a fund that outperformed it's 10 year benchmark( even though it did NOT outperform the entire S&P 500). In short, this fund is a "winner" in an under-performing benchmark. Many on this site (myself included), have very little interest in beating the market. Meeting the market with low fees is just fine.

VGSLX would have some promise, but adds unnecessary complication to a retirement allocation. If you want real estate is in your retirement allocation, this is a good index fund for that.

VMFXX is really just cash that will never keep up with inflation. Not a terrible place to put your emergency fund, but downright terrible for building a stashe, as it will have the opposite effect losing to inflation over time. Many plans will default to placing money here (or similar cash fund) if you do not specify where to put your money. Still better than not saving at all.

All the other choices you already filtered out. Based on what remain I see no need to go back to the entire list again.

One more comment: Kudo's to your company for their offerings. You have some great choices.

The company that handles our 401K opened a T. Rowe price retirement 2040 plan for me. Ticker is Mutf: TRRDX. I think this is standard practice, since that's when they think I will retire.

I like VFIAX over TRRDX

The_Dude

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Re: 401K advice
« Reply #9 on: June 18, 2018, 03:08:00 PM »
I'd recommend you do some research on asset allocations and pic one that balances your goals with a thoughtful consideration of your risk tolerance. 

VFIAX is a great core fund as part of an overall asset allocation.  Personally, I wouldn't make it my only fund.  At a minimum, I'd want some international and small cap diversification. 

terran

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Re: 401K advice
« Reply #10 on: June 18, 2018, 08:59:09 PM »
I would shoot for approximating the total US stock market using:

VFIAX is Vanguard 500 Index Admiral, expense ratio is .04%
VSMAX, Vanguard Small Cap Index ADM, .17%
VIMAX, Vanguard Mid Cap Index ADM, .23%

Try to get some international in there in other accounts (20-40%), and remember you can hold the funds above in other accounts too to even out your asset allocation -- you don't need to have your desired asset allocation in each account.

rugorak

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Re: 401K advice
« Reply #11 on: June 25, 2018, 08:35:21 AM »
The way the representative explained it was max out on the 401K and then if I could spare an extra $100 each paycheck, to come back and open a Roth IRA.
Personally I would do your Roth or Traditional IRA by yourself. Of course they want you to do it with them. They make more money that way. But you should do what is best for you. If you like Vanguard Funds I would put your IRA with them. You'll pay nothing but the expense ratio that way. Or if you prefer Fidelity or whomever's funds put your IRA there.

I would shoot for approximating the total US stock market using:

VFIAX is Vanguard 500 Index Admiral, expense ratio is .04%
VSMAX, Vanguard Small Cap Index ADM, .17%
VIMAX, Vanguard Mid Cap Index ADM, .23%

Try to get some international in there in other accounts (20-40%), and remember you can hold the funds above in other accounts too to even out your asset allocation -- you don't need to have your desired asset allocation in each account.

So there is some debate on whether you need to do international, etc. I'll refer to JLCollins -http://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/

As for simulating VTSAX as you are suggesting I looked into that but the expense ratios vs. what is actually help by VTSAX just didn't make sense. Instead I just make sure that outside of my workplace plan I do invest in VTSAX. I ran the math over the past and I would have done better just doing VFAIX inside my plan rather than trying to simulate VTSAX.

In the end you are not going to do bad either way. But don't let perfect be the enemy of the good. If you can get close to your ideal don't go through too many hoops in order to try and get that tiny bit. You may end up costing yourself more than you gain.