Author Topic: What 401k funds to use?  (Read 4034 times)

gergg

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What 401k funds to use?
« on: December 30, 2014, 02:54:59 PM »
I have no idea which funds I should use in my 401k (Fidelity).  I ended up just picking a smattering of things, but I'm not sure this is the best strategy.  Any advice?  I'm 28 and putting in about 15k plus 6k in employer match per year.

Here's my current allocation:

Small Cap Growth: 15%
Large Cap Value: 15%
Large Cap Growth: 15%
Small Cap Value: 10%
Small Cap Core Index: 10%
2055 Targeted Fund: 10%
Emerging Market Equity: 10%
International Value: 10%
International Fund: 5%
Bond Index Fund: 5%

BarkyardBQ

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Re: What 401k funds to use?
« Reply #1 on: December 30, 2014, 03:05:24 PM »
Can you provide the full name or symbol of the fund and the expense ratio. Plus any other options you have in the plan.
« Last Edit: December 30, 2014, 03:13:18 PM by zdravé »

gergg

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Re: What 401k funds to use?
« Reply #2 on: December 30, 2014, 10:08:14 PM »
I can't seem to find the symbols on the fidelity website, but personal capital says they are:

Small Cap Growth: 15% (TDKM, 0.81% expenses)
Large Cap Value: 15% (TDKI, 0.23% expenses)
Large Cap Growth: 15% (TDKP, 0.55% expenses)
Small Cap Value: 10% (TDKC, 0.78% expenses)
Small Cap Core Index: 10% (TDKF, 0.10% expenses)
2055 Targeted Fund: 10% (TDKV, 0.54% expenses)
Emerging Market Equity: 10% (TDKJ, 1.31% expenses)
International Value: 5% (ADVEX, 0.64% expenses)
International Fund: 5% (TDKE, 0.5% expenses)
Bond Index Fund: 5% (WFBIX, 0.05% expenses)

Note that the descriptions for all of these say "Information on this investment option was provided by your plan sponsor, plan trustee, investment manager, trustee or third party data provider. This investment is not a mutual fund."  So I don't really know what it is to be honest.  The symbols don't come back on a google search.

The other choices are (names are copied and pasted, but it doesn't show the symbols):

Money Market Fund: 0.09% expenses
Short Duration Bond: 0.5% expenses
Bond Fund: 0.46% expenses
Balanced Fund: 0.28% expenses
Balanced Real Asset: 0.7% expenses
Equity Index Fund: 0.025% expenses
International Index: .1% expenses


Looking at the expenses I just wrote out, I'm thinking I should get rid of all the different funds I've elected and instead use the Equity Index Fund and International Index Fund.  Something like 75% Equity Index Fund, 20% International Index, 5% Bond Index Fund. Did I answer my own question or would a different allocation be better?
« Last Edit: December 30, 2014, 10:11:45 PM by gergg »

rmendpara

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Re: What 401k funds to use?
« Reply #3 on: December 30, 2014, 10:16:29 PM »
Those look like custom funds that your company had created specially for your 401k (i.e they don't appear when searched on Yahoofinance).

Read the benchmarks for each fund.

50-80%: Try and get one domestic equity fund, probably benchmarked to S&P 500, Nasdaq, Dow, etc.

10-30%: Try and get one international equity fund, which should have some exposure to emerging markets but mostly intl developed markets.

0-15%: Bond fund or 2055 targeted fund (will have some bonds now and will gradually increase over time)

I don't know your overall situation, but being 28 and assuming you don't plan to retire for at least 20 years, you're best served with 3-4 funds to hit the major groups while you start your investing. You can gradually add exposure to small caps, emerging markets, and even more bonds as your portfolio grows and you have room to take on a bit of risk for small portions of your assets.

I'd encourage you to keep it simple. I made the mistake (in hindsight) of getting too complicated with my 401k when I started contributing in 2012 to dividend funds, equity income funds, emerging markets, etc. All told, I had close to 10 different funds and barely 15k at the end of 2 years. I would have done better to just put it all in a large cap value fund (S&P, Dow, whatever benchmark) and a diversified international fund at 80/20 and left it alone.

Credaholic

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Re: What 401k funds to use?
« Reply #4 on: December 30, 2014, 11:20:00 PM »
I just opened a Fidelity 529 for my kids and found it difficult to find ticker symbols, but the options given seem similar to what you've mentioned here. Is there a Total Market Index option in your 401K? That's what I've invested in after calling Fidelity and confirming that that option basically means you're investing in FSTMX/FSTVX. That's Fidelity's equivalent to the Vanguard total market index that everyone on MMM touts as the only thing you ever need to invest in. I'm trying to figure out a similar equivalent now over at Principal Financial since DHs 401K just moved over there.

wtjbatman

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Re: What 401k funds to use?
« Reply #5 on: December 31, 2014, 05:47:21 AM »
Looking at the expenses I just wrote out, I'm thinking I should get rid of all the different funds I've elected and instead use the Equity Index Fund and International Index Fund.  Something like 75% Equity Index Fund, 20% International Index, 5% Bond Index Fund. Did I answer my own question or would a different allocation be better?

Assuming Equity Index Fund is the equivalent of a U.S. total stock market fund, yes, that sounds just about right. You may want to do a higher bond allocation unless your risk tolerance is extremely high. With 95% in equities, the next market crash could cause your portfolio value to drop significantly. Would you be able to stay the course through that?

gergg

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Re: What 401k funds to use?
« Reply #6 on: December 31, 2014, 07:16:07 AM »
Ok, thanks everyone.  The Equities Index says it tracks the S&P 500, so I guess I'll use that one since there is no "total market" option.  I prefer to keep most in stocks for now, I would adjust the allocation if I was going to stop contributing and not retire in midst of a market crash.

BarkyardBQ

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Re: What 401k funds to use?
« Reply #7 on: December 31, 2014, 09:35:16 AM »
Ok, thanks everyone.  The Equities Index says it tracks the S&P 500, so I guess I'll use that one since there is no "total market" option.  I prefer to keep most in stocks for now, I would adjust the allocation if I was going to stop contributing and not retire in midst of a market crash.

Because the S&P 500 is just that you may try tilting 10-20% in Small Cap Core and Small Cap Value. Read the details of the funds. But you could miss out on some gains over the long term by only being invested in the 500. Ultimately it's your portfolio so do what you feel.