Author Topic: 401k ...All S&P 500 or diversified with higher Exp. ratios?  (Read 4009 times)

dcheesi

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401k ...All S&P 500 or diversified with higher Exp. ratios?
« on: March 27, 2014, 11:18:47 AM »
Ok, I'm sure this has been answered before, but my search-fu is failing me. My 401K plan is not terrible compared to some, but it's still quite limited. Basically there is one S&P 500 Index with a good exp. ratio (.10%), and everything else is managed funds in the .50-1.0% fee range.

Right now I've got my money split up between the 500 fund and some other funds to balance out mid/small cap and a little non-US stock. I'm wondering if it would make more sense to move it all into the 500 index fund to save the fees? Or is that straying too far from the total stock market ideal? (Keep in mind that these other funds are not really indexes, but rather managed funds, so they're not perfect choices for approximating total stock market anyway.)

warfreak2

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #1 on: March 27, 2014, 11:23:07 AM »
Do you have any other investments in a seperate account? You only need to be diversified overall, and that could mean having just the S&P 500 in the 401k and having other funds meeting your other diversification needs elsewhere.

matchewed

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #2 on: March 27, 2014, 11:23:51 AM »
I'd go for minimizing fees and then look for diversification in other investment vehicles (IRA/taxable account/HSA...etc.).

*edit* warfreak2 beat me to it.

dcheesi

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #3 on: March 27, 2014, 11:37:07 AM »
Well I've got a taxable account (Vanguard of course), but no other "retirement" accounts. Suppose I could investigate that...

NumberCruncher

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #4 on: March 27, 2014, 11:57:12 AM »
Well I've got a taxable account (Vanguard of course), but no other "retirement" accounts. Suppose I could investigate that...

Any reason why you have a taxable account but no IRA?

Another Reader

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #5 on: March 27, 2014, 12:00:43 PM »
An IRA is worth investigating.

Not all managed funds are bad.  Do you have any options that have done well over 10 years or longer?  Look at the hypothetical growth of $10,000 over 10 years for any fund that looks promising.  Perhaps you could post your options, as many folks are faced with the same conundrum.

El Gringo

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #6 on: March 27, 2014, 12:27:19 PM »
My plan is similar to yours. I realized last year that the S&P500 index was the only cheap one in the plan. Once I realized that, I moved everything to that fund, and then reorganized my Vanguard IRA to hold everything else (VXF, VXUS, etc).

ZiziPB

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #7 on: March 27, 2014, 02:47:46 PM »
Quote
Any reason why you have a taxable account but no IRA?

Income too high for a deductible IRA? 

TomTX

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #8 on: March 27, 2014, 08:09:03 PM »
Put it in the low-expense index fund.

Find diversification elsewhere.

dcheesi

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #9 on: March 28, 2014, 12:38:10 AM »
Well I've got a taxable account (Vanguard of course), but no other "retirement" accounts. Suppose I could investigate that...

Any reason why you have a taxable account but no IRA?
Honestly just laziness. In the past I just dumped money in my 401k and didn't think about it much. At the same time, I was paranoid enough to build up an excessively large emergency fund. I finally (way too late) took action on investing the latter properly, hence the Vanguard account.

I had always assumed that my 401k was "good enough", so I never seriously considered opening another retirement account. Before getting turned on to Bogle-style investing here, I always felt overwhelmed by the whole investing game and tended to avoid dealing with it.

NumberCruncher

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Re: 401k ...All S&P 500 or diversified with higher Exp. ratios?
« Reply #10 on: March 28, 2014, 12:36:05 PM »
Well I've got a taxable account (Vanguard of course), but no other "retirement" accounts. Suppose I could investigate that...

Any reason why you have a taxable account but no IRA?
Honestly just laziness. In the past I just dumped money in my 401k and didn't think about it much. At the same time, I was paranoid enough to build up an excessively large emergency fund. I finally (way too late) took action on investing the latter properly, hence the Vanguard account.

I had always assumed that my 401k was "good enough", so I never seriously considered opening another retirement account. Before getting turned on to Bogle-style investing here, I always felt overwhelmed by the whole investing game and tended to avoid dealing with it.

Dude - you can put $11,000 in an IRA right now (2013 & 2014 contributions). The deadline to  contribute for 2013 is April 15th.