Author Topic: 401K allocation - 17+ years from starting to withdraw the money  (Read 3648 times)

wild wendella

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401K allocation - 17+ years from starting to withdraw the money
« on: January 14, 2015, 02:12:05 PM »
Hi there.  I just re-allocated my 401k, and may have been rather hasty about it. My plan changed to allow use of a 'mutual fund window' through a brokerage, and so I jumped at the opportunity to move some funds to that window.  I'm not interested in bonds, but I'm concerned my allocation sucks and is not diverse enough (too heavy on large cap).  Any thoughts on this?

10.40%   International         
   5.95%   Artisan International Growth Equity Fund      
   4.45%   VTIAX   VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND    
25%   S&P         
   25%   SSgA S&P 500 Index Fund      
43%   Total US Stock Market         
   43%   VTSAX   VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL    
13.36%   US Small Cap         
   6.68%   VSMAX   VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES   
   6.68%   VSIAX   VANGUARD SMALL-CAP VALUE INDEX FUND ADMIRAL   
4.45%   US Mid Cap         
   4.45%   VIMAX   VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES   
3.56%   Speculative - Sector: Healthcare         
   3.56%   VHCIX   VANGUARD HEALTH CARE INDEX FUND ADMIRAL SHARES   
<1%   Vanguard Target Retirement 2035 Fund         
      58% total stock, 25.1% total intl stock, 13% total bond, 3.3% total intl bond   
   
Future investments:
40%   Vanguard Target Retirement 2035 Fund
55%   SSgA S&P 500 Index Fund
5%   Artisan International Growth Equity Fund

.. and then I can manually transfer those to the mutual fund window options as I wish.   Thanks for any feedback.

Louisville

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Re: 401K allocation - 17+ years from starting to withdraw the money
« Reply #1 on: January 14, 2015, 02:22:54 PM »
How did you arrive at it? If the answer is, "I just kind of guessed," then it's a bad AA. If the answer is, "I ran it through cFireSim and it matches my risk tolerance and growth needs,"  (or some such thought out strategy) then it might be a good AA.
Most here would, I think, tell you that it's too complex because the funds overlap a lot. Good on using index funds, though.

Dodge

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Re: 401K allocation - 17+ years from starting to withdraw the money
« Reply #2 on: January 14, 2015, 02:27:27 PM »
Hi there.  I just re-allocated my 401k, and may have been rather hasty about it. My plan changed to allow use of a 'mutual fund window' through a brokerage, and so I jumped at the opportunity to move some funds to that window.  I'm not interested in bonds, but I'm concerned my allocation sucks and is not diverse enough (too heavy on large cap).  Any thoughts on this?

10.40%   International         
   5.95%   Artisan International Growth Equity Fund      
   4.45%   VTIAX   VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND    
25%   S&P         
   25%   SSgA S&P 500 Index Fund      
43%   Total US Stock Market         
   43%   VTSAX   VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL    
13.36%   US Small Cap         
   6.68%   VSMAX   VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES   
   6.68%   VSIAX   VANGUARD SMALL-CAP VALUE INDEX FUND ADMIRAL   
4.45%   US Mid Cap         
   4.45%   VIMAX   VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES   
3.56%   Speculative - Sector: Healthcare         
   3.56%   VHCIX   VANGUARD HEALTH CARE INDEX FUND ADMIRAL SHARES   
<1%   Vanguard Target Retirement 2035 Fund         
      58% total stock, 25.1% total intl stock, 13% total bond, 3.3% total intl bond   
   
Future investments:
40%   Vanguard Target Retirement 2035 Fund
55%   SSgA S&P 500 Index Fund
5%   Artisan International Growth Equity Fund

.. and then I can manually transfer those to the mutual fund window options as I wish.   Thanks for any feedback.

Unfortunately, it's hard to give recommendations without knowing the expense ratios for each fund, as we can't look them up.  I recently looked at a 401k that had Vanguard Total Stock Index Fund at a 1.49% ER instead of the standard 0.05% ER...

If the expense ratios are all normal however, I'd just recommend the standard 3 fund portfolio:

56% Vanguard Total Stock Index Fund
24% Vanguard Total International Stock Index Fund
20% Vanguard Total Bond Index Fund

I think 100% stocks is a mistake, but if you insist, then probably something like:

70% Vanguard Total Stock Index Fund
30% Vanguard Total International Stock Index Fund

wild wendella

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Re: 401K allocation - 17+ years from starting to withdraw the money
« Reply #3 on: January 14, 2015, 02:33:32 PM »
Thanks so much for these recommendations.  Yes, this allocation is the result of a wild guess.  I will definitely take a look at cFireSim, and run some scenerios.  Probably should have posted questions here before rashly re-allocating yesterday.  The index fund fees are all normal and low (.02% - .14%); the Artisan is .67% and is offered through my normal 401k plan, not the 'window'.  I appreciate that there's inconsistent overlap and it seems needlessly complex.  Thank you!

GGNoob

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Re: 401K allocation - 17+ years from starting to withdraw the money
« Reply #4 on: January 14, 2015, 02:43:09 PM »
Thanks so much for these recommendations.  Yes, this allocation is the result of a wild guess.  I will definitely take a look at cFireSim, and run some scenerios.  Probably should have posted questions here before rashly re-allocating yesterday.  The index fund fees are all normal and low (.02% - .14%); the Artisan is .67% and is offered through my normal 401k plan, not the 'window'.  I appreciate that there's inconsistent overlap and it seems needlessly complex.  Thank you!

Is there a minimum requirement of $ or % of funds that must be kept in your normal 401k portfolio? In my opinion, keep the minimum in the account in one of the cheapest funds. Then move the rest to the window account and choose a simple 2 or 3 fund portfolio like Dodge mentioned.

For example, my 401k and 457 accounts require a minimum of $500 on the plan funds. Then rest I move to a self-directed brokerage account (SDBA) and invest in cheap Vanguard ETFs at TD Ameritrade according to my IPS. The $500 in my plan funds sits in a Capital Preservation Fund. All of my monthly contributions then go into that fund and each month I just have to log in and transfer everything except $500 to my SDBA.

wild wendella

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Re: 401K allocation - 17+ years from starting to withdraw the money
« Reply #5 on: January 14, 2015, 03:42:52 PM »
Yes, exactly, there is a minimum.  I don't recall exactly what it is, but I think either 5-10K.  The only problem with your suggested strategy is that we have a list of Non Transaction Fee (NFT) funds we can invest in within the mutual window, but that list does not include any of the low-cost index funds I would want to invest in (no Vanguard options, for example).  So I have to pay 19.95 to buy or sell the funds I want to buy.  So....  I should minimize how often I buy or sell funds there.  It seems kind of shady, true, but I like that I can now invest in a wide variety of Vanguard and similar funds, so I'll take it. 

Our base 401K plan has a Vanguard target retirement fund, so I could just put all future contributions there, and once a year move some money out into the mutual fund window.  To be honest, I kind of like the idea though of keeping _some_ money in a non-Vanguard funds (the SSgA S&P index fund, for example) just for variety.  Though I know that's borderline paranoid.

thedayisbrave

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Re: 401K allocation - 17+ years from starting to withdraw the money
« Reply #6 on: January 14, 2015, 03:57:00 PM »
You have a ton of overlap.  The S&P Fund, Total Stock and Target Retirement are essentially doing variations of the same thing.  I would simplify it down to just Total Stock, and then holding the small cap, international, and health care if you'd like.  Mid cap is meh, unless you want to overweight it (there are more mid cap in total stock than small cap). 

RapmasterD

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Re: 401K allocation - 17+ years from starting to withdraw the money
« Reply #7 on: January 14, 2015, 08:45:46 PM »
Way too complex. Don't look at your 401K in isolation. Look across all your accounts. Right now across two IRAs, an investment account and my wife's 401K we have four stock/stock ETF positions, two bond ETF positions, and cash.