Author Topic: 401k allocations  (Read 4040 times)

kazuken

  • 5 O'Clock Shadow
  • *
  • Posts: 5
401k allocations
« on: June 17, 2015, 10:48:24 AM »
Hello, I am new here to MMM.
Currently, I am trying to max out my 401k (as I live with my parents and have no real bills to pay), I am 22.

Currently putting about 4k a month until I reach the maximum.

Aggressive Growth   
DFA US Targeted Value Fund   
Oppenheimer Developing Mkt   
Small Cap Growth Fund   
Intl Equity Index Fund   
Small Cap Index Fund   
Science & Technology Fund   
Franklin Small-Mid Growth   
Oppenheimer Global   
Templeton World   
EuroPacific Growth Fund   
Invesco Small Cap Growth   
Real Est. Securities Fund   
T. Rowe Price Health Sci   
Financial Industries Fund   


Growth   
T. Rowe Price Sml Cap Val   
Mid Cap Index Fund   
Small Cap Value Fund   
Blue Chip Growth Fund   
Capital Appreciation Fund   
The Growth Fund of America   
Davis New York Venture   
Total Stock Market Index Fund   
Utilities Fund   


Growth & Income   
T. Rowe Price Equity Inc   
500 Index Fund   
Investment Company of America   
JPMorgan MidCap Value Fund   
Mutual Global Discovery   
Washington Mutual Investors   
American Balanced Fund   
Fundamental Large Cap Value   


Income   
PIMCO Global Bond   
PIMCO Real Return   
U.S. High Yield Bond Fund   
T. Rowe Price Spectrum Inc   
PIMCO Total Return   
Vanguard Short-Term Federal   


Conservative   
Money Market Fund   
3-Year Compound   
5-Year Compound   
10-Year Compound

Those are my options. I heard many great things about the lazy core four portfolio. What would be the smartest allocations to match that or do you have any better ideas.

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: 401k allocations
« Reply #1 on: June 17, 2015, 11:04:50 AM »
What are the expense ratios for the funds? This is the usual starting point. The 500 Index Fund in particular is likely to be a good bet if the ER is low.

kazuken

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: 401k allocations
« Reply #2 on: June 17, 2015, 11:19:53 AM »
What are the expense ratios for the funds? This is the usual starting point. The 500 Index Fund in particular is likely to be a good bet if the ER is low.

1% which now researching is very high compared to vanguard at 0.17%.
I do not have time right now but the ER min is 1% and max is 1.79%. My guess is that these are pretty high? Am i taking the wrong strategy trying to max out the 401k with these much higher expense ratios?

Jeremy E.

  • Handlebar Stache
  • *****
  • Posts: 1946
  • Location: Lewiston, ID
Re: 401k allocations
« Reply #3 on: June 17, 2015, 11:21:58 AM »
Put everything into the total stock market index fund if the expense ratio is under .2%

Jeremy E.

  • Handlebar Stache
  • *****
  • Posts: 1946
  • Location: Lewiston, ID
Re: 401k allocations
« Reply #4 on: June 17, 2015, 11:23:33 AM »
also read this when you have time, someone much better at explaining than me
http://jlcollinsnh.com/2013/06/28/stocks-part-viii-b-should-you-avoid-your-companys-401k/

kazuken

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: 401k allocations
« Reply #5 on: June 17, 2015, 11:34:40 AM »
If I max out both IRA and 401k, I will pay 5k less taxes. So perhaps I should keep everything as cash and roll it over as soon as I can into an IRA?

Jeremy E.

  • Handlebar Stache
  • *****
  • Posts: 1946
  • Location: Lewiston, ID
Re: 401k allocations
« Reply #6 on: June 17, 2015, 11:37:31 AM »
I would use S&P 500 or Total stock market index funds even if they had 2% expense ratio, more than 2% expense ratio and I'd have to think about it

GGNoob

  • Pencil Stache
  • ****
  • Posts: 725
  • Age: 32
  • Location: Colorado
Re: 401k allocations
« Reply #7 on: June 17, 2015, 11:41:47 AM »
If I max out both IRA and 401k, I will pay 5k less taxes. So perhaps I should keep everything as cash and roll it over as soon as I can into an IRA?

Do you get a match from your employer? If you do, it might be best to invest in this order:
  • 401k up to match
  • IRA
  • Max 401k

kazuken

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: 401k allocations
« Reply #8 on: June 17, 2015, 11:45:34 AM »
If I max out both IRA and 401k, I will pay 5k less taxes. So perhaps I should keep everything as cash and roll it over as soon as I can into an IRA?

Do you get a match from your employer? If you do, it might be best to invest in this order:
  • 401k up to match
  • IRA
  • Max 401k

The match will end in July.

@ Jeremy E.
The 500 Index fund is 1% and the Total stock market index fund is 1.03%. What % allocation would you recommend.

I greatly appreciate everyone's help! Thanks everyone.

Jeremy E.

  • Handlebar Stache
  • *****
  • Posts: 1946
  • Location: Lewiston, ID
Re: 401k allocations
« Reply #9 on: June 17, 2015, 11:50:13 AM »
I would do 100% in total stock market index fund for now, and as you get closer to your retirement age add in a small percentage of bonds, and I agree with the order given by previous poster. Also I recommend reading the entire stock series by JLCollinsNH when you have free time. Good Luck!

kazuken

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: 401k allocations
« Reply #10 on: June 17, 2015, 11:55:02 AM »
Thanks Jeremy!

I have a lot to learn! I will do that as have more free time.

TheOldestYoungMan

  • Pencil Stache
  • ****
  • Posts: 751
Re: 401k allocations
« Reply #11 on: June 17, 2015, 12:04:48 PM »
If the tax benefit outweighs the expense ratio, you go ahead and do it, and just pick a fund with a low ratio out of your options.

If you were going to be staying at the company for 40 years it is probably a bigger deal.  As it stands, when you reach FIRE the "leave it in the 401k company's hands or take it out" question answers itself.

To the extent there is someone at your company who will listen, you can also have a conversation with them about the options.  There is at least one person at your company who can pick up the phone and call the operator of the plan and have one of the vanguard low cost index funds added.  Like, today.

Dunno if it's worse potentially being "that guy" that always "says things" that cause other people "extra work."

MDM

  • Walrus Stache
  • *******
  • Posts: 9688
Re: 401k allocations
« Reply #12 on: June 17, 2015, 12:16:58 PM »

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: 401k allocations
« Reply #13 on: June 17, 2015, 12:23:19 PM »
Yes, if 1% is the best option available, the total stock market fund at 1.03% is a good choice. Just roll your 401k over into a traditional IRA at Vanguard as soon as you leave this job. 1% is really high.

And definitely try to get your benefits people to get better options.