Author Topic: 401k fees?  (Read 2387 times)

norabird

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401k fees?
« on: August 21, 2014, 12:19:42 PM »
I wanted to double-check the fees on my current 401k, which is in the Fidelity 2050 K. Asked to be put into Spartan funds instead to reduce my fees -- chose 80% spartan total fund, 10% in the spartan bond index, and 10% in the spartan international fund. That account has about $5,888 right now.

Also rolled my old employer's 401k plan into a pre-tax IRA. That account has about $22,840. It's going into a Vanguard fund which I'll have to select once the money becomes available from the rollover. Advice there?

Does that sound right? I called Fidelity because I wasn't able to figure out online what would have low fees, and decided on this mid conversation after a quick google. I definitely wanted to get a long-term, low-cost index fund and I *think* I've done that, but need a gut-check. Ended up making a lot of big changes suddenly, which were in line with things I've read, but still feel a little woozy at shifting so much. As much as I wish I had chosen spartan to start with, I'm hoping this will help with my being able to compound interest over the years as I increase my contribution (only 10% now, plus company match, but going up to 20% once I pay off my cc).

Thanks!

fallstoclimb

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Re: 401k fees?
« Reply #1 on: August 21, 2014, 12:40:08 PM »
I am far, far from an expert in this area, but I will say that 10% in international seems a bit low?  (Assuming the spartan total fund is U.S.-only). 

Also, people who know more than me will probably want to know how old you are, so I'm going to out you as 30ish.

skyrefuge

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Re: 401k fees?
« Reply #2 on: August 21, 2014, 04:35:02 PM »
The general procedure is to first decide what you want your overall asset allocation to be, and then decide which location you want for each of those assets. I'm not sure if the allocation you decided for you 401(k) is representative of what you want your overall asset allocation to be, but if so, it seems like a reasonable allocation.

Since your IRA and 401(k) are essentially the same from a tax/accessibility perspective, and, since the fund choices available in your 401(k) seem as good as you can get in an IRA (which is an unusual benefit most people don't have), you then have a choice: duplicate the same 3-fund allocation in your IRA (using Vanguard funds) that you have in your 401(k), or split asset classes between the two accounts (for example, US stocks in your IRA, and international + bonds in your 401(k)). While the first option increases the total number of funds you'd need to keep track of, it might be easier overall since it will be easier to rebalance to keep your asset allocation where you want it.

And don't worry about not making the switch to Spartan funds sooner. With the relatively small amount you had invested, you probably "lost" something on the order of $10, if that.

ioseftavi

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Re: 401k fees?
« Reply #3 on: August 22, 2014, 07:54:20 AM »
I wanted to double-check the fees on my current 401k, which is in the Fidelity 2050 K. Asked to be put into Spartan funds instead to reduce my fees -- chose 80% spartan total fund, 10% in the spartan bond index, and 10% in the spartan international fund. That account has about $5,888 right now.

Also rolled my old employer's 401k plan into a pre-tax IRA. That account has about $22,840. It's going into a Vanguard fund which I'll have to select once the money becomes available from the rollover. Advice there?

Does that sound right? I called Fidelity because I wasn't able to figure out online what would have low fees, and decided on this mid conversation after a quick google. I definitely wanted to get a long-term, low-cost index fund and I *think* I've done that, but need a gut-check. Ended up making a lot of big changes suddenly, which were in line with things I've read, but still feel a little woozy at shifting so much. As much as I wish I had chosen spartan to start with, I'm hoping this will help with my being able to compound interest over the years as I increase my contribution (only 10% now, plus company match, but going up to 20% once I pay off my cc).

Thanks!

Hi Nora-

Your overall asset allocation (90% stocks, 10% bonds) sounds pretty OK, but as one poster said, you seem a bit light on international.  Here's what I would suggest for someone in our age bracket who's got a 15+ year timeframe:
  • 80-90% stocks
  • 10-20% bonds
Now, within the 'stock' slice of your asset allocation pie, you want to make sure you have the right mix of US / international.  Again, for someone with a longer timeframe and higher risk tolerance, I'd suggest fully one-third of the 'equity' slice be international.  So take your 80% or 90% and multiply it by 33% to get something like 26-30% of your overall portfolio in international companies.

So, a three fund portfolio using an overall allocation of 85% stocks and 15% bonds would look like:
  • 15% Spartan Bond Index
  • 28% Spartan International Index
  • 57% Spartan Total Market Index
That would get you to the 85% stock / 15% bond mix I mentioned, and about one-third of your 'stock' piece would be in international. 

Also rolled my old employer's 401k plan into a pre-tax IRA. That account has about $22,840. It's going into a Vanguard fund which I'll have to select once the money becomes available from the rollover. Advice there?

Just put it into Vanguards Target Retirement 2050 and forget about it.  This is an "asset allocation fund" where it does all the allocating for you.  Expense ratio is 0.18%, so it's very very low.

Hope this helps!
« Last Edit: August 22, 2014, 07:55:59 AM by ioseftavi »

norabird

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Re: 401k fees?
« Reply #4 on: August 22, 2014, 08:55:06 AM »
Ah that's exactly what I ended up settling on ioseftavi, thanks! Now I'm going to put it all on auto-pilot with a lighter heart.