Author Topic: 401k fund options, what would you choose?  (Read 5352 times)

GetItRight

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401k fund options, what would you choose?
« on: April 11, 2015, 07:03:42 AM »
There are my options in my employer's 401k. I currently have everything in VFFVX target retirement fund. Should I be splitting it among some of the lower expense funds or even some higher expense funds too? What would you guys do?



Fund                                                  Symbol   Expense    1yr            5yr
PIMCO Total Return Fund                   PTTRX   0.46%   5.64%   4.98%
Prm Inf-Pro and Icm (Babson)           MIPZX   0.45%   2.96%   4.31%
American Funds American Bal Fd    RLBGX   0.29%   8.40%   11.77%
Vanguard Target Retirement Inc    VTINX   0.16%   5.71%   6.70%
Vanguard Targt Retirement 2010    VTENX   0.16%   6.12%   7.63%
Vanguard Targt Retirement 2015    VTXVX   0.16%   6.56%   8.94%
Vanguard Targt Retirement 2020    VTWNX   0.16%   7.50%   9.27%
Vanguard Targt Retirement 2025    VTTVX   0.17%   7.65%   9.78%
Vanguard Targt Retirement 2030    VTHRX   0.17%   7.77%   10.28%
Vanguard Targt Retirement 2035    VTTHX   0.18%   7.92%   10.76%
Vanguard Targt Retirement 2040    VFORX   0.18%   7.91%   11.06%
Vanguard Targt Retirement 2045    VTIVX   0.18%   7.92%   11.06%
Vanguard Targt Retirement 2050    VFIFX   0.18%   7.91%   11.06%
Vanguard Targt Retirement 2055    VFFVX   0.18%   7.89%   
Vanguard Targt Retirement 2060    VTTSX   0.18%   7.89%   
Equity Income (T. Rowe Price)           PRFDX   0.67%   4.71%   11.67%
Vanguard Institutional Index           VINIX   0.04%   12.71%   14.44%
Am Funds Growth Fnd of America    RGAGX   0.33%   12.31%   13.71%
Vanguard Growth Index Fund           VIGIX   0.08%   16.62%   15.70%
Vanguard Mid Cap Index Fund           VMCIX   0.08%   14.89%   16.10%
Vanguard Small Cap Index Fund     VSCIX    0.08%    9.84%    15.84%
JPMorgan US Small Company Fund    JUSMX   0.77%   11.54%   
Capital Wrld Grth & Income Fd           RWIGX   0.45%   5.42%   9.94%
Amer Funds EuroPacific Growth       RERGX    0.49%    2.80%    7.11%
Vanguard Total Intl Stock Inde       VTIAX    0.14%    -1.09%   

AK

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Re: 401k fund options, what would you choose?
« Reply #1 on: April 11, 2015, 07:47:44 AM »
I wish my 401k had these options! Currently have to do a self-directed to get my desired Vanguard options.

Personally, I'd go with one of the 2045 or later target date funds because they invest in the total stock market, total international stock market and total bond funds that automatically rebalance over time. Also, the .18% expense ratio is really low still.

I wish there was a Vanguard bond fund option with a lower expense ratio compared to the bond fund options available but you could still create a good portfolio with the various Vanguard equity funds and the bond funds.

Overall, the options are good so please start contributing asap if you aren't already.

milesdividendmd

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Re: 401k fund options, what would you choose?
« Reply #2 on: April 12, 2015, 10:24:36 PM »
Some combo of VIFIX, VSCIX, VTIAX, and vanguard target date 2010, depending on your risk tolerance and appetite for global stocks....

CDP45

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Re: 401k fund options, what would you choose?
« Reply #3 on: April 12, 2015, 10:31:55 PM »
just go with the vanguard target date for the year you want to retire, super low fees, automatic asset mixing, no regrets.

Or you could head to the bogleheads site and educate your self.

seattlecyclone

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Re: 401k fund options, what would you choose?
« Reply #4 on: April 13, 2015, 09:28:25 AM »
What is your desired asset allocation? You do have one, right?

The target date funds aren't bad at all from an expense ratio perspective. You're locked into a set asset allocation with these, but Vanguard's choice here is probably pretty good for an average investor. It's important to recognize that there's no magic here, these are just a combination of a few Vanguard funds. For example, the 2055 fund that you're investing in now is:
61.6% Total Stock Market
28.3% Total International Stock Market
7.6% Total Bond Market
2.5% Total International Bond Index

Unfortunately you can't replicate this mix exactly with the individual funds in your 401(k). For example you don't have a total US stock market fund available. However you can approximate this fund with an 81/6/13 mix of VINIX/VMICX/VSCIX, with a weighted average expense ratio of about 0.05%. You do have Vanguard's Total International Stock index fund available as well, which is nice.

The only problem is the bond allocation. There isn't a bond fund in your 401(k). You have a PIMCO bond fund and maybe some others in there too, but they all have higher expense ratios. The target retirement income fund and the closer target retirement dates are invested mostly in bonds, so you could go with one of those for bonds, or you could invest in bonds in your IRA and have all stocks in your 401(k). The IRA strategy is what I do: I invest in the best funds available in my 401(k), and then fill any gaps in my asset allocation in my IRA.

So if you did want to come as close as possible to the 2055 target date fund, and you have some money available to invest in your IRA, you would do the following:
56% Vanguard Institutional Index
4% Vanguard Mid-Cap Index
9% Vanguard Small-Cap Index
31% Vanguard International Index
Then, in your IRA you would invest the following amounts:
8% of your 401(k) balance in Vanguard Total Bond Index
3% of your 401(k) balance in Vanguard International Bond Index

Or you could just pay an extra 0.1% expense ratio and not mess with it.

astvilla

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Re: 401k fund options, what would you choose?
« Reply #5 on: April 13, 2015, 10:28:25 AM »
Wow you are really lucky! Most employers don't have great 401K options like you. I'm so jealous.

I second seattlecyclone's advice. It's sound and the best you can do.

apples2apples

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Re: 401k fund options, what would you choose?
« Reply #6 on: April 14, 2015, 11:17:10 AM »
I have basically the same options through my employer.  It is indeed a great plan, if you choose wisely.  Since I am in my mid-20s and at least 15 years away from when I would consider retiring, I invest heavily in the VG Mid Cap (40%) and Small Cap (30%) indexes, with smaller allocations to the Institutional Index (S&P 500) and the Total International.  I am willing to be aggressive early on in my quest for FIRE. I have seen some great returns the past few years in comparison to the S&P (not the same avg. market cap though).  Currently I have a high allocation to build up my international position because those markets appear cheaper in comparison with the US, so expected returns could end up being slightly higher in the shorter term.  I still will maintain probably an 80% US allocation though.

I should note that I have investments outside my 401K to complete my asset allocation, so your decision could be different if you need the 401K to be matching your desired allocation.  Also - these are some of the lowest expense ratios in the biz, so take advantage of these investment opportunities!

Jeremy E.

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Re: 401k fund options, what would you choose?
« Reply #7 on: April 14, 2015, 02:01:12 PM »
I would put 100% into VINIX (low expense ratio S&P 500) that .04% expense ratio is so sexy.... and S&P is always a good choice.  If you want to be closer to the total stock market, do 81% in VINIX, 6% in VMCIX, and 13% in VSCIX.