401k: Selection choices

[afreeman85]

So my 401k selections are all pretty expensive. There is an S&P index fund that is a .23 expense ratio and the "Target Retirement" funds are .75.

All other funds are around 1%.

At this point I have been contributing enough to get the maximum employer match (5% of my salary to get 4%) and have just had it in the lowest cost fund (The S&P).

I am looking to start contributing more into the 401k and am curious if I should continue with just putting 100% into the lowest cost option (the S&P)?

What say you MMMers?

[Tyler]

When I was in a similar situation, I chose to put all of my 401k money in the inexpensive S&P index. Then I rebalanced my IRA and taxable account to bring my overall AA back to where I wanted it to be. Basically, I found it helpful to look at all of my various accounts as one large portfolio rather than several smaller ones with sub-optimal choices.

[afreeman85]

Thanks. That makes sense. I don't currently have any other investments. I just finished up with all my student debt and got a promotion with a 30% pay increase. I want to add more to 401k for the tax advantages. But all my eggs in the S&P basket gives me pause.

[Frs1661]

You might consider opening an IRA at vanguard and investing the next $5500/year there.  For the first year or two you'd be able to get 0.17% er (on their total stock market fund), then upgrade to admiral shares (0.05% er) one you have 10k invested. You would also have other low-cost investment choices.

0.23%er isn't the end of the world though, if you have more to invest, or don't want to bother with a second account.

Sent from my Nexus 4 using Tapatalk