Author Topic: 401k Target Date Fund or Create your own Portfolio  (Read 890 times)

jradams76

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401k Target Date Fund or Create your own Portfolio
« on: February 28, 2018, 08:24:35 AM »
I'm male early 40's who has been investing in my companies Target Date fund for the past 10 years contributing enough to get my companies match.

I was looking at my options to invest in other funds other than the target fund (expense ratio is .36) to see if I could get better returns. I keep reading about investing in vanguard and using a 3 fund portfolio which gives you more control over a target fund. There are not a lot of options to select from which is probably why I probably went with the target fund to begin with.

I use Fidelity and now they have offered an option for brokerage link which I can then move funds from the target fund and split them into other funds like a vanguard fund. Is this a wise choice or should I just leave things along and stop messing with things. I'm not sure about all the fee's and may actually cost more in the long run anyway.  I was thinking I could just funnel all my contributions to the brokerage account and then I can split the funds into the three Vanguard funds?

Of course I understand no one can tell me which fund will make the most and its all based on people opinions.

DavidAnnArbor

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Re: 401k Target Date Fund or Create your own Portfolio
« Reply #1 on: February 28, 2018, 08:48:40 AM »
The Target Date fund is perfectly acceptable for now. If you want to do it on your own through the brokerage account, then do some research on what kind of index fund portfolio has the risk tolerance you're comfortable with, and determine what the fees would be.

hadabeardonce

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Re: 401k Target Date Fund or Create your own Portfolio
« Reply #2 on: February 28, 2018, 10:33:25 AM »
... the target fund (expense ratio is .36) ... more control over a target fund. There are not a lot of options to select from ... I use Fidelity

now ... option for brokerage link ... not sure about all the fee's
Target date funds follow something called a "glide path" which determines their asset mix. You could choose a later date to have more stock exposure or an earlier date to be more conservative.

Definitely look into the fees regarding the brokerage account. I have a 457 where I pay $50/yr to gain access to a brokerage account, but I think it allows me to dodge a .25% administrative fee on those funds and gain access to a ton more funds. I did a bunch of research into how it worked before activating the option and switching things over. Ask about the cost of purchasing funds through the brokerage account too. Initially my brokerage wanted to charge me like $10 or $20 each time I did a buy, but I was able to avoid that by setting up an automated purchase schedule.

Live long and prosper.

jradams76

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Re: 401k Target Date Fund or Create your own Portfolio
« Reply #3 on: February 28, 2018, 10:38:39 AM »
... the target fund (expense ratio is .36) ... more control over a target fund. There are not a lot of options to select from ... I use Fidelity

now ... option for brokerage link ... not sure about all the fee's
Target date funds follow something called a "glide path" which determines their asset mix. You could choose a later date to have more stock exposure or an earlier date to be more conservative.

Definitely look into the fees regarding the brokerage account. I have a 457 where I pay $50/yr to gain access to a brokerage account, but I think it allows me to dodge a .25% administrative fee on those funds and gain access to a ton more funds. I did a bunch of research into how it worked before activating the option and switching things over. Ask about the cost of purchasing funds through the brokerage account too. Initially my brokerage wanted to charge me like $10 or $20 each time I did a buy, but I was able to avoid that by setting up an automated purchase schedule.

Live long and prosper.

Thanks I will check it out what if any fees are when to purchase funds through the brokerage account.  It was free to open the account and its tied to my 401k.  Looking around it appears any fidelity funds are free.  But I will look into it some more.  Thank you.

Radagast

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Re: 401k Target Date Fund or Create your own Portfolio
« Reply #4 on: February 28, 2018, 11:50:45 PM »
... the target fund (expense ratio is .36) ... more control over a target fund. There are not a lot of options to select from ... I use Fidelity

now ... option for brokerage link ... not sure about all the fee's
Target date funds follow something called a "glide path" which determines their asset mix. You could choose a later date to have more stock exposure or an earlier date to be more conservative.

Definitely look into the fees regarding the brokerage account. I have a 457 where I pay $50/yr to gain access to a brokerage account, but I think it allows me to dodge a .25% administrative fee on those funds and gain access to a ton more funds. I did a bunch of research into how it worked before activating the option and switching things over. Ask about the cost of purchasing funds through the brokerage account too. Initially my brokerage wanted to charge me like $10 or $20 each time I did a buy, but I was able to avoid that by setting up an automated purchase schedule.

Live long and prosper.

Thanks I will check it out what if any fees are when to purchase funds through the brokerage account.  It was free to open the account and its tied to my 401k.  Looking around it appears any fidelity funds are free.  But I will look into it some more.  Thank you.
Fidelity also has target date funds with lower expense ratios, you might check if the brokerage account has those.