I have just started to get serious about my financial planning. I am 27 years old. I have been able to invest in my company's 401(k) since January 2016. I originally just put all of my money into the 2055 Target Retirement Fund without even thinking about fees. After reading MMM, I realized this may have been a mistake. I only have 10.5k in the account with only 7.6k of that vested.
I am going to begin maxing out my 401(k). Where should I put the money given my company's limited options?
The 2055 Target Retirement Fund doesn't list out the total gross expense ratio. It only says this: "The current allocation of this model portfolio assumes investment of 5% in the bond fund (Pioneer Bond Fund Class A) and 95% in the stock funds (Putnam Growth Opportunities Fund Class Y, MFS Value Fund Class A, Oakmark International Fund Class I, Invesco International Growth Fund Class R5, JPMorgan Mid Cap Value Fund Class A, Invesco Small Cap Value Fund Class Y, Janus Enterprise Fund Class I, JPMorgan Small Cap Growth Fund Class A). The Rebalance Frequency for this Model is quarterly."
2055 Target Retirement Individual Expense Ratios:
Pioneer Bond Fund: 0.98%
Puntam Growth Opportunities Fund: 0.77%
MFS Value Fund: 0.90%
Oakmark International Fund: 1.05%
Invesco International Growth Fund: 0.99%
JP Morgan Mid Cap: 1.42%
Invesco Small Cap: 0.87%
Janus Enterprise Fund: 0.74%
JP Morgan Small Cap Growth Fund: 1.56%
While I don't know the exact weighting of each fund, I would imagine this fund has fees around 1% total. I don't know how much the quarterly rebalancing is costing me either. While I have read horror stories about worse 401k options, I know this isn't that great. There aren't a lot of other funds to choose from outside of those listed. For example, besides the Blackrock S&P 500 Index, the next lowest gross expense ratio is 0.50% in the Lipper Global Large-Cap Growth Fund. I know Buffet is a big proponent of the S&P 500.
Should I continue to invest all of my money in the 2055 Target Retirement Fund? Or would I be better off investing my yearly $18k into the Blackrock S&P 500 Index which has a gross expense ratio of 0.11%?