Author Topic: 403 B fund/vanguard questions  (Read 410 times)

mominca

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403 B fund/vanguard questions
« on: February 23, 2019, 10:18:55 AM »
I'm working on optimizing our retirement accounts, I read JL Collins book and am still learning. I hope to write a case study in the future but I don't have all my numbers organized and I'm still working on tracking all our expenditures.

Right now I'm trying to make sure our retirement accounts are optimized. My husband has a TSP from his last job, which is invested in one of the dated funds that adjusts proportions as you get closer to retirement. I read that this is a good option in TSP but can have a high expense ratio if it is in a 401K or 403B. His current job offers a 403b (offered through "TransAmerica", he was also in a fund that adjusts proportions automatically as the set retirement approaches. I just checked the expense ratio on this account, it's 0.75%. The current percentages on his account are as follows:
US Stocks: 54%
Bonds: 14%
Non US stocks: 29%

There are a lot of individual funds offered, there are some Vanguard options, but I don't see VTSAX and I'm not familiar with the other accronyms.

There is "Vanguard fed money market" VMFXX at 0.11%, Vanguard 500 index admiral VTFIAX at 0.04%, Vanguard Midcap VIMAX at 0.05%, Vanguard small cap VIMIN at 0.05%

Is one of these comparable to VTSAX?

They also have the vanguard Interm bond VBILX at 0.07%, and Vanguard FTSE all world ex US  VFWAX at 0.11%

If he wants to keep the same investment percentages, I could switch his allocations to VBILX, VFWAX, and the VMFXX fund and have a much lower expense ratio, right?

I'm still learning, thank you for any advice and direction here.
« Last Edit: February 23, 2019, 11:17:11 AM by mominca »

terran

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Re: 403 B fund/vanguard questions
« Reply #1 on: February 23, 2019, 10:55:33 AM »
See https://www.bogleheads.org/wiki/Approximating_total_stock_market

According to that, 81% Vanguard 500 Index Fund (VFINX), 4% Vanguard Mid-Cap Index Fund (VIMSX), 15% Vanguard Small-Cap Index Fund (NAESX) would approximate VTSAX.

If the small cap fund really has a 0.5% expense ratio I would probably skip it.

mominca

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Re: 403 B fund/vanguard questions
« Reply #2 on: February 23, 2019, 04:08:49 PM »
Thanks, that makes sense.

It is 0.05% for the small cap. I ran a calculator, and if we were to invest the maximum allowable each year for 20 years with the difference in expense ratios we could save $59,000!

terran

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Re: 403 B fund/vanguard questions
« Reply #3 on: February 23, 2019, 04:47:47 PM »
I thought that might be a type. I'd do 80/5/15 in that case. No need to get super precise, and the round numbers would be easier for me to remember. Also don't worry too much if they get out of whack during the year. Just rebalance once a year or so.