403b options at work

[Memphis Mustache]

Hey Guys,

I have a 403b at work that I invest in and my company puts 6 percent in (regardless of what I put in). I just want to get a little advice on what fund(s) I should be putting this money into, as the fund options are not exactly the best from what I've seen. I am in my mid-30s and am not close to retirement yet, so I need real fund growth.

Here are the options:

Symbol   Name
RNPGX   American Funds New Perspective R6
QCSTPX   CREF Stock R2
DFCEX   DFA Emerging Markets Core Equity Portfolio Institutional
DFSTX   DFA US Small Cap Portfolio Institutional Class Shares
IARIX   Invesco Real Estate Fund Class R5
JDVWX   John Hancock Disciplined Value Fund Class R6
MLAIX   MainStay Large Cap Growth Fund I
EXOSX   Manning & Naiper Overseas Series
VEXAX   Vanguard Extended Market Index Fund Admiral
VINIX   Vanguard Institutional Index Fund Institutional
VTIAX   Vanguard Total International Stock Index Fund Admiral
PTQRX   Prudential Total Return Bond Fund Class Q
VAIPX   Vanguard Inflation Protected Securities Fund Admiral
VBIRX   Vanguard Short-Term Bond Index Fund Admiral
VBTLX   Vanguard Total Bond Market Index Fund Admiral
N/A         TIAA Stable Value
VMMXX   Vanguard Prime Money Market Fund Investor
QCSCPX   CREF Social Choice R2
VTENX   Vanguard Target Retirement 2010 Fund Investor
VTXVX   Vanguard Target Retirement 2015 Fund Investor
VTWNX   Vanguard Target Retirement 2020 Fund Investor
VTTVX   Vanguard Target Retirement 2025 Fund Investor
VTHRX   Vanguard Target Retirement 2030 Fund Investor
VTTHX   Vanguard Target Retirement 2035 Fund Investor
VFORX   Vanguard Target Retirement 2040 Fund Investor
VTIVX   Vanguard Target Retirement 2045 Fund Investor
VFIFX   Vanguard Target Retirement 2050 Fund Investor
VFFVX   Vanguard Target Retirement 2055 Fund Investor
VTTSX   Vanguard Target Retirement 2060 Fund Investor
VTINX   Vanguard Target Retirement Income Fund Investor


I assume that a combination of VINIX and one of the Vanguard Retirement Funds would be the way to go? I would put the vast majority into VINIX (maybe 80 percent?), since it has better growth potential (it tries to mimic the S&P500) and the rest into either VFORX or VTIVX. The selection here isn't great but I would assume that is the best way to go.

[GGNoob]

The following funds will replicate a 90% stock and 10% bond Vanguard Target Retirement Fund but will get it done at a lower cost (guessing lower anyhow since we do not know the expense ratios):

43% VINIX   Vanguard Institutional Index Fund Institutional
11% VEXAX   Vanguard Extended Market Index Fund Admiral
36% VTIAX   Vanguard Total International Stock Index Fund Admiral
10% VBTLX   Vanguard Total Bond Market Index Fund Admiral

This also follows the three-fund portfolio advice.

[Proud Foot]

Without knowing the ERs and how admin fees are charged I would invest it similar to how GGNoob suggested.  Definitely look at how your admin fees are.  In my 401k how the plan is set up the investments have a higher "ER" than the actual underlying investments.  However the difference is not the same for all funds meaning an investment with an underlying ER of 0.60% may have a lower total expense than the Vanguard fund with an 0.09% ER.

[seattlecyclone]

Not sure why you say the fund options "are not exactly the best," as Vanguard Admiral funds all tend to be quite good. It all depends on what you want your asset allocation to be. What percentage of your portfolio do you want to be in stocks? Bonds? US? International? Decide that first and then pick the Vanguard funds that get you there.

[MDM]

...the fund options are not exactly the best from what I've seen. 
...
The selection here isn't great but I would assume that is the best way to go.

What are the fees for these funds? As others have noted, the selection itself looks excellent.

[thd7t]

Vanguard institutional funds have ridiculously low ERs. VINIX is lower than VTSAX for the same index. Personally, I would be (am) mostly in that.

[peppaz]

Vanguard institutional funds have ridiculously low ERs. VINIX is lower than VTSAX for the same index. Personally, I would be (am) mostly in that.

Me: "Wow a fund cheaper than VTSAX?"
:Glosses over institutional fund:
:checks fund:

>Minimum investment:   $5,000,000

[thd7t]

Vanguard institutional funds have ridiculously low ERs. VINIX is lower than VTSAX for the same index. Personally, I would be (am) mostly in that.

Me: "Wow a fund cheaper than VTSAX?"
:Glosses over institutional fund:
:checks fund:

>Minimum investment:   $5,000,000

On the upside, it's not much cheaper!

[I'm a red panda]

Vanguard institutional funds have ridiculously low ERs. VINIX is lower than VTSAX for the same index. Personally, I would be (am) mostly in that.

Me: "Wow a fund cheaper than VTSAX?"
:Glosses over institutional fund:
:checks fund:

>Minimum investment:   $5,000,000

That's just if you invest in it as an individual. You don't need 5 million if you invest as part of an institutional plan.  My 403b allows me VITSX, I certainly don't have 5 million!

[hadabeardonce]

Knowing how much you have in your 403b currently would be helpful for selecting funds.

I'm about your age and chose to go 100% with a target date fund(VTIVX). GGNoob's list is super cool, but I can't meet the minimums for those funds(even with swapping VINIX for VTSAX), which means I couldn't achieve the asset allocation percentages either.

[Memphis Mustache]

I have right at $7,600 in the account, as I have only been employed there for about a year. I currently have all of the funds automatically going into VTIVX, though I think I need to change that, as VTIFX won't grow and be as aggressive as I would like. At my age and considering how far I have to go to get to retirement, I believe I need to be looking at the more aggressive funds that have the opportunity for serious growth over time.

As far as the fees associated with my plan - well, I spent a little time looking my statements and didn't see any fees specifically being taken out and I read a summary of our plan at work and it wasn't 100 percent clear. So, I am not sure :(

[MDM]

As far as the fees associated with my plan - well, I spent a little time looking my statements and didn't see any fees specifically being taken out and I read a summary of our plan at work and it wasn't 100 percent clear. So, I am not sure :(

Unfortunately, 403b plans are often not as transparent as 401k plans.  See http://www.kiplinger.com/article/retirement/T047-C000-S002-make-the-most-of-a-403-b-retirement-plan.html which includes this quote:

These teacher-retirement plans often limit their offerings to insurance products, such as annuities, and they charge much higher fees than 401(k)s. But the biggest difference is the way 403(b) plans are sold. Instead of a menu of funds -- with easy access to information about fees and perform­ance -- many school systems just hand out a list of sales reps.

See also http://drexel.edu/hr/benefits/compliance/403bdisclosures/, which talks about expense ratios and their importance but doesn't disclose them.

You want something like https://stateofmi.voya.com/einfo/pdfs/forms/michigan/expense_ratios_2016.pdf - ask your HR person, but don't hold your breath....

[peppaz]

As far as the fees associated with my plan - well, I spent a little time looking my statements and didn't see any fees specifically being taken out and I read a summary of our plan at work and it wasn't 100 percent clear. So, I am not sure :(

Unfortunately, 403b plans are often not as transparent as 401k plans.  See http://www.kiplinger.com/article/retirement/T047-C000-S002-make-the-most-of-a-403-b-retirement-plan.html which includes this quote:

These teacher-retirement plans often limit their offerings to insurance products, such as annuities, and they charge much higher fees than 401(k)s. But the biggest difference is the way 403(b) plans are sold. Instead of a menu of funds -- with easy access to information about fees and perform­ance -- many school systems just hand out a list of sales reps.

See also http://drexel.edu/hr/benefits/compliance/403bdisclosures/, which talks about expense ratios and their importance but doesn't disclose them.

You want something like https://stateofmi.voya.com/einfo/pdfs/forms/michigan/expense_ratios_2016.pdf - ask your HR person, but don't hold your breath....

I've had about 4 different 403B plans and each one could not answer simple questions about dividends - they don't show dividends getting reinvested or even track them at all. I'm not ever taking about just smaller companies - MetLife had no idea how to answer the question - I really feel like they are just pocketing dividends as fees.