457 Investment Options

[anxiousclothing]

39 y/o wanting to start investing in 457. What options are best for me in the accumulating wealth stage?

[terran]

Looks like some great options.

First of all, is this a governmental 457(b) or not? If so, no worries, go forth. If not, just realize that non-governmental 457(b) plans are technically considered the property of the institution and can be taken by the institutions creditors in bankruptcy.

Any of the Vanguard funds listed there (the ones that start with "VANG") would be a good option. You have a good total stock market fund, total international market fund, and total bond market fund. Do a bit of reading on asset allocation and select a mix of those you're happy with.

If you're just starting out and this will be your only invested money (or even if not) one of the target date funds ("VANG INST TR XXXX") would also be a perfectly good option that you won't have to rebalance. Pick one with and asset allocation you're happy with after reading the above .The later the date the more stocks/less bonds they have, but all of the further out dates will be pretty similar because they really don't change that much until they get to be within 10-15 years of the date listed.

[anxiousclothing]

Terran,

Thank you for the response. It is a government 457(b). Does something like this below make sense or is it completely absurd?
VANG TOT STK MKT IS   73%
VANG TOT INTL STK AD   15%
VANG TOT BD MKT INST   12%
Total: 100%

[MountainTown]

Looks like a good allocation to me.

[terran]

Yes, that's reasonable.

Some people would say no international, only US. Some people would say 50% international to match the global market. The percentage of international compared to all stock in target date funds is between 30% (Fidelity) and 40% (Vanguard), so I shoot for something in there figuring they've done their research.

Some people say you should have no bonds during the accumulation phase. Some people say you should have as much as your age in bonds. Your 12% is probably enough to take the edge off the volatility without effecting returns too much, but it will still be a bumpy ride, so stay the course. I tend more towards the all stock end, but have some target date funds with small bond allocations (around 10%) depending on the investments available in certain accounts. I'll increase bonds significantly as I near retirement to combat sequence of returns risk.