Author Topic: Advice on a Fund  (Read 8489 times)

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1199
  • Location: West-Central Florida - USA
Advice on a Fund
« on: March 10, 2014, 09:34:06 AM »
My portfolio looks like this:

Stable Value/Cash Management
VT PLUS Fund - http://www.icmarc.org/prebuilt/static/funds/profile/70717000.html
24.6% 

Balanced/Asset Allocation
VT Vantagepoint MP Cons Growth - http://www.icmarc.org/prebuilt/static/funds/profile/02529900.html
15.0%

I was thinking of going to this
VT Fidelity Puritan - http://www.icmarc.org/prebuilt/static/funds/profile/77246000.html?ShowBenchMark=false
for it's lower fees, but I need advice.


U.S. Stock
VT Vantagepoint 500 Stk Idx - http://www.icmarc.org/prebuilt/static/funds/profile/00679800.html
30.1%

VT Vantagepoint Brd Mkt Idx - http://www.icmarc.org/prebuilt/static/funds/profile/00809800.html
20.2% 

International/Global Stock
VT Vantagepnt Ovrseas Eq Idx - http://www.icmarc.org/prebuilt/static/funds/profile/00669800.html
10.0%

In the Asset Allocation area of funds I need advice.  These aren't the greatest of funds, but the ones I have picked have some of the lowest fees of the others I can choose from.  I am trying for a little bit of conservative here in the Asset Allocation area, but the funds I have to choose from don't seem to offer much.  On that note, I don't care for the VT Plus Fund, but not much else conservation available.  It has a pretty high fee for what it offers!

FIRE in 4.5 years (I'm 52 now).

Any advice will be welcomed, and pondered.

Thank you.


matchewed

  • Magnum Stache
  • ******
  • Posts: 4395
  • Location: CT
Re: Advice on a Fund
« Reply #1 on: March 10, 2014, 10:45:58 AM »
What is does your investment policy statement say? It is going to be tough to give advice. The generic advice you seem to have down, look for low fees and funds which follow your AA. Outside of that it is a personal decision that falls onto you to evaluate versus your plan. We have no way of knowing your plan.

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1199
  • Location: West-Central Florida - USA
Re: Advice on a Fund
« Reply #2 on: March 10, 2014, 12:56:36 PM »
What is does your investment policy statement say? It is going to be tough to give advice. The generic advice you seem to have down, look for low fees and funds which follow your AA. Outside of that it is a personal decision that falls onto you to evaluate versus your plan. We have no way of knowing your plan.

Whoa!  That's good advice.  I have never thought to do that and have basically kept it all in my head.  I will consider an IPS, and this will be a good way to have all my investment information in one place.  It may also be useful for my DW, and if something should "happen" to me, she'll know what we have.

Thank you.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5229
Re: Advice on a Fund
« Reply #3 on: March 10, 2014, 01:27:59 PM »
I'm going to guess you are in a 457 plan administered by ICMARC.  The choices are generally mediocre.  Putting almost 25 percent in a stable value fund guarantees you will underperform other asset classes over time. 

I don't personally care for Fidelity Puritan.  If you post or link the available funds and what you want in this account for asset allocation, you will get some ideas about the choices.

Is this plan in addition to a defined benefit pension?  Do you have other retirement or taxable accounts?  These accounts could affect your asset allocation for the ICMARC account.

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1199
  • Location: West-Central Florida - USA
Re: Advice on a Fund
« Reply #4 on: March 10, 2014, 02:09:46 PM »
I'm going to guess you are in a 457 plan administered by ICMARC.  The choices are generally mediocre.  Putting almost 25 percent in a stable value fund guarantees you will underperform other asset classes over time. 

I don't personally care for Fidelity Puritan.  If you post or link the available funds and what you want in this account for asset allocation, you will get some ideas about the choices.

Is this plan in addition to a defined benefit pension?  Do you have other retirement or taxable accounts?  These accounts could affect your asset allocation for the ICMARC account.

Yes, it's a 457 from ICMARC.  I do have a defined benefit pension (I am vested), but will loose 5% per year under age 62 (my 30 years here and 62 years of age happen to coincide).

I agree on the mediocre nature of the funds available.  Most are high fees, and some are rediculous.  I'm just not seeing the best way to balance my risk.  All or most in US Stocks is not where I want to be, so it seems as though my only option to provide a bit less risk is the Stable Value fund to balance out the US Stocks.  I'll be lucky to get 2% after fees on the value fund.

Here is a link to the available funds - https://accountaccess.icmarc.org/participant/investments/fundPerformance.jsp

I am close to what I'd like for my asset allocation, but as I said, I feel as though I'm getting there using two extremes (value fund and stock indexes).  I feel as though I have a little too much risk right now, but don't want to put anything more into the stable value fund.  So, I guess I'd like to hear if there is a gem in the list that will help me reduce my risk some, without going too conservative on the stable value fund.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5229
Re: Advice on a Fund
« Reply #5 on: March 10, 2014, 03:08:43 PM »
The link is to a log-in page.  Perhaps you can copy the list of funds?

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1199
  • Location: West-Central Florida - USA
Re: Advice on a Fund
« Reply #6 on: March 10, 2014, 07:24:02 PM »
The link is to a log-in page.  Perhaps you can copy the list of funds?

Sorry about that.  I thought I had the right link.  This should be it - http://www.icmarc.org/investments/457-and-401-plans.html

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5229
Re: Advice on a Fund
« Reply #7 on: March 10, 2014, 08:14:06 PM »
Well, you certainly have a plate of stinking poo there.  Even their core bond fund underperformed its index.  The stable value is almost 1 percent below the Prudential stable value fund in my 457 plan. 

The first question I would ask myself if I were in your shoes would be how much do I have in this account and how much of my total assets does this account represent?  As long as I had other accounts to use for asset allocation, I would cherry pick the best of what is offered.  The index accounts are a good start.  The index equity funds I would consider would be the S&P 500, the broad market index fund, and the small/mid cap index fund.  I would also look at one managed fund, the T Rowe Price Small Cap Value fund.  Small caps tend to be more volatile, which you are trying to avoid, so I would consider only a small percentage in my overall asset allocation.

Fidelity Puritan is similar in philosophy to Vanguard's Wellington.  It's a balanced fund, but in my opinion, it owns riskier equities.  For what you want, some of that would be ok.  The MP Conservative Growth Fund is a fund of funds.  That's multiple layers of expenses.  I would ditch that one.  I don't care for any of their international or specialty funds.  You can do much better outside of this account.

So generally, I think you are headed in the right direction.  If you look at your overall asset allocation and tweak your choices, you will have made the best of what's offered. 

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1199
  • Location: West-Central Florida - USA
Re: Advice on a Fund
« Reply #8 on: March 11, 2014, 05:29:06 AM »
Well, you certainly have a plate of stinking poo there.  Even their core bond fund underperformed its index.  The stable value is almost 1 percent below the Prudential stable value fund in my 457 plan. 

The first question I would ask myself if I were in your shoes would be how much do I have in this account and how much of my total assets does this account represent?  As long as I had other accounts to use for asset allocation, I would cherry pick the best of what is offered.  The index accounts are a good start.  The index equity funds I would consider would be the S&P 500, the broad market index fund, and the small/mid cap index fund.  I would also look at one managed fund, the T Rowe Price Small Cap Value fund.  Small caps tend to be more volatile, which you are trying to avoid, so I would consider only a small percentage in my overall asset allocation.

Fidelity Puritan is similar in philosophy to Vanguard's Wellington.  It's a balanced fund, but in my opinion, it owns riskier equities.  For what you want, some of that would be ok.  The MP Conservative Growth Fund is a fund of funds.  That's multiple layers of expenses.  I would ditch that one.  I don't care for any of their international or specialty funds.  You can do much better outside of this account.

So generally, I think you are headed in the right direction.  If you look at your overall asset allocation and tweak your choices, you will have made the best of what's offered.

Yes, poo it is.  Without it though I may not have started putting $$ away when I was 24.  I do work with what I have and really appreciate your words and suggestions.  With some adjustments I'll get closer to what you suggested.  In fact, I ditched the Conservative Growth yesterday for Fidelity Puritan.  Lower fees and more conservative.

Now I need to think about that chunk in the Stable Value fund.  If there was something less crappy, but still stable I'd go there.  In the past I was using bonds to balance, but no more (at least for now).  Do you see anything very stable in the list?

Thank you.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5229
Re: Advice on a Fund
« Reply #9 on: March 11, 2014, 07:17:27 AM »
There is nothing there except the stable value fund that will not be subject to stock and/or bond market fluctuations.  However, whether these fluctuations are tolerable depends on how you intend to use the money and when.  If you intend to retire at 56/57 and use this money to delay taking the pension until it maxes out, you have to worry about sequence of returns risk.  You may want to put more in the stable value fund to preserve capital as you get closer to retirement.  I left a year's worth of expenses in the stable value fund when I retired, on the theory it was available without penalty if the poo hit the fan.  That money would protect me from cashing anything else out in a bad market.  Because down markets rarely last more than two or three years, you may want to think about how much would cover you for that time and where you want to keep it.  If you take the pension immediately, you may choose to leave less in the account.

Another concern is how you can withdraw from the account.  Your options may be limited.  You do not want to be forced into a full rollover at separation if you intend to use the money to cover the years until age 59.5.  You also don't want to have to take all the cash you will need for several years in a lump sum.  Prudential allowed partial rollovers and I could take a limited number of partial withdrawals.  The flexibility was key to leaving the money in the account.

I hope you will update your choices here as time goes on.  Your analysis of your situation and then how your choices play out may be helpful to folks that have similar plans but are a few years behind you.

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1199
  • Location: West-Central Florida - USA
Re: Advice on a Fund
« Reply #10 on: March 11, 2014, 07:37:58 AM »
Thank you Another Reader for your thoughtful considerations.  I'll keep on top of it and improving my comfort level (and knowledge) as I go along.  At least I'm not crazy when I look at what is available in the stable fund category and see nothing much there  I'll see if I can invest in something as stable outside of the 457K (keeping an eye on the tax implications), but without the high fee and fairly low return.  Jumping ahead without researching that, but my guess is that there would be something available through an IRA.  I max out my contribution to the 457K now, so no go unless I change that - not even sure I can do both 457 and IRA.  However, I could use my wife's IRA to a point.

I do have a few other incomes and will be careful to understand how they all interact over the next ten years and beyond.
« Last Edit: March 11, 2014, 05:57:09 PM by Rollin »