Author Topic: Asset allocation in 401(k) for first time investor.  (Read 1753 times)

uma

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Asset allocation in 401(k) for first time investor.
« on: August 18, 2015, 07:36:20 PM »
Hello,

Soon to be investor, seeking for some help with asset allocation in 401(k).

This question must have been asked a thousand times here on the forum, but I still feel like my situation is a little bit different (no fees and not well known funds).

First, a brief summary: We are a young couple making $160k per year, no debt, $70k in savings for a downpayment, although we are not sure we will buy in the nearest future, as we live in Bay Area. We are hoping to retire in 10-15 years. I plan to max out 401(k) contributions this year, as my wife's employer doesn't offer 401(k) plan yet. And each of us will probably max out Roth IRA, but I'm trying to figure out the 401(k) first.

My employer offers 401(k) through Transamerica. They don't offer a match, but they underwrite all Contract Asset Charges (CAC) ( 12b-1 monthly operational fees). They have about 24 funds to choose from, and none of which is well known/popular one.
Given that I won't have to pay fees, which one ore more you would recommend? I was looking for something similar to Vanguard's Target Retirements funds, with the majority of US stocks, some international stocks and bonds.

I'm debating between the following two:

"Growth Portfolio Ret Opt" (66% US, 20% No-US, 5% Bonds)
"Moderate Growth Portfolio Ret Opt" (52% US, 16% No-US, 24% Bonds)

Does one of them look as a good fund to start with? What would you recommend for a novice who just starts with 401(k) and has the following options? Any feedback/critique is appreciated.

Short Bonds/Stable/MMkt - Stable Value  Transamerica Stable Value Option 
Interm./Long-Term Bond - Intermediate-Term Bonds  Loomis Sayles Bond Ret Opt 
Interm./Long-Term Bond - Intermediate-Term Bonds  SSgA U.S. Bond Index Ret Opt 
Aggressive Bonds - High Yield Bonds Transamerica Partners High Yield Bond Ret Opt
Large-Cap Stocks - Large-Cap Value Stocks Fidelity Advisor Equity Income Inv Opt 
Large-Cap Stocks - Large-Cap Blend Stocks American Funds Fundamental Investors Inv Opt 
Large-Cap Stocks - Large-Cap Blend Stocks Transamerica Partners Stock Index Ret Opt
Large-Cap Stocks - Large-Cap Blend Stocks WMC Core Equity Ret Opt
Large-Cap Stocks - Large-Cap Growth Stocks  American Funds Growth Fund of America Inv Opt
Small/Mid-Cap Stocks - Mid-Cap Value Stocks Goldman Sachs Mid Cap Value Ret Opt
Small/Mid-Cap Stocks - Mid-Cap Blend Stocks SSgA S&P Mid Cap Index Ret Opt 
Small/Mid-Cap Stocks - Mid-Cap Growth Stocks  Morgan Stanley Growth Opportunities Ret Opt
Small/Mid-Cap Stocks - Small-Cap Blend Stocks Fidelity Advisor Small Cap Inv Opt 
Small/Mid-Cap Stocks - Small-Cap Blend Stocks SSgA Russell Small Cap Index Ret Opt 
Small/Mid-Cap Stocks - Small-Cap Blend Stocks Wells Fargo Advantage Small Cap Value Inv Opt
Small/Mid-Cap Stocks - Real Estate  Nuveen Real Estate Securities Ret Opt
International Stocks - World/Foreign Stocks Dreyfus International Value Inv Opt
International Stocks - World/Foreign Stocks Oppenheimer Global Ret Opt 
International Stocks - World/Foreign Stocks SSgA International Index Ret Opt 
Multi-Asset/Other - Balanced  AEGON Balanced Ret Opt 
Multi-Asset/Other - Asset Allocation Investment Choices Transamerica Asset Allocation - Conservative Portfolio Ret Opt 
Multi-Asset/Other - Asset Allocation Investment Choices Transamerica Asset Allocation - Moderate Portfolio Ret Opt 
Multi-Asset/Other - Asset Allocation Investment Choices Transamerica Asset Allocation - Moderate Growth Portfolio Ret Opt
Multi-Asset/Other - Asset Allocation Investment Choices Transamerica Asset Allocation - Growth Portfolio Ret Opt

MDM

  • Walrus Stache
  • *******
  • Posts: 9108
Re: Asset allocation in 401(k) for first time investor.
« Reply #1 on: August 18, 2015, 08:24:16 PM »
uma, welcome to the forum.

In the "if it seems too good to be true..." category, the language in your post implies your employer will not charge you a general administration fee, but that is different from fees charged within individual funds.

What are the fees charged within each fund?

uma

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Asset allocation in 401(k) for first time investor.
« Reply #2 on: August 18, 2015, 10:07:43 PM »
Thanks for the comment. I must have misunderstood the terms and I'll try to figure that out. ER most likely is not included.
Although, the HR mentioned that they offer "something better than a match".

mrpercentage

  • Handlebar Stache
  • *****
  • Posts: 1236
  • Location: PHX, AZ
Re: Asset allocation in 401(k) for first time investor.
« Reply #3 on: August 18, 2015, 10:23:20 PM »
I went with highest growth long term performance after subtracting the fees. I have 15 years before I begin to pull it though.

I do other investments but my auto investments are aggressive and all in one fund.