Author Topic: Choosing investments for 401k and rollover funds  (Read 921 times)

newgirl

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Choosing investments for 401k and rollover funds
« on: January 30, 2018, 08:36:52 AM »
Hi all,

I am coming up on the end of my waiting period for 401k eligibility, yay! I am budgeting to max it out this year. I am trying to decide which fund to invest in. I have a choice of Vanguard target date retirement funds, and in an interesting twist, because I work for a large insurance company with a big institutional investing arm, they have created an index fund that aims to track the S&P 500 with an expense ratio of 0.03%. VTSAX is not available.

I've attached screenshots of the two funds I've narrowed it down to - which would you recommend? Based solely on expenses the institutional index fund would win, but I guess I'm not educated enough about the stock market to know whether the S&P 500 is a good benchmark to track or if there are downsides to that I'm not considering.

I also have about $15000 sitting in a 401k with my former employer. I don't want to leave it there as the fee are really high. Should I roll it over into my work 401k, or should I open a separate IRA with Vanguard? I tend to prefer simplicity, so I am leaning towards just rolling it over since my 401k investment funds have low fees... but if there are advantages to keeping a separate IRA I'd be interested to hear them. I make too much to qualify for a deductible IRA, which is why I'm focusing on maxing out the 401k.

Thank you in advance for your thoughts.

Radagast

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Re: Choosing investments for 401k and rollover funds
« Reply #1 on: January 30, 2018, 08:53:34 AM »
Those are both good choices. Personally, I favor the diversification of the Vanguard fund.

homestead neohio

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Re: Choosing investments for 401k and rollover funds
« Reply #2 on: January 30, 2018, 10:11:22 AM »
I'd suggest opening a rollover IRA through Vanguard instead of rolling it to this employer.  I view all employer 401k plans as just a temporary parking place for tax deferred investments (and employer matches) on their way to a Vanguard account.  I currently have 3 taxable accounts active, 2 because various companies I worked for used certain providers for ESPP programs, and 1 Vanguard.  They are still active because I don't want to sell the investments and realize the gains right now for tax reasons.  When I plan to live off of investments, I'll sell these and go down to just the Vanguard account in order to simplify.

It seems that maximizing cost efficiency while saving has lead to me having a bunch of different accounts.  I love personal capital as a tool for tracking them all. 

newgirl

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Re: Choosing investments for 401k and rollover funds
« Reply #3 on: January 31, 2018, 07:14:30 AM »
Thank you both for your thoughts :)

Bateaux

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Re: Choosing investments for 401k and rollover funds
« Reply #4 on: January 31, 2018, 07:47:46 AM »
I've had great sucess with Vanguard Index 500.  Roll your old 401k into an IRA and VTSAX is a great choice for that.