Author Topic: Current 401K, previous 401K, and Vanguard options  (Read 1220 times)

mac91red

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Current 401K, previous 401K, and Vanguard options
« on: February 02, 2016, 06:53:09 AM »
Good morning.

I was hoping for some feedback on the current state of my 401k as well as a 401k that I am holding from my previous employer. 

Current:
Us Large Cap Equity index - fee = .03%.  Models the sp 500.  Mix % = 80%.
US Bond index - fee = .04%.  Mix % = 20%.
These seems like easy picks due to their low fees.  The international and small cap mixes all had fees around 1%.  My question is would it be wise/good to take advantage of some of the other large cap options?

Options: 

US Large Cap Growth (TRBCX) - fee = .72%
US Large Cap Value Equity (DODGX) - fee = .52%

The large cap value performs worse that the s&p so to me it makes sense to avoid it since i have the index option already and why waste investments on a poorer performer with a higher fee.  But what about the Growth?  When I compare its performance to the s&p it does look favorable but is it worth the .72%

Now - for my previous 401k.  I didn't know what I was doing at the time so I was following the online guidance to follow their suggestions.  I ended up with an investment mix across 10 different options - index, growth, large, small, medium, international you name it.  Looking back this mix in total has about 2% in fees.  My currently balance is $37,000 and it is just sitting there.  Id like to move it and I've read a lot about vanguard VTSMX.  I have also noticed that many people aren't singularly invested in VTSMX which strays from what i've read from mmm.  Would it be a good decision to transfer it all to this option?  Also, this 401k has been a loser since the start of the year.  Making a rollover after the rough start of 2016 isnt costing me anything that I am not thinking of right?  There's no point in holding it until it gets back to 0 before rolling it over is there?

Qualifiers:
  Age: 35, 13 years to FIRE

dandarc

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Re: Current 401K, previous 401K, and Vanguard options
« Reply #1 on: February 02, 2016, 07:44:46 AM »
So do you want to pay 20X more for funds that likely will under-perform the index funds?

A risk on the rollover is that you sell low, and while the money is in-transit, stocks go up and you wind up buying high.  The check can be in the mail for weeks sometimes.  Note this can happen no matter what the current price-level is.  The best way to mitigate this is to transfer in-kind if at all possible, then change to the new funds at the new brokerage - minimizes your time out of market.  A call to Vanguard would let you know if they can facilitate this - some proprietary funds cannot be transferred in-kind.  Also, in the grand-scheme of things, $37K isn't that much, so even if you take a substantial hit doing this, you'll be OK long-term.

At the ER's you've got on the index funds, I might consider rolling the old 401K into the current 401K - .03% is better than you can get, even at Vanguard.  VTSAX (with $37K, you get admiral shares) will give you a bit of small and mid-cap exposure that you don't have in an S&P 500 fund, so if you want that, .05% is a good ER too.  Not really a bad choice either way on this rollover.  Then if you want bond exposure, you can do that with the Total Bond Index fund as well.  Personally I go 55% VTSAX / 25% Total International / 20% Total Bond, but you should determine your own allocation.

Think about your risk tolerance, then come up with an Investment Policy Statement - https://www.bogleheads.org/wiki/Investment_policy_statement.  Then when money comes in, you don't have to think about it - just buy whatever your IPS says to buy.

mac91red

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Re: Current 401K, previous 401K, and Vanguard options
« Reply #2 on: February 02, 2016, 08:39:52 AM »
Appreciate the feedback - I know that I want to be 80/20 for awhile which is why I settled on the funds/mix with my current 401k.  I like the idea of moving the old outside of my current employer just to have more flexibility to move the funds later.  Not many appealing options where I am at currently.