Author Topic: Finally got enrolled in 401(k)! It's question time!  (Read 1321 times)

Penn42

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Finally got enrolled in 401(k)! It's question time!
« on: April 24, 2018, 05:46:05 PM »
The plan is through John Hancock and I had heard that John Hancock is notorious for high fees.  Now that I'm finally in the system there I've taken a look across the fees of the available funds and they don't seem all that awful.  Higher than Vanguard, but not many .8's or anything like that.  In fact, looking at the available funds on Morningstar I see the expense ratio's are exactly the same.  So when people were saying JH can be notorious for high fees were they saying that because JH is notorious of only offering funds with high fees, or is JH trying to pull a fast one and there are other fees I haven't found yet?

I'm at the beginning of my wealth accumulation phase and I'm wondering how to approach asset allocation right now.  I've read Financial Fitness Forever by Merriman which is where the bulk of my asset allocation knowledge comes from.  Should I diversify now and build the allocation from the ground up, or should I throw it all in a large cap index and diversify once I have more capital? 

The plan offers a bunch of T. Rowe Price target date funds, and a smattering of some other things.  Here are the ones that, of my very limited knowledge, jumped out to me.

MSPIX - Mainstay Mackay S&P 500 Index (Class I) - ER .33%
R2INDXT - BlackRock Russell 2000 Index Fund - ER .06%
DFSVX - DFA US Small Cap Value Portfolio (Class I) - ER .52%
TRLGX - T. Rowe Price Institutional Large Cap Growth - ER .56%

There are only two international funds, which are also the two with the highest ER's.

APHIX - Artisan International Fund (Institutional Class) - .96%
OAKIX - Oakmont International Fund (Class Investor) - 1%

Right now I set everything up to go into the Mainstay Mackay 500 Index.  They put my initial investment into an American Funds Blend Fund (nearly 40% bonds), so I took all that out of there and put it in the 500 Index too. 

Steeze

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #1 on: April 24, 2018, 05:59:57 PM »
Not sure about JH, but beware the hidden fees.

My 401k through Voya has an additional 0.85% fee on top of the published ER in the list of funds. The fee shows up in the participant disclosure only. I had to poke around quite a bit to find it.

The s&p 500 fund you selected is on point. The Russell 2000 fund is worth a second look, but not a necessity, nice low ER though. If it were me, I would be 10-20% in the Russell 2000 fund. The other funds are redundant and/or too expensive IMO.

Focus on building your capital for now. When you are more comfortable and knowledgeable select an asset allocation you are comfortable with and draft an investment policy statement. Then work on building and maintaining your stash and target allocation in accordance with you IPS.

Congrats on the 401k!

Interest Compound

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #2 on: April 24, 2018, 06:19:15 PM »
I'd keep it all in the S&P500 fund, and seek bond/international exposure in my other accounts.

Congrats!

Penn42

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #3 on: April 24, 2018, 08:18:05 PM »
Ok, I poked around the JH website some more and downloaded last quarters' performance and expense review.  According to that there's no additional charge on top of that fund's fee, but there is a 108 dollar annual service fee for any plan participant.  I'll have to call them and make sure I'm not missing something.

Interest Compound

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #4 on: April 24, 2018, 08:58:15 PM »
Ok, I poked around the JH website some more and downloaded last quarters' performance and expense review.  According to that there's no additional charge on top of that fund's fee, but there is a 108 dollar annual service fee for any plan participant.  I'll have to call them and make sure I'm not missing something.

While it'd be nice to know, it shouldn't impact your decision. The information isn't actionable, because you'll still be much better off maxing it out.

Radagast

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #5 on: April 24, 2018, 11:17:46 PM »
The plan is through John Hancock and I had heard that John Hancock is notorious for high fees.  Now that I'm finally in the system there I've taken a look across the fees of the available funds and they don't seem all that awful.  Higher than Vanguard, but not many .8's or anything like that.  In fact, looking at the available funds on Morningstar I see the expense ratio's are exactly the same.  So when people were saying JH can be notorious for high fees were they saying that because JH is notorious of only offering funds with high fees, or is JH trying to pull a fast one and there are other fees I haven't found yet?

I'm at the beginning of my wealth accumulation phase and I'm wondering how to approach asset allocation right now.  I've read Financial Fitness Forever by Merriman which is where the bulk of my asset allocation knowledge comes from.  Should I diversify now and build the allocation from the ground up, or should I throw it all in a large cap index and diversify once I have more capital? 

The plan offers a bunch of T. Rowe Price target date funds, and a smattering of some other things.  Here are the ones that, of my very limited knowledge, jumped out to me.

MSPIX - Mainstay Mackay S&P 500 Index (Class I) - ER .33%
R2INDXT - BlackRock Russell 2000 Index Fund - ER .06%
DFSVX - DFA US Small Cap Value Portfolio (Class I) - ER .52%
TRLGX - T. Rowe Price Institutional Large Cap Growth - ER .56%

There are only two international funds, which are also the two with the highest ER's.

APHIX - Artisan International Fund (Institutional Class) - .96%
OAKIX - Oakmont International Fund (Class Investor) - 1%

Right now I set everything up to go into the Mainstay Mackay 500 Index.  They put my initial investment into an American Funds Blend Fund (nearly 40% bonds), so I took all that out of there and put it in the 500 Index too.
The S&P500 is a good choice.

Even though the ER is low, Russell 2000 funds have a long and continuing history of being bad compared to other small company funds. I'd favor DFSVX over it.

Penn42

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #6 on: April 25, 2018, 06:45:26 AM »
^^^

Interesting.  Another thing I found interesting is of thr funds I listed the only one in the positive for the year so far is TRLGX.  Id assume it must have done overlap with the S&P, but it's done nearly 5% better.  Eventually is like to be better understand how funds are built so maybe that anomally would be a little more quantifiable.

Interest Compound

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #7 on: April 25, 2018, 09:34:08 AM »
^^^

Interesting.  Another thing I found interesting is of thr funds I listed the only one in the positive for the year so far is TRLGX.  Id assume it must have done overlap with the S&P, but it's done nearly 5% better.  Eventually is like to be better understand how funds are built so maybe that anomally would be a little more quantifiable.

Again, not actionable. TRLGX is Large Cap Growth. Large Cap Growth happened to do 5% better in the arbitrary time period that is Jan 1 - Today. This should have 0 affect on your investment strategy.

You made a good choice by putting it all in the S&P500. Try not to veer off-course.

Penn42

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Re: Finally got enrolled in 401(k)! It's question time!
« Reply #8 on: April 25, 2018, 10:37:20 AM »
^^^

Interesting.  Another thing I found interesting is of thr funds I listed the only one in the positive for the year so far is TRLGX.  Id assume it must have done overlap with the S&P, but it's done nearly 5% better.  Eventually is like to be better understand how funds are built so maybe that anomally would be a little more quantifiable.

Again, not actionable. TRLGX is Large Cap Growth. Large Cap Growth happened to do 5% better in the arbitrary time period that is Jan 1 - Today. This should have 0 affect on your investment strategy.

You made a good choice by putting it all in the S&P500. Try not to veer off-course.

Yeah, I'm not worried about it.  I had seen that before I put everything where I did, just find it interesting.