Author Topic: Help me invest properly in my 401k! Please!  (Read 2020 times)

ShePersisted

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Help me invest properly in my 401k! Please!
« on: May 16, 2018, 01:18:18 PM »
Hello helpful people!

I work at AT&T (formerly the DIRECTV side) and set up my 401k 18 years ago and had no idea what I was doing. 10 or so years ago someone helped change some investments for me based on average returns, but little else and when we were bought by AT&T, they moved things to "equivalent" investments.  I need to change it to ensure I'm investing in the right places. I am currently contributing 10% with a company match of 4%. Over the last 12 months, my rate of return is 10.96%, however for this year so far, it's down to .66%! I'm sure this is because most everything is tied up in the AT&T Asset Aloc 2045 fund (for when I turn 65) and this isn't doing well right now. The importance of diversifying, right?

Anyway, here are the options I have, along with the average annual returns, cumulative total returns, fees and additional information. I hope I've got enough information here, but let me know if I'm missing something.

Thank you, geniuses for your help!



MDM

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Re: Help me invest properly in my 401k! Please!
« Reply #1 on: May 16, 2018, 02:44:21 PM »
It may be best to follow the advice in your user name and persist with your current investment. ;)

Your options in that 401k are so good that you practically can't make a mistake for any reasonable Asset allocation .  Good luck!

ysette9

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Re: Help me invest properly in my 401k! Please!
« Reply #2 on: May 16, 2018, 05:08:26 PM »
I can’t read your spreadsheet on my phone but it sounds like you are in a target date fund 2045. If that asset allocation is what you like and the fees are low then go ahead and stick all of your money there. If not, make your own target date fund by using the mix of lowest-fee index funds you have access to.

The returns over the past year don’t matter. What matters is keeping the fees as low as possible and making sure you are invested in the right asset allocation for your age, goals, timeline, and risk tolerance. Keep in mind also to achieve that overall asset allocation across your entire portfolio, not just this 401(k) account. For example, I have all of my bonds in my 401(k) for tax purposes to achieve the desired allocation across retirement and taxable accounts.

terran

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Re: Help me invest properly in my 401k! Please!
« Reply #3 on: May 16, 2018, 07:42:46 PM »
Your options in that 401k are so good that you practically can't make a mistake for any reasonable Asset allocation .  Good luck!

Agreed. I don't think I've ever seen expense ratios as low as some of those -- 0.01%! Even vanguard institutional class funds are 0.035%.

The point of target date funds like what you're invested in is they have all the diversification you need all in one fund, so that's a fine option. If you want to do a bit more work (look at MDM's link) you could save a bit on fees, but not a big deal either way.


seattlecyclone

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Re: Help me invest properly in my 401k! Please!
« Reply #4 on: May 16, 2018, 08:00:01 PM »
Your returns are pretty close to zero this year because that's how the stock market has been doing. You're doing nothing wrong. Sometimes the market goes up, sometimes it goes down, sometimes it goes sideways. No need to change anything.

talltexan

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Re: Help me invest properly in my 401k! Please!
« Reply #5 on: May 17, 2018, 08:53:24 AM »
Paul Merriman has surveyed the top 100 companies' 401(k) plans, and here is his recommendation for AT&T https://paulmerriman.com/att/

If you don't want to mess with rebalancing as you age and wish to move into bonds, you could keep your 2045 target date fund, and just add 25% of the small/mid cap.

robartsd

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Re: Help me invest properly in my 401k! Please!
« Reply #6 on: May 17, 2018, 11:29:23 AM »
Your stock index fund options are great (very low ER) if you want to manage a portfolio of a few funds. With those options and a Vanguard traditional IRA, I'd hold as much of my stock allocation in the 401(k) and as much of my bond allocation in the IRA as possible (your 401k bond fund ER's aren't bad but Vanguard Admiral shares are better). If you like the convenience of a single fund the ER on the target date funds aren't bad.

ShePersisted

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Re: Help me invest properly in my 401k! Please!
« Reply #7 on: May 17, 2018, 01:48:18 PM »
Wow! Thank you all so much for your input. I am glad to know I haven't messed this up! It's also great news that the plans are good and the fees are low. I feel much better!

I'll read up some more on the additional recommendations to bolster my understanding and see if any additional changes make sense.

Phew!! This forum is great. I really appreciate you all.

FlorenG

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Re: Help me invest properly in my 401k! Please!
« Reply #8 on: May 18, 2018, 01:22:43 PM »
I agree with the general answer that you are doing just fine in terms of allocation :)

Questions: Are you putting it all into 401(k) or Roth (or some percentage to each)? What's your tax rate? Are you planning to retire early? Is your 10% contribution enough to reach the $18,500 allowed limit (that would require a yearly salary of $185,000)?

Depending on your answers there could be some room for interesting tweaks and optimization...