Author Topic: Help me reallocate DCP investments  (Read 1989 times)

DSKla

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Help me reallocate DCP investments
« on: January 06, 2015, 04:25:48 PM »
By default, my money was going into the UC DCP, a tax-deferred account for UC employees managed by Fidelity. Now deductions from my check are mandatorily routed through UCRP, but the issue I have is a little over $2k in the DCP, which is invested in the UC Savings Fund by default. This fund is very conservative, and it's projected 10 year return is 2.71%.

Stats: 29 years old, nowhere near FIRE, paying down a little debt but not so much that I want to cashout and take the taxes and penalties on $2k. I do not own any other tax deferred accounts besides the DCP ($2k) and the UCRP ($5k) which I'm not allowed to touch until 31 days after termination of employment, which won't be for a few years.

No additional money is currently going into DCP. I am withholding voluntary contributions until cc debt is gone in a year or so.

I have to make two decisions:

1) keep in fidelity DCP, or move to fidelity 403b. Available investments are the same, can't see a huge difference between the accounts. However, a third option would be to rollover to a personal traditional IRA. I don't have one currently, but could start one.

2) which fund to invest in. The two available options that I saw that were most in line with the usual vanguard total index stocks and bonds were: FSKAX for stocks and FXSTX for bonds. These are fidelity spartan funds. If these suck, I can post a full list of available options. This decision would be a moot point if I'm advised to start an IRA instead, because i could start one anywhere and invest in anything that allows my starting balance.

Thanks for helping an investment noob.

GGNoob

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Re: Help me reallocate DCP investments
« Reply #1 on: January 06, 2015, 05:29:30 PM »
If you can roll it over into a Traditional IRA, that may be your best bet since you'll want to do that eventually anyhow. If you roll it over, the obvious place to put it is Vanguard (lowest fees). You wouldn't have many choices with only $2k so you'd probably want to pick a Target Retirement Date fund that fits your estimated retirement year. Then later on you can either add to that tIRA or even convert it to a Roth IRA and add to the Roth. Once its large enough you could break it down into individual funds if you wanted. Otherwise for people who don't know or don't care to know how to manage portfolios themselves, those target retirement funds at Vanguard are pretty great.

No additional money is currently going into DCP. I am withholding voluntary contributions until cc debt is gone in a year or so.

If you get an employer match, your best bet is to get the match because that's free money.

DSKla

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Re: Help me reallocate DCP investments
« Reply #2 on: January 06, 2015, 06:20:37 PM »
I don't get any match. What they do is force me to give 7% of my check to the UCRP, and they contribute 14% to the same fund. The catch is I don't get a dime of their contribution until I retire, at which time it comes to me as a pension. If I leave the university to take another job, they let me have my money but they keep theirs. So it might be a good deal to people who will retire from there, but I won't, so essentially my employer gives me nothing but the middle finger and locks down 7% of my money without my consent.