Author Topic: How are my 401k election choices?  (Read 3577 times)

extremedefense

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How are my 401k election choices?
« on: February 24, 2017, 10:48:26 AM »
EQUITY/STOCK 
[company I work for stock] 10%
VEMPX - VANGUARD EXTENDED MARKET INDEX 10%
VIIIX - VANGUARD INSTITUTIONAL INDEX 50%
VTPSX - VANGUARD TOTAL INTL STK INDEX 10%
 TOTAL -                                                  80%

BOND/FIXED INCOME 
VIPIX - VANGUARD INFLATION-PROTECTED 10%
VBMPX - VANGUARD TOTAL BOND MKT INDEX 10%
 TOTAL -                                                   20%


Here are all my options in case you would change it.

Investment     Type     Symbol     Price

EQUITY/STOCK
BLACKROCK EQUITY DIVIDEND CF Core BEDTT $17.84
BLACKROCK US FDMTL LRG CL T Core BUFTT $17.05
DODGE & COX STOCK FUND Core DODGX $194.92
FIAM SMALL MID CAP CORE II FD Core PYSMT $19.06
MFS INTERNATIONAL GROWTH Core MIGFT $12.62
QS US SM CAP EQUITY FUND CL IS Core LMBMX $13.69
STATE STREET REAL ASSET C Core SGACT $11.27
T ROWE INST LARGE-CAP GROWTH Core TRLGX $31.87
TIF INTL EQUITY SERIES FD Core TFEQX $19.46
VANGUARD EXTENDED MARKET INDEX Core VEMPX $188.30
VANGUARD INSTITUTIONAL INDEX Core VIIIX $215.87
VANGUARD TOTAL INTL STK INDEX Core VTPSX $105.07

BOND/FIXED INCOME
PIMCO TOTAL RETURN PORT. INSTL Core PTTRX $10.14
VANGUARD INFLATION-PROTECTED Core VIPIX $10.52
VANGUARD TOTAL BOND MKT INDEX Core VBMPX $10.69
WESTERN ASSET CORE BOND CL IS Core WACSX $12.44
MONEY MARKET/STABLE VALUE
STABLE VALUE FUND Core MLSVF $21.71
ALLOCATION FUNDS
BLACKROCK GLOBAL ALLOC I Core MALOX $19.01
LIFEPATH INDEX 2020 FUND O Core LOMMT $14.05
LIFEPATH INDEX 2025 FUND O Core LNMMT $14.61
LIFEPATH INDEX 2030 FUND O Core LQMMT $15.12
LIFEPATH INDEX 2035 FUND O Core LFMTT $15.61
LIFEPATH INDEX 2040 FUND O Core LBMTT $16.04
LIFEPATH INDEX 2045 FUND O Core LNJTT $16.42
LIFEPATH INDEX 2050 FUND O Core LBMIT $16.72
LIFEPATH INDEX 2055 FUND O Core LGHMT $17.29
LIFEPATH INDEX 2060 FUND O Core LKMMT $11.26
LIFEPATH INDEX RETIREMENT FD O Core LZMMT $13.19
PIMCO ALL ASSET FUND Core PAAIX $11.66

Am I good? I'm 22 years old, and plan to FIRE in the next 8 - ?? years.

extremedefense

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Re: How are my 401k election choices?
« Reply #1 on: February 24, 2017, 11:05:22 AM »
See attached photo for the expense ratios and past performance.

NoStacheOhio

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Re: How are my 401k election choices?
« Reply #2 on: February 24, 2017, 11:10:20 AM »
Those are the best choices in funds for what you have. Have you really thought about your bond allocation?

extremedefense

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Re: How are my 401k election choices?
« Reply #3 on: February 24, 2017, 11:12:27 AM »
Those are the best choices in funds for what you have. Have you really thought about your bond allocation?

I have not. Because of my age should I not have bonds? 100% stocks / equities?

NoStacheOhio

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Re: How are my 401k election choices?
« Reply #4 on: February 24, 2017, 11:14:50 AM »
Those are the best choices in funds for what you have. Have you really thought about your bond allocation?

I have not. Because of my age should I not have bonds? 100% stocks / equities?

That's something you need to evaluate and decide for yourself. It depends heavily on your personality and life situation. Either way, you should have positive reasons for making the choices you make.

http://jlcollinsnh.com/stock-series/

Car Jack

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Re: How are my 401k election choices?
« Reply #5 on: February 24, 2017, 11:35:12 AM »
Dump the company stock.

If the company decides to become an Enron, you have no job and now your company stock is worth zip.

I've got $2M in retirement savings and every time my company stock comes to me (RSUs and ESPP), I use the option to order a sell before it's even bought.  I honestly don't even care what you put that money into....bonds....stocks.....Alpaca futures.  Just not in your own company stock unless it's part of S&P 500 or total stock or something.

extremedefense

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Re: How are my 401k election choices?
« Reply #6 on: February 24, 2017, 11:46:44 AM »
Just not in your own company stock unless it's part of S&P 500 or total stock or something.

Luckily the company stock is part of the S&P 500. :)

I changed my elections though based off the replies:
EQUITY/STOCK 
[company I work for stock] 15%
VEMPX - VANGUARD EXTENDED MARKET INDEX 16%
VIIIX - VANGUARD INSTITUTIONAL INDEX 59%
VTPSX - VANGUARD TOTAL INTL STK INDEX 10%
 TOTAL -                                                  100%

RangerOne

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Re: How are my 401k election choices?
« Reply #7 on: February 24, 2017, 02:55:32 PM »
Just not in your own company stock unless it's part of S&P 500 or total stock or something.

Luckily the company stock is part of the S&P 500. :)

I changed my elections though based off the replies:
EQUITY/STOCK 
[company I work for stock] 15%
VEMPX - VANGUARD EXTENDED MARKET INDEX 16%
VIIIX - VANGUARD INSTITUTIONAL INDEX 59%
VTPSX - VANGUARD TOTAL INTL STK INDEX 10%
 TOTAL -                                                  100%

Even if it is it is only a 1% sliver, maybe 3% if you work for Apple. The biggest companies pay you partly in RSU's so you are already heavily invested in those. Otherwise best not to hold company stock since it is just hampering diversification.

Most of your indexes look fine to me.

It looks like your VIIIX and VEMPX are your attempt to mirror the US total stock market. A mid/small cap index mixed with the S&P 500 which is generally aligned with the total market all on its own. Considering comparing holdings of those indexes to these: https://www.bogleheads.org/wiki/Approximating_total_stock_market.

This gives a few different index combinations to better approximate the market. Your mix there may already be pretty good since generally you just need to supplement the S&P 500 with a small cap index or a bit of small and mid.

Most investments recommend holding any where from 20%-40% in international stock for diversification. 10% is lower than I have seen recommended but again its is a personal preference. Most target retirement funds from Fidelity and Vanguard are all the way up at 36% international. Making 20% somewhat conservative. The index you are using there is good.

The 20% bonds. Again a really conservative investor like John Bogel recommends in his books 20% bonds when building your main portfolio. I have leaned more towards the 90/10 recommendation, but that is really up to you. Do some more reading and see if you like that strategy for the long term.

I don't know much about the use case of the VIPIX bond fund. Typically it is simpler to have the one total US bond index, maybe with an international version.

Every time you add an extra more specific fund like VIPIX you should be asking yourself why you are including this and what level of diversification is it bringing to the table. I wouldn't worry at all about historical or recent returns. If you did that you probably wouldn't buy any bonds at all are looking pretty bleak with interest rates on the rise. If it is not diversifying your portfolio it could be throwing off the weight of your other index causing you to be more heavily invested in one market sector over another which means you risk under or over performing the aggregate market.

The general advise for simple long term investing is to mirror the whole market as best you can, and keep costs as low as you can. Thats it. If you read one of John Bogel's books you will find it pretty much says this ad nauseum. If you have an index that is not expressly chosen for that purpose, odds are you should consider ditching it. Things like buying Value over a Growth index are all just forms of speculation and very few people can out speculate the total market over a 30 year + term.

In summary though being 22, I would ditch the VIPIX fund and divert that money to equities. And ditch the company stock and dump it into equities. Then you will probably be in great shape for at leas the next 20 years, before you need to consider bumping back up your bond allocations as you age.