Author Topic: How can I learn/understand my different 401K and 457 fund options?  (Read 418 times)

Cheapskate_McScrooge

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Currently, through my employer, I have Voya 401K and 457 plans. 100% of my investments (5% contribution to get the employer match in my 401K and 10% contribution in my 457) are elected to the State Street Target Retirement 2060. So far, I'm getting an okay return, almost 6%. I chose that fund because it seemed to be a good balance of US stocks, international stocks, and bonds, automatically adjusting the percentage balance between the three as I get older.

My goal is, eventually, early retirement/financial independence; I am 25.

Yet there are many, many more options that I want to learn about, but don't understand, e.g. Capital Preservation, Fixed Income, Moderate Allocation, Large Cap Domestic Equity, Mid/Small Cap Domestic Equity, International Equity, and Emerging Markets, with funds under each of them, including, just to name a few, State Street Bond Market Index, Dodge & Cox Stock Portfolio, and T. Rowe Price Mid Cap Value; I have no idea what any of this means.

What is the best way to learn about all of this so I have full control and understanding of my investment options? Is it simply a matter of clicking each fund and reading about them? Should I stick with one fund throughout the course of my working career or should I put a certain percentage into different funds that pertain to my goals? Thank you to anyone who can help!

DadJokes

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Re: How can I learn/understand my different 401K and 457 fund options?
« Reply #1 on: July 03, 2019, 09:49:03 AM »
If your employer offers Vanguard or Fidelity as well, use them, as Voya typically has pretty bad options with higher expense ratios. With that said, look for the funds with the lowest expense ratios. That usually involves index funds. I think Voya's best option is INGIX, or Voya U.S. Stock Index Portfolio. It tracks the S&P 500, which are the top 500 companies in America. Since most (or all) of those businesses operate overseas as well, international funds are not really necessary.

Having access to a 457 is amazing for those seeking financial independence. While people with 401ks have to jump through hoops to withdraw funds before 59.5 without penalty, those with 457s can withdraw penalty-free once separated from that employer. However, employers typically don't match funds put into a 457. As such, you would want to invest in your 401k up to the match, then the HSA if you have one, then invest in the 457.

If you like a long read about investing, JL Collins' stock series is a great resource. It can be found here: https://jlcollinsnh.com/stock-series/ - or you can borrow his book from a library; it is a bit more organized and easy to read.