Author Topic: New at investing and 401k questions  (Read 1491 times)

jasonown

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New at investing and 401k questions
« on: December 14, 2017, 07:33:23 PM »
Hi yall,

I am a 23 year old recent grad that is currently working at the moment. I just had a few questions regarding my work's 401k plan as this is my first time and I have no idea what I am doing. I know that I should be contributing so I want to get the guidance from this community on which funds to invest in. Currently they have automatically enrolled me to 3% contribution with no employer match. They also placed me into Lifetime 2050 Fund at 100% of my contribution. Here are the available funds:

Guaranteed Interest Account [1.00%]
Diversified Income Fund [0.64%]
Mainstay Total Return Bond R1 [0.98%]
Lifetime Retirement Inc Fund [1.30%]
Lifetime 2020 Fund [1.33%]
Lifetime 2030 Fund [1.36%]
Lifetime 2040 Fund [1.41%]
Lifetime 2050 Fund [1.56%]
Large Cap Index Fund [0.20%]
Mass Investors Trust [0.98%]
Mid Cap Value Fund [1.38%] 
MFS Mid Cap Val Fd R3 [1.16%]
Principal Mid Cap Fund R3 [1.16% ]
Vanguard Small Cap Index Adml [0.06%]
Invesco Diversified Div R [1.09%]
Growth Stock Fund [0.99%]
Extended Market IndexFund [0.21%]
Vanguard Dev Mrkts Indx Adm [0.07%]
Oppenheimer Intl Growth Fund Y [0.89%]
Vanguard International Growth Fund [0.46%]
« Last Edit: December 14, 2017, 09:23:25 PM by jasonown »

MDM

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Re: New at investing and 401k questions
« Reply #1 on: December 14, 2017, 07:44:19 PM »
jasonown, welcome to the forum.

It will help if you edit the OP and add the expense ratios for each fund.

jasonown

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Re: New at investing and 401k questions
« Reply #2 on: December 14, 2017, 09:23:38 PM »
Thanks! It has been updated.

Radagast

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Re: New at investing and 401k questions
« Reply #3 on: December 14, 2017, 09:33:40 PM »
Large Cap Index Fund [0.20%]
Vanguard Small Cap Index Adml [0.06%]
Extended Market IndexFund [0.21%]
Vanguard Dev Mrkts Indx Adm [0.07%]
Here are the ones that are worth looking at. I'd just equally weight the 2 or 3 with the lowest expense ratios. Then add large cap stocks or emerging markets in an IRA, and taxable if necessary. Start thinking about bonds 5 or 10 years from now.

And max out that contribution! Going from 25% tax rate to 10% feels really amazing (though obviously I know nothing about your tax situation).

surfhb

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Re: New at investing and 401k questions
« Reply #4 on: December 14, 2017, 09:35:25 PM »
Welcome!

Read this book:

https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926/ref=sr_1_1?ie=UTF8&qid=1513312240&sr=8-1&keywords=j+collins+investing

You want to go with the Index funds and their low costs.    Why?  Lots of reason and its all in the book.    Best financial book ever written and Ive read them all.    READ THE BOOK!

This is what I would do:

70% Large Cap Index Fund [0.20%]
30% Vanguard Small Cap Index Adml [0.06%]




MDM

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Re: New at investing and 401k questions
« Reply #5 on: December 14, 2017, 10:05:41 PM »
Large Cap Index Fund [0.20%]
Vanguard Small Cap Index Adml [0.06%]
Extended Market IndexFund [0.21%]
Vanguard Dev Mrkts Indx Adm [0.07%]
Here are the ones that are worth looking at.
+1

The Vanguard International Growth Fund is also plausible.

See Three-fund portfolio - Bogleheads for some thoughts.

jasonown

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Re: New at investing and 401k questions
« Reply #6 on: December 18, 2017, 09:19:58 PM »
Large Cap Index Fund [0.20%]
Vanguard Small Cap Index Adml [0.06%]
Extended Market IndexFund [0.21%]
Vanguard Dev Mrkts Indx Adm [0.07%]
Here are the ones that are worth looking at. I'd just equally weight the 2 or 3 with the lowest expense ratios. Then add large cap stocks or emerging markets in an IRA, and taxable if necessary. Start thinking about bonds 5 or 10 years from now.

And max out that contribution! Going from 25% tax rate to 10% feels really amazing (though obviously I know nothing about your tax situation).

What do you mean by going from 25% to 10%? Thanks for the tips!

wenchsenior

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Re: New at investing and 401k questions
« Reply #7 on: December 19, 2017, 08:20:58 AM »
Large Cap Index Fund [0.20%]
Vanguard Small Cap Index Adml [0.06%]
Extended Market IndexFund [0.21%]
Vanguard Dev Mrkts Indx Adm [0.07%]
Here are the ones that are worth looking at. I'd just equally weight the 2 or 3 with the lowest expense ratios. Then add large cap stocks or emerging markets in an IRA, and taxable if necessary. Start thinking about bonds 5 or 10 years from now.

And max out that contribution! Going from 25% tax rate to 10% feels really amazing (though obviously I know nothing about your tax situation).

What do you mean by going from 25% to 10%? Thanks for the tips!

It means that investing in a 401k dramatically reduces your taxable income, potentially dropping you down 1-2 tax brackets (depending on your income and tax filing situation) and making you pay less in taxes on your remaining income.

Radagast

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Re: New at investing and 401k questions
« Reply #8 on: December 20, 2017, 08:34:11 PM »
Large Cap Index Fund [0.20%]
Vanguard Small Cap Index Adml [0.06%]
Extended Market IndexFund [0.21%]
Vanguard Dev Mrkts Indx Adm [0.07%]
Here are the ones that are worth looking at. I'd just equally weight the 2 or 3 with the lowest expense ratios. Then add large cap stocks or emerging markets in an IRA, and taxable if necessary. Start thinking about bonds 5 or 10 years from now.

And max out that contribution! Going from 25% tax rate to 10% feels really amazing (though obviously I know nothing about your tax situation).

What do you mean by going from 25% to 10%? Thanks for the tips!

It means that investing in a 401k dramatically reduces your taxable income, potentially dropping you down 1-2 tax brackets (depending on your income and tax filing situation) and making you pay less in taxes on your remaining income.
Yup. Every dollar put into the 401k reduces your taxable income by a dollar, which not only lowers the amount of money that is taxed but can also drop you into a lower marginal tax rate. Bonus points if you get low enough to avoid capital gains tax, once you have taxable investments.