The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: mgnhrvth on May 11, 2016, 06:38:09 AM
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My DH just started a new job with CACI. Their 401(k) plan is called the "CACI $mart Plan" - it looks like it's administered by T Rowe Price. There is a flat annual fee of $32. There is matching - for every dollar he contributes (up to 6% of his pay), CACI will contribute another 50 cents for a maximum match of 3%. The company match is given on an annual basis.
Quick background - he is 35 y/o, no significant savings or investments but no debt. He is also a Reservist with 11+ years of service and plans to continue through to year 20 or beyond. I have significant retirement savings and investments. I think he/we could afford for him to be more aggressive with his 401(k).
Below are the options I think he should consider (all Vanguard):
Stocks: VINIX, VIMSX, VSCIX, VGTSX
Bonds: VBTIX
I want him to take full advantage of the match but any thoughts RE mix etc? We were talking about him contributing up to the CACI match, matching out his Roth IRA and then topping off his TSP and or non-retirement investment account?
Final note: it has taken quite some time for him to get on the savings bandwagon, not a full-blown MMM yet but I am very encouraged by his initiative RE saving, hoping to build on positive momentum.
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All five of those funds are very good low-cost index funds.
What you need to decide is what should your overall asset allocation be? What percentage of your stash should be in stocks, and what percentage should be in bonds? What percentage do you want in international vs. domestic? Do you want to dabble in real estate or other alternative investments? Think about your risk tolerance and come up with a breakdown that makes sense for you and your family. Then write it down and stick to it.
Once you have decided on this breakdown, the funds usually pick themselves. In this case you would use VBTIX for domestic bonds, VINIX/VIMSX/VSCIX in roughly an 80/10/10 ratio if you want to mimic a total US stock market fund like VTSAX for your domestic stock allocation, and VGTSX for international stocks. You would likely need to meet your international bond allocation (if any) in your IRA or a different account.