Author Topic: Ohio Deferred Compensation Program  (Read 2159 times)

Nutso

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Ohio Deferred Compensation Program
« on: May 28, 2015, 11:42:00 AM »
Hey guys,

I'm posting this for a friend who works for the State of Ohio. She had a question about her contributions to Ohio Deferred Compensation Program. https://www.ohio457.org/iApp/tcm/ohio457/index.jsp

She's investing in LifePath2045. She's concerned about the expense ratio.

Here's the list of funds:
https://www.ohio457.org/tcm/ohio457/static/OhioIPR.pdf

Leave it alone, or change up funds?

MDM

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Re: Ohio Deferred Compensation Program
« Reply #1 on: May 28, 2015, 11:54:41 AM »
She's concerned about 0.2%?

If that bothers her, she could do VTPSX + VIIIX + VBMPX and, depending on allocation, pay ~0.05%.  But then, for a fair comparison, she would have to do the rebalancing.  On $20,000 the difference of 0.15% is $30/yr.  Up to her....

Nutso

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Re: Ohio Deferred Compensation Program
« Reply #2 on: May 28, 2015, 11:58:38 AM »
Thought the rule of thumb for expense ratio is < .1?

Or it's different for Target Funds?

MDM

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Re: Ohio Deferred Compensation Program
« Reply #3 on: May 28, 2015, 12:21:45 PM »
Thought the rule of thumb for expense ratio is < .1?

Or it's different for Target Funds?
The "rule" is "all else being equal, the lower the expense ratio the better."  Automated rebalancing is not equal to rebalancing on your own. 

The main point, however, is that the small differences in these fees are not nearly as significant as the difference between, say, 1.5% vs. 0.2%.

forummm

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Re: Ohio Deferred Compensation Program
« Reply #4 on: May 28, 2015, 12:35:13 PM »
Thought the rule of thumb for expense ratio is < .1?

Or it's different for Target Funds?

0.2% is really good for an employer-sponsored plan. Really good. The balanced funds have somewhat higher expense ratios than owning the funds individually. Even Vanguard's Target Retirement Fund series has a 0.18% ER.

KungfuRabbit

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Re: Ohio Deferred Compensation Program
« Reply #5 on: May 28, 2015, 05:01:17 PM »
Yea dude, thats not an issue.

The big "expense ratio" to avoid is a financial advisor that charges 1.5% and then hooks you up with 1% mutual funds, giving you an expense ratio of 2.5%.

The lifepath funds are really nice in that they do automatic rebalancing and adjusting as you age.  The set and forget is well worth the 0.2% price tag. 

Nutso

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Re: Ohio Deferred Compensation Program
« Reply #6 on: May 29, 2015, 08:50:29 AM »
Okay, thanks guys!

Appreciate the comments.