The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Platypuses on December 10, 2015, 12:56:53 PM
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Currently my 401k and my SO's 401k are both being allocated and rebalanced by the large institutions that are holding our money. After looking further into the gross expense ratios, we tend to be in the higher cost funds. I would like to manage the allocations and rebalance the funds myself but am having difficulty determining where to start and what % to put in each fund.
First a little background. We are both 32. Plan to work for another 20 or so odd years, and are comfortable with taking higher risks in this stage of the game.
I filtered through our 401k options and discarded any funds with a gross expense ratio greater than 0.5%. Here are the options:
- S. O. 401k Options Gross Expense Ratio
- SSgA U.S. Bond Index Securities Lending Series Fund - Class VI 0.28
- SSgA Target Retirement 2040 Non-Lending Series Fund - Class D 0.47
- SSgA S&P 500 Index Securities Lending Series Fund - Class VI 0.13
- SSgA S&P MidCap Index Non-Lending Series Fund - Class F 0.21
- SSgA Russell Small Cap Index Securities Lending Series Fund - Class IV 0.21
- SSgA International Index Securities Lending Series Fund - Class VI 0.36
- My 401k Options Gross Expense Ratio
- BLACKROCK MID CAPIZTN NL FD M 0.06
- NORTHERN TR CL S&P 500 IDX II 0.03
- SSGA RUSSELL SMALL CAP CL S 0.06
- VANGUARD REIT INDEX FUND ADM 0.12
- NORTHERN TR CL AGG BD IDX L1 0.01
What % do you think I should put in my wife's fund and in mine?
Thanks!!
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What do you want your overall asset allocation between stocks/bonds, US/international to be? How much money is in each of these accounts, and how much is in other investment accounts where you can invest in anything?
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What do you want your overall asset allocation between stocks/bonds, US/international to be? How much money is in each of these accounts, and how much is in other investment accounts where you can invest in anything?
I am thinking primarily US stocks, so my initial intuition would be something like 60% S&P 500, 15% Small Cap, 15% Mid Cap, 10% REIT or Bonds. Maybe add in International and cut small cap and mid cap to 10% each.
Have around 75k in each 401k account. Currently putting all taxable investments after maxing out 401k's into VTSAX where we have around 13k. Also have around 4.5k in individual U.S. stocks.
Does this seem reasonable?
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Yeah, that allocation seems reasonable. You would also be just fine with an 80/20 S &P/ bond index split.
That said if you want exposure to other market segments, you have another decision to make. Namely, optimizing your 401ks separately or jointly. If you treat your 401ks as one big pot you can save yourself ~0.2 er by having all of your bond/reit/mid/small cap exposure in your 401k (where fees are lower) and all your s &p exposure in your SOs (where fees are higher but still less than the difference between fees for the other markets). The upside is that you save a bit on fees. The downside is that if you ever split up both your allocations will be messed up.
Or you could just separately create the allocation you described in both accounts and accept that SO will see returns ~.2-.25 lower since they don't have northern trust/vanguard.