Author Topic: Prudential 401k help with picking allocations  (Read 466 times)

RunningMan3

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Prudential 401k help with picking allocations
« on: July 06, 2019, 06:04:14 AM »
My employer matches up to 4% if we put 5% in to the 401k. I've been setup on the Prudential goalmaker moderate setting which has your portfolio heavily diversified. I'm currently reading "The Simple Path to Wealth" and I'm now realizing that I needed to get out of the goalmaker setting as I'm seeing my portfolio in some high fee funds. I'm a newbie when it comes to manually selecting a portfolio. There is no Vanguard VTSAX option. I attempted to mimic the VTSAX in the portfolio with the index funds that were available. I ended up doing this:

Dryden S&P 500 Index Fund - 81%
Vanguard Small-Cap Index Fund Admiral Shares - 15%
QMA Mid Cap Index Fund - 4%

I wanted to get some advice on these selections. I'm 39 yrs old and the 401K has $89K sitting in it. I realized that I should have posted the index fund options in this post before selecting them and probably after making the changes. I can't view the index fund options and there fees for 7-10 days while Prudential makes the changes I just made above. However there was not many index funds available. The other index fund options were the Vanguard Bond index fund and Vanguard Total International Stock Index Fund Admiral Shares available. I was just going by this link: https://www.bogleheads.org/wiki/Approximating_total_stock_marketlink to mimic the VTSAX with the options that I had available. My other question is after I get out of the goalmaker setting and put future money in the new allocations, should I look into transferring the portfolio into the new allocations rather than have them sit in the high fee funds that were set in the goalmaker setting?




Radagast

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Re: Prudential 401k help with picking allocations
« Reply #1 on: July 06, 2019, 11:33:29 AM »
Please post the expense ratios and any other fees, otherwise we can't do much. Remember to only use the 401k up to the employer match, then max out your HSA (if available) and IRA before filling this up. Don't over think the percentages. 81/15/4 is overly precise. You will get a lot more diversification from the international stocks and bonds than you will from a mid cap fund, so consider those if you don't address them in your other accounts.

S&P500 index fund: If the expense ratio is higher than the small-cap fund, I would not hold at market weight. I would over weight the small cap fund, or even go all in that.
Vanguard small cap fund: looks to have the lowest expense ratio of the three, but verify. Use this to replace the midcap fund, and possibly part or all of the S&P500 fund depending on expenses.
QMA Mid Cap Index Fund: I didn't see this on a google search, I only found an active mid cap value fund which should be avoided. Honestly Vanguard Small Cap contains so many midcaps that this isn't really needed.

RunningMan3

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Re: Prudential 401k help with picking allocations
« Reply #2 on: July 06, 2019, 02:18:37 PM »
I cancelled my pending investment allocation that I posted above so that I could get better advice in this forum. Here are my investment allocation options in Prudential:

***Fees listed are gross/net per $1,000

Guaranteed Income Fund - $0 fees
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) - $0.50
Core Plus Bond / PGIM Fund - $3.70
PGIM High Yield Fund- Class R6 (PHYQX) - $4.20
International Bond Plus / PIMCO Fund - $4.90
Prudential Day One IncomeFlex Target Balanced Fund - $13.40
Large Cap Value Fund (sub-advised by Wellington Management) - $5.20
Dryden S&P 500 Index Fund - $0.90
Large Cap Growth / American Century Fund - $5.70
Mid Cap Value / QMA Fund - $7.20
QMA Mid Cap Index Fund - $0.80
Mid Cap Growth I Fund (managed by Ivy) - $7.50
Small Cap Value / Victory Fund - $8.60
Vanguard Small-Cap Index Fund Admiral Shares (VSMAX) - $0.50
Small Cap Growth I Fund (managed by Brown Advisory) - $9.10
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) - $1.10
American Funds EuroPacific Growth Fund Class R-6 (RERGX) - $4.90
Prudential Real Assets Fund - $14.90 gross, $9.20 net




RunningMan3

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Re: Prudential 401k help with picking allocations
« Reply #3 on: July 06, 2019, 02:39:37 PM »
My thought was to change strategy to:

60%, Dryden S&P 500 Index Fund (0.09%)
20%, Vanguard Total Intl Stock Index Admiral (VTIAX) (0.11%)
20%, Vanguard Total Bond Market Index Adm (VBTLX) (0.05%

Radagast

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Re: Prudential 401k help with picking allocations
« Reply #4 on: July 06, 2019, 03:09:32 PM »
Vanguard Small-Cap Index Fund Admiral Shares (VSMAX) - $0.50
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) - $0.50
QMA Mid Cap Index Fund - $0.80
Dryden S&P 500 Index Fund - $0.90
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) - $1.10

I think any combination of those ^ would be good. For the lulz I often say just split equally between them, but here that makes more slices than necessary TBH. I dislike that S&P500 fund because it has a higher expense than the other two US stock funds. The S&P500 consists of the largest and most liquid companies on the planet, the expenses should be a few points lower than the other two, not a few points higher. But, not a big deal for 0.09%. I still feel like you should include the Vanguard small cap fund, which is the lowest cost stock fund available. Up to you though. Your idea is fine. It also depends on your asset allocation in your other accounts.