I am maxing out my 401k with my current employer, but the available funds are not that great. I have all my monies going to the index fund with the lowest expense ratio (BSPAX, 0.37%; everything else is closer to 2% and up)
However, there is a 'self-directed' option which would let me invest in anything I want - i.e., Vanguard funds. The self-directed account is a lot more involved than the traditional 401k:
- Can only have 75% of the 401k balance in the SDBA, so would still have 25% of $$ in the traditional 401k plan.
- It has a $100 annual fee that would be deducted from the account balance every year.
- I would also have to pay commissions on the trades that are made within the account (I'm waiting to hear back what the commission is).
- I would have to call them any time I want to make a trade in the account, as there is no online interface at the moment.
Per a financial advisor with the 401(k) company, it is not a great option because of the extra cost, work and attention required... but I thought I'd ask the Mustachians about this first, because the work may well be worth it.
I don't
have to make trades every pay period, and to start I could invest 75% of the ~$20K currently in the account, so $15K, then leave it alone to accumulate some more, adding to the self-directed account every quarter or so. But if I went that route, the $100/year is about 0.67% of $15K - that plus whatever the commission is would negate the expense ratio savings of VTSMX vs. BSPAX, right?
Am I missing anything, or is really better to stick with the traditional set up?