My company offers a %4 matching 401k plan through Fidelity investments. There are tools to help choose the right plan. As for strategy, the automatic robo style software provides a “Target Date Balanced Fund” approach and a “Model Portfolio”
Plan 1: one Fund:
OH0Q SS TRGT RET 2035 M Exp Ratio: Gross:0.08% Net:0.07% (street state target retirement non-lending fund class M)
Top 10 holdings:
State St S&P 500® Indx NL Cl A 34.53%
State St Gbl All Cp Eq ex-US Idx NL Cl C 31.45%
State St Russell Sm/Mid Cp® Indx NL Cl A 11.88%
State St US Lg Gov Bnd Indx NL Cl A 9.84%
State St US Bnd Indx NL Cl A 8.83%
State St Bloomberg RSC IdxSM NL Cl A 3.47%
Plan2: Model balanced Portfolio
OJ6Z BLKRK US DEBT INDEX Intermediate-Term Bond 25.00%
OFG1 SS LG CAP INDEX Large Blend 16.00%
OJLE SS INTL INDEX Foreign Large Blend 11.00%
OFGW INCOME FUND Stable Value 10.00%
OJLM PIMCO CORE PLUS BOND Intermediate-Term Bond 8.00%
NRSRX Neuberger Berman Socially Rspns R6 Large Growth 6.00%
3717 FID CONTRAFUND POOL Large Growth 5.00%
ARAIX Ariel Fund Institutional Mid-Cap Blend 4.00%
OJLD SS EMRG MKTS INDEX Diversified Emerging Mkts 4.00%
OJLN PIMCO REAL RETURN Inflation-Protected Bond 4.00%
3716 FID GROWTH CO POOL Large Growth 3.00%
OJLC SS MID/SMALL INDEX Mid-Cap Blend 2.00%
FNMIX Fidelity New Markets Income Fund Emerging Markets Bond 1.00%
NRHIX Neuberger Berman High Income Bond R6 High Yield Bond 1.00%
Now my question:
The target retirement fund (seems to be an SSGA fund) is made up of other index managed funds which I assume each has its own hidden expense ratio, but shows a Gross 0.08%. Am I missing bunch of hidden expenses other than the posted %0.08?
The graph seems to be underperforming the S&P 500 which is it is comparing to….
Plan 2 is a combo of stocks and bonds. If I rebalance every year, do you think it will give me better returns? Or the difference is not significant and I better go with the one target retirement and save and forget strategy?
Any thoughts are much appreciated