Author Topic: Trying to understand my 401k  (Read 943 times)

EconDiva

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Trying to understand my 401k
« on: August 18, 2018, 09:50:14 AM »
Brace yourselves for some really na´ve questions here.  I sat down this morning and went through the funds in my 401k-something I never do.  But I believe it was last year they went away with the Vanguard Target Retirement Funds.  Below is what I'm currently invested in.  I am trying to understand what my AA should be?  60:40 (I'm 39 years old)?  Based on the below, I'm currently 97% stocks correct?

Should I do away with any particular funds altogether due to the fees?  If so, which ones?  Should I go by a certain threshold (i.e., any fund above 0.05%)?

Lastly, I see that my employer has State Street Target Retirement Funds available.  Since I am pretty hands off with investments and like to "set it and forget it", should I consider moving everything into one of these funds instead?  The ER on the State Street Target Retirement fund is 0.10% compared to Vanguard's 0.14% (again, which is no longer an option through my employer).  I haven't done any research on the performance of State Street's funds versus Vanguard's yet though.  I really appreciate any insight here. 


Stock: 1% (Company stock: 0.00% ER)

International: 33% (Vanguard Institutional Total International Stock Index Trust: 0.06% ER)

Mid/Small U.S. Equity: 28%
*12% is in Diamond Hill Small-Mid Cap Fund [DHMYX]:  0.81% ER
*16% is in Vanguard Extended Market Index Fund: 0.04% ER 

Large U.S. Equity: 35% (Vanguard Institutional 500 Index Trust: 0.01% ER)

Balanced: 2%
*1% is in GMO Global Asset Allocation [GATRX]:  0.61% ER
*1% is in PIMCO All Asset Fund [PAAIX]:  1.005% ER

Bond: 1% (JPMorgan Core Bond Fund [JCBUX]): 0.35% ER

Capital Preservation: 1% (Short Term Investment Fund: 0.12% ER)

Laserjet3051

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Re: Trying to understand my 401k
« Reply #1 on: August 18, 2018, 09:59:16 AM »
Brace yourselves for some really na´ve questions here.  I sat down this morning and went through the funds in my 401k-something I never do.  But I believe it was last year they went away with the Vanguard Target Retirement Funds.  Below is what I'm currently invested in.  I am trying to understand what my AA should be? 60:40 (I'm 39 years old)?  Based on the below, I'm currently 97% stocks correct?

Should I do away with any particular funds altogether due to the fees?  If so, which ones?  Should I go by a certain threshold (i.e., any fund above 0.05%)?

Lastly, I see that my employer has State Street Target Retirement Funds available.  Since I am pretty hands off with investments and like to "set it and forget it", should I consider moving everything into one of these funds instead?  The ER on the State Street Target Retirement fund is 0.10% compared to Vanguard's 0.14% (again, which is no longer an option through my employer).  I haven't done any research on the performance of State Street's funds versus Vanguard's yet though.  I really appreciate any insight here. 


Stock: 1% (Company stock: 0.00% ER)

International: 33% (Vanguard Institutional Total International Stock Index Trust: 0.06% ER)

Mid/Small U.S. Equity: 28%
*12% is in Diamond Hill Small-Mid Cap Fund [DHMYX]:  0.81% ER
*16% is in Vanguard Extended Market Index Fund: 0.04% ER 

Large U.S. Equity: 35% (Vanguard Institutional 500 Index Trust: 0.01% ER)

Balanced: 2%
*1% is in GMO Global Asset Allocation [GATRX]:  0.61% ER
*1% is in PIMCO All Asset Fund [PAAIX]:  1.005% ER

Bond: 1% (JPMorgan Core Bond Fund [JCBUX]): 0.35% ER

Capital Preservation: 1% (Short Term Investment Fund: 0.12% ER)

1079 posts deep and 5+ years on this board, I'd have expected you would be well past the "determining my AA" stage (see bolded above).

We cant answer for you what your AA should be. Only you can. It will depend on your willingness, need, and ability to assume risk. Head over to bogleheads to better understand what that last statement really means, it's not a simple calculation. Once you figure out an AA you can stick with through tough times, I'd definitely get rid of the Diamond Hill, GMO, and PIMCO funds, those ERs are atrocious! That JPM bond fund doesnt look too good either. Why do you have such tiny fractions of your portfolio in these balanced funds?  Tiny (1%), and expensive (ER) allocations are not your friend.

Dont make any moves until you can define a long term AA you can stick with; then make the changes.

EconDiva

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Re: Trying to understand my 401k
« Reply #2 on: August 18, 2018, 10:40:38 AM »
^When you start off with statements like the first one you made, you come off as critical/scornful making it hard to even want to read anything past that.  You can give advice without being that way you know...without passing judgment. 

The fact you even felt the need to check/reference my join date before responding is just...I don't even know what to say about that.

Guess it never crossed your mind that since (as stated) I never worried much about my AA since I was comfortable in the Vanguard target retirement fund I had been in forever which like I said is no longer an option now as of recent.  People re-evaluate things, have changes in their needs and risk tolerance, question their AA as they get older and learn more, etc. etc. etc.
« Last Edit: August 18, 2018, 10:43:33 AM by EconDiva »

terran

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Re: Trying to understand my 401k
« Reply #3 on: August 18, 2018, 08:34:07 PM »
If you're comfortable with the Vanguard Target date funds you can just copy that. For example, here's what the 2055 fund is invested in: https://investor.vanguard.com/mutual-funds/profile/portfolio/vffvx

They're all 60/40 US/International stock.

I probably wouldn't worry about international bonds, especially if you go with a pretty low overall bond allocation.

Since you don't seem to have a total stock market fund you could approximate it with 80% S&P 500 and 20% vanguard extended market, so I'd use those two as you entire domestic allocation, and skipping the extended market fund and just doing all S&P 500 wouldn't be bad either.

Drop all the non vanguard stock funds you're in as they aren't doing anything for you and they have pretty bad expense ratios.

That bond fund is pretty expensive. If you have an IRA you might consider putting your bonds there as you should be able to get a cheaper option.