Which investments should I invest in? (401K)

[zurich78]

I have a number of options in terms of how to invest my Fidelity 401K and quite frankly, I don't even know where to begin.  The vast majority (85%) of my investment portfolio is in my 401K and it is currently 100% allocated to a target date retirement fund. 

Should I just keep it there? 

Or would I be better off investing in some combination below?  I click on the various options and the descriptions of these investments are like Greek to me =(  Any ideas on what a good combination of investments might be, or, any suggestions on the best ways to learn more about what these are exactly?  My lame initial thought was to just take the number of stock investments (13) and divide that by 85 and just put equal parts in to each one but I'm sure people have better ideas than that =)  Haha.  (And the remaining 15% split equally in to bond investments).

Stock Investments
NT Collective S&P 400 Index Fund - Non-Lending
Northern Trust Russell 2000 Index Fund - DC - Non-Lending - Tier Two
NorthernTrust S&P 500 Index Fund - DC - Non Lending - Tier Three
NT Collective All Country World ex-US Investable Market Index Fund - DC - Non Lending - Tier Two
American Century Investments Equity Income Fund Institutional Class (ACIIX)
DFA U.S. Small Cap Value Portfolio Institutional Class (DFSVX)
Harbor Mid Cap Growth Fund Institutional Class (HAMGX)
GMO Global Equity Allocation Strategy Fund
Large-Cap Value Stock Fund
Large-Cap Growth Stock Fund
International Stock Fund
International Small-Cap Equity/Emerging Market Stock Fund
Small Cap Growth Stock Fund

Bond Investments
Northern Trust Aggregate Bond Index Fund - Non Lending - Tier Two
Interest Income (PIMCO Sep. Managed Account)
Bond Fund (PIMCO Sep. Managed Account)
PIMCO High Yield Fund Institutional Class (PHIYX)
PIMCO Foreign Bond (U.S. Dollar-Hedged) Fund Institutional Class (PFORX)

Short-Term Investments (what is this?!)
NTGI Short Term Investment Fund

[matchewed]

In regards to your first question for keeping your 401k money in a target date fund, the answer will be it is up to you. You will generally pay a small amount of higher fees for the target date fund but it is a set it and forget it sort of fund. The bigger question would be does that target date fund reflect your personal take on what your AA should be?

As for the other investments it is best to get something that is diversified within itself such as a total market or near equivalent that has low fees. Break down your various options by fees. Then determine what comprises those options, or to put it another way, what kind of companies make up the fund and how many? The narrower and fewer the less diversified, the broader and more the more diversified.

As for the Short-Term Investments, it is just a money market fund where you place cash that is waiting to be invested elsewhere, if it's your 401k you can usually just ignore its existence.

[Bourbon]

Do you have the fees and tickers for those options?

I'm currently pursuing a 100% VTSAX/VTSMX strategy.  Unfortunately I don't have that option in my or my wife's 401k's.

I was able to use this boglehead link to approximate for both accounts -

http://www.bogleheads.org/wiki/Approximating_total_stock_market

[milesdividendmd]

As John Bogle says, "You get what you don't pay for."

The first step  that I use  to sort out all of the investment options within a 401K is to sort the funds by expense ratios.  I then pick out the 3 cheapest equity funds, and the cheapest bond fund, and try to make a "lazy portfolio."

see:

http://www.bogleheads.org/wiki/Lazy_portfolios

within fidelity the cheapest funds tend to be vanguard or Spartan funds.

Alexi

[zurich78]

So here is my entire retirement portfolio, do you guys think I'm doing this right?

I currently have $132K total in my retirement accounts.

$76K in a T Rowe Price 401K from a previous employer
$49K in a Fidelity 401K from my current employer
$7K in a Fidelity Roth IRA (just started it last year.  Yes I know I'm late to the game.)

I'd like to keep my T Rowe Price 401K because I can invest in Vanguard Total Bond and Total Int'l Stock index funds whereas in my Fidelity account I cannot.  I'm 35 years old, and I'm pursuing a 90/10 Stocks/Bonds allocation.  Within the stocks, I'm planning to have 70% US Stocks and 30% Int'l stocks.  Since my investment options within my 401Ks are limited, this is how I'm doing it.

Fidelity 401K
$49K (100% of my Fidelity 401K account) in NorthernTrust S&P 500 Index Fund - DC - Non Lending - Tier Three (there's no symbol, Exp Ratio 0.0525%)

Fidelity Roth IRA
$7K (100% of my Fidelity Roth IRA account) in Fidelity Spartan Total Stock Market Index Fund Investor Class (FSTMX, Exp Ratio 0.1%)

T Rowe Price
$30K (40% of my T Rowe Price account) in Vanguard Institutional Index Fund (VINIX, Exp Ratio 0.04%)
$34K (44% of my T Rowe Price account) in Vanguard Total International Stock Index Fund (VGTSX, Exp Ratio 0.22%)
$12K (16% of my T Rowe Price account) in Vanguard Total Bond Market Index Institutional Class (VBTIX, Exp Ratio 0.07%)

I don't have an option for Vanguard Total Stock Market Index Fund and it seems like VINIX is the closest thing to it (it's basically an S&P 500 Index Fund).  So my "Total Stock Market Index Fund" investments are all in S&P indexes.  Is that ... ok or risky?

Oh, and I don't have a taxable investment account as part of my retirement portfolio yet... I'm getting there =)

[matchewed]

So here is my entire retirement portfolio, do you guys think I'm doing this right?

I currently have $132K total in my retirement accounts.

$76K in a T Rowe Price 401K from a previous employer
$49K in a Fidelity 401K from my current employer
$7K in a Fidelity Roth IRA (just started it last year.  Yes I know I'm late to the game.)

I'd like to keep my T Rowe Price 401K because I can invest in Vanguard Total Bond and Total Int'l Stock index funds whereas in my Fidelity account I cannot.  I'm 35 years old, and I'm pursuing a 90/10 Stocks/Bonds allocation.  Within the stocks, I'm planning to have 70% US Stocks and 30% Int'l stocks.  Since my investment options within my 401Ks are limited, this is how I'm doing it.

Fidelity 401K
$49K (100% of my Fidelity 401K account) in NorthernTrust S&P 500 Index Fund - DC - Non Lending - Tier Three (there's no symbol, Exp Ratio 0.0525%)

Fidelity Roth IRA
$7K (100% of my Fidelity Roth IRA account) in Fidelity Spartan Total Stock Market Index Fund Investor Class (FSTMX, Exp Ratio 0.1%)

T Rowe Price
$30K (40% of my T Rowe Price account) in Vanguard Institutional Index Fund (VINIX, Exp Ratio 0.04%)
$34K (44% of my T Rowe Price account) in Vanguard Total International Stock Index Fund (VGTSX, Exp Ratio 0.22%)
$12K (16% of my T Rowe Price account) in Vanguard Total Bond Market Index Institutional Class (VBTIX, Exp Ratio 0.07%)

I don't have an option for Vanguard Total Stock Market Index Fund and it seems like VINIX is the closest thing to it (it's basically an S&P 500 Index Fund).  So my "Total Stock Market Index Fund" investments are all in S&P indexes.  Is that ... ok or risky?

Oh, and I don't have a taxable investment account as part of my retirement portfolio yet... I'm getting there =)

In regards to being concentrated in S&P 500 based funds it isn't a question of is it ok or risky. It is a question of are you okay with the risks. It will be based on 500 of the biggest companies in the US. It will not cover any mid cap or small cap which can have greater returns but greater volatility as well. Look at how the S&P 500 has performed over the last 20-30 years. Are you okay with the dips and the like? The comfort is up to you.

Also what type of account is the T Rowe Price account?

[zurich78]

^ Thanks for the reply!

My T Rowe Price is a 401K from a previous employer.  I can't contribute to it anymore but I can manage within it. 

Ok, good point about the S&P 500 being all large caps.  So what's a good blend to try to best mirror a Total Stock Market index fund?  Do I split it up 33/33/33 or would there be a better split to try to mirror a total stock market index fund?

Here are the options in my T Rowe Price account.

Equity Income Fund (PRFDX)
Extended Equity Market Index (PEXMX)
Growth Stock Fund (PRGFX)
Harbor Int'l Fund (HAINX)
JP Morgan Mid Cap Value Fund (FLMVX)
New America Growth Fund (PRWAX)
New Horizons Fund (PRNHX)
Small-Cap Value Fund (PRSVX)
U.S. Treasury Money Market Trust (No Symbol)
Vanguard Inflation Protected Securities Fund (VIPIX)
Vanguard Institutional Index Fund (VINIX)
Waddell & Reed Advisors Science and Tech Fund (USTFX)
Bunch of Target Date Retirement Funds

Within my Fidelity, there are large/mid/small options.  So I could do X percent to Northern Trust S&P MidCap 400 Index Fund, Y percent to Small Cap Growth Stock Fund, and then Z percent to the S&P 500 Index fund.  Is a Total Stock Market index fund typically 33/33/33 split or I would guess higher allocation to large, then mid then small.  So maybe 50/30/20 or something?

[matchewed]

^ Thanks for the reply!

My T Rowe Price is a 401K from a previous employer.  I can't contribute to it anymore but I can manage within it. 

Ok, good point about the S&P 500 being all large caps.  So what's a good blend to try to best mirror a Total Stock Market index fund?  Do I split it up 33/33/33 or would there be a better split to try to mirror a total stock market index fund?

Here are the options in my T Rowe Price account.

Equity Income Fund (PRFDX)
Extended Equity Market Index (PEXMX)
Growth Stock Fund (PRGFX)
Harbor Int'l Fund (HAINX)
JP Morgan Mid Cap Value Fund (FLMVX)
New America Growth Fund (PRWAX)
New Horizons Fund (PRNHX)
Small-Cap Value Fund (PRSVX)
U.S. Treasury Money Market Trust (No Symbol)
Vanguard Inflation Protected Securities Fund (VIPIX)
Vanguard Institutional Index Fund (VINIX)
Waddell & Reed Advisors Science and Tech Fund (USTFX)
Bunch of Target Date Retirement Funds

Within my Fidelity, there are large/mid/small options.  So I could do X percent to Northern Trust S&P MidCap 400 Index Fund, Y percent to Small Cap Growth Stock Fund, and then Z percent to the S&P 500 Index fund.  Is a Total Stock Market index fund typically 33/33/33 split or I would guess higher allocation to large, then mid then small.  So maybe 50/30/20 or something?

First a total stock market index is usually just the whole index where it holds the securities as a proportion of how they are represented in the market. Does Apple constitute 3% of the total market? If yes, then a total market should have 3% of their funds in Apple (if they're using that framework).

Secondly I can't tell you which funds to pick. These are your investments. I can only tell you what I've already stated.

As for the other investments it is best to get something that is diversified within itself such as a total market or near equivalent that has low fees. Break down your various options by fees. Then determine what comprises those options, or to put it another way, what kind of companies make up the fund and how many? The narrower and fewer the less diversified, the broader and more the more diversified.

Pull up the fees for each. Label each by what type of fund they are and build your IRA based on how you have your Asset Allocation defined and minimizing fees.

[Will]

My T Rowe Price is a 401K from a previous employer.  I can't contribute to it anymore but I can manage within it. 

Can't you roll that over to Vanguard directly and have access to every Vanguard fund?

[zurich78]

My T Rowe Price is a 401K from a previous employer.  I can't contribute to it anymore but I can manage within it. 

Can't you roll that over to Vanguard directly and have access to every Vanguard fund?

You mean roll it in to a Vanguard IRA?  I'd do that,  but I don't want any balances in my IRA because I'll be doing a backdoor Roth conversion every year and I can't have balances in my IRA if I want to avoid pro rata taxation on my contributions.

[butchmonkey]

So here is my entire retirement portfolio, do you guys think I'm doing this right?

I currently have $132K total in my retirement accounts.

$76K in a T Rowe Price 401K from a previous employer
$49K in a Fidelity 401K from my current employer
$7K in a Fidelity Roth IRA (just started it last year.  Yes I know I'm late to the game.)

I'd like to keep my T Rowe Price 401K because I can invest in Vanguard Total Bond and Total Int'l Stock index funds whereas in my Fidelity account I cannot.  I'm 35 years old, and I'm pursuing a 90/10 Stocks/Bonds allocation.  Within the stocks, I'm planning to have 70% US Stocks and 30% Int'l stocks.  Since my investment options within my 401Ks are limited, this is how I'm doing it.

Fidelity 401K
$49K (100% of my Fidelity 401K account) in NorthernTrust S&P 500 Index Fund - DC - Non Lending - Tier Three (there's no symbol, Exp Ratio 0.0525%)

Fidelity Roth IRA
$7K (100% of my Fidelity Roth IRA account) in Fidelity Spartan Total Stock Market Index Fund Investor Class (FSTMX, Exp Ratio 0.1%)

T Rowe Price
$30K (40% of my T Rowe Price account) in Vanguard Institutional Index Fund (VINIX, Exp Ratio 0.04%)
$34K (44% of my T Rowe Price account) in Vanguard Total International Stock Index Fund (VGTSX, Exp Ratio 0.22%)
$12K (16% of my T Rowe Price account) in Vanguard Total Bond Market Index Institutional Class (VBTIX, Exp Ratio 0.07%)

I don't have an option for Vanguard Total Stock Market Index Fund and it seems like VINIX is the closest thing to it (it's basically an S&P 500 Index Fund).  So my "Total Stock Market Index Fund" investments are all in S&P indexes.  Is that ... ok or risky?

Oh, and I don't have a taxable investment account as part of my retirement portfolio yet... I'm getting there =)

In regards to being concentrated in S&P 500 based funds it isn't a question of is it ok or risky. It is a question of are you okay with the risks. It will be based on 500 of the biggest companies in the US. It will not cover any mid cap or small cap which can have greater returns but greater volatility as well. Look at how the S&P 500 has performed over the last 20-30 years. Are you okay with the dips and the like? The comfort is up to you.

Also what type of account is the T Rowe Price account?

Minor correction. Though the S & P 500 is a large cap blend, it does include mid cap stocks.

Otherwise I agree.


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