Helping a Friend Select a 401k

[GrandTomato]

I have a friend who is changing jobs and needs to set up her 401k retirement benefits. Neither of us have much experience with 401k investment options.

She picked the LIVESTRONG 2045 fund but I am trying to help her find the best option. She currently has a Vanguard Target Retirement 2045 in a Roth account. She has a large emergency fund and understands about risk and asset allocation. My preference would be to stick with Vanguard, Fidelity, or another low-cost provider. I have listed the options below but do not know all of the expense ratios. The expense ratio for the LIVESTRONG 2045 fund was around 70 basis points. It seems like there may be a better option. Self-Directed Brokerage is an option; the company matches on 5% of contributions but would this also apply to the Self-Directed Brokerage option?

She also has the ability to pick several funds and specify the percentage to invest.

She can pick from these choices:

Core Funds
SSgA Money Market - 0.39%
Vanguard Inflation-Protected Securities - 0.22%
Guide Stone Medium-Duration Bond - 0.49%

Large U.S. Equity
Vanguard Institutional Index - 0.04%
GuideStone Value Equity - 0.67%
William Blair Growth I - 0.84%

Mid U.S. Equity
American Beacon Mid Cap Value - 0.98%
Times Square Mid Cap Growth - 1.09%
Fidelity Spartan Market Index - 0.10% (Benchmark: Russell MidCap TR)

Small U.S. Equity
Northern Small Capital Value - 1.00%
Legg Mason Small Cap Growth - 0.89%

International
Fidelity Spartan International Index - 0.20%
American Funds EuroPacific - 0.50%
MFS International Value R4 - 1.03%

Lifestyle/Pre-mix
LIVESTRONG Income - 0.55%
LIVESTRONG 2015 - 0.58%
LIVESTRONG 2020 - 0.61%
LIVESTRONG 2025 - 0.63%
LIVESTRONG 2030 - 0.66%
LIVESTRONG 2035 - 0.69%
LIVESTRONG 2040 - 0.72%
LIVESTRONG 2045 - 0.73%
LIVESTRONG 2050 - 0.75%

Self-Directed Brokerage - $20 every quarter

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Thank you for any help you can provide. I worry you may want more information.

[Khanmots]

For good advice you'll need to provide the expense ratios for the various funds along with any other fees or loads that may be associated.

[nimo956]

I agree that you need to look up the expense ratios, but based on past experience, I'm gonna say these are her best options:

SSgA Money Market
Vanguard Inflation-Protected Securities
Vanguard Institutional Index
Fidelity Spartan Market Index
Fidelity Spartan International Index

Edit: I missed the Self-Directed Brokerage option. You should check the rules on this, but if there are no fees, you could select any fund you'd want.

[pkcrafter]

GT, I guessing this is incorrect

Mid U.S. Equity
American Beacon Mid Cap Value
TimesSquare Mid Cap Growth
Fidelity Spartan Market Index

More likely this is Spartan Extended Market Index. If so, and your friend can handle individual funds, then Vanguard Inst. Index, Spartan Ex. Mkt Index, Spartan International and bond?? Are you sure inflation protected bond are the only choice? That would be very strange.

ER on Livestrong is 0.98%

Paul

[NYBoglehead]

Without knowing exact expense ratios, from other threads along the way the Vanguard Institutional Index is usually the lowest cost option. I've seen it as low as 3 bps I believe. Needless to say that is a minimal drag on performance and is likely to be the best fund available.

[GrandTomato]

I have updated my post with expense ratios. There are no load fees but a few funds have early redemption fees.

Thank you for the responses.

[linuxuser]

Vanguard Inflation-Protected Securities
Vanguard Institutional Index
Fidelity Spartan Market Index
Fidelity Spartan International Index

+1