Need help with choosing funds in my 401K

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Need help with choosing funds in my 401K

Postby BigMrRitz » Sat Mar 16, 2013 9:52 am

Age: 34
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: ?


Current retirement assets - $120K

His 401k - 62.5%
Investment Symbol Gross Expense Ratio Allocation%
EQUITY/STOCK
DWS RREEF REAL ESTATE SEC INST RRRRX 0.61% 24.27%
HARBOR INTL FUND HAINX 0.79% 10.84%
HARBOR:SM CAP VAL;INST HASCX 0.86% 15.64%
SSGA S&P 500 INDEX FUND CL E JOZBT 0.13% 25.73%
VANGUARD EXPLORER ADMIRAL VEXRX 0.34% 13.88%

BOND/FIXED INCOME
PIMCO REAL RETURN FD CL INST PRRIX 0.47% 9.64%

Company match = 6%


His Roth IRA at Vanguard - 12.5%
100% Vanguard Target Retirement 2050 Fund (VFIFX)

Her Roth IRA at Vanguard - 3%
100% Vanguard Target Retirement 2050 Fund (VFIFX)

Her Rollover IRA at Vanguard - 22%
100% Vanguard Target Retirement 2050 Fund (VFIFX)


Annual Contributions
$17,500 his 401k
$5,500 his Roth IRA
$5,500 her Roth IRA


Available funds

Funds available in his 401(k)
EQUITY/STOCK
AMERICAN GRTH FD OF AMER CL R5 (RGAFX) (0.39)
COLUMBIA MID CAP VAL Z (NAMAX) (0.94)
DAVIS NEW YORK VENTURE CL Y (DNVYX) (0.62)
DWS RREEF REAL ESTATE SEC INST (RRRRX) (0.61)
EM COLLECTIVE INV FUND TIER 2 (HLEMT) (1.35)
HARBOR INTL FUND (HAINX) (0.79)
HARBOR MID CAP GRTH FD INST CL (HAMGX) (0.86)
HARBOR:SM CAP VAL;INST (HASCX) (0.86)
MFS VALUE FD CL R4 (MEIJX) (0.71)
OPPENHEIMER OFITC INTERNATIONA (OFIIT) (0.7)
PRUDENTIAL JENNISON GROWTH Z (PJFZX) (0.76)
SSGA S&P 500 INDEX FUND CL E (JOZBT) (0.13)
VANGUARD EXPLORER ADMIRAL (VEXRX) (0.34)

BOND/FIXED INCOME
LORD ABBETT BOND DEBENTURE FD (LBNYX) (0.62)
PIMCO REAL RETURN FD CL INST (PRRIX) (0.47)
PIMCO TOTAL RETURN PORT. INSTL (PTTRX) (0.46)

MONEY MARKET/STABLE VALUE
RETIREMENT BANK ACCOUNT (IRSAI) (0)
WELLS FARGO STABLE RETURN FD C (WESRT) (0.48)

ALLOCATION FUNDS
THE OAKMARK EQUITY & INCOME FD (OAKBX) (0.78)


I'm trying to simplify my investments as much as possible. Over the last year I've consolidated all of our accounts to Vanguard and put all of our investments in the Vanguard Retirement 2050 fund. I struggle a little bit with choosing the right funds in my 401K. I would like to mirror the 90/10 allocation that we have in the vanguard accounts.

Questions:
1. I have 25% of my 401K in the REIT. I like the idea of having exposure to something different outside of the stock/bond funds. But do I have too much in this fund or should I even be in this fund at all?

2. Am I choosing the right investments given my choices?
BigMrRitz
 
Posts: 15
Joined: Mon Dec 31, 2012 5:49 pm

Re: Need help with choosing funds in my 401K

Postby livesoft » Sat Mar 16, 2013 10:26 am

Although what you have done appears to be just fine, I would take a completely different approach than what you have done. I would use one fund per account for the next while, but I would use different funds:

His 401(k)
63% S&P500 Index fund (yep, put all of it in that fund)

His Roth
12.5% Vanguard Total Bond Market

Her Rollover IRA
22% Vanguard Total Int'l Index fund

Her Roth
3% any single fund you want (REIT, small-cap value index, or extended market index)

I would not worry have everything "perfectly" balanced at all. If you felt you need to rebalance, I would probably use "her Rollover IRA" at Vanguard to do so.

I think you will eventually come around to the idea that you might want more than 10% in fixed income.

There are many other possibilities. For instance, His Roth could be a single fund: Vanguard Total Int'l Index fund. Then Her Rollover IRA could be the bond fund plus another fund or two. And all rebalancing could be done in Her Rollover IRA.

Another example:
His401(k): Mix S&P500 and Explorer for US equities
HisRoth: Total Int'l Index fund (set and forget mode)
HerRoth: REIT (set and forget mode) or Total Int'l Index fund.
HerRollover: All Bond fund, or Bond fund+REIT or Bond fund plus anything else for rebalancing.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
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Re: Need help with choosing funds in my 401K

Postby BigMrRitz » Sat Mar 16, 2013 10:50 am

That's actually great advise. I never really thought of it that way. It really solves 2 problems for me. 1. It allows me to minimize my costs as much as possible. 2. Each account becomes its own asset class which makes it really easy for me to know what my asset allocation is at any given time (I would just need to know the balance of each account).

I guess the S&P fund offers me enough diversification is equities compared to the total stock market fund?
BigMrRitz
 
Posts: 15
Joined: Mon Dec 31, 2012 5:49 pm

Re: Need help with choosing funds in my 401K

Postby Default User BR » Sat Mar 16, 2013 12:20 pm

BigMrRitz wrote:That's actually great advise. I never really thought of it that way.

Livesoft's proposed plan was similar to what I thought.

BigMrRitz wrote:I guess the S&P fund offers me enough diversification is equities compared to the total stock market fund?

It's pretty good. You could, as mentioned, pick up some extended market elsewhere to complement it. Or even go small value or something like that.


Brian
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