Which Vanguard Fund to Choose

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TandL
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Joined: Sun May 09, 2021 11:39 pm

Which Vanguard Fund to Choose

Post by TandL »

[Edited to put all info in one spot as suggested-thanks.]

We're learning about investing and looking to rearrange how our retirement funds are invested. We are in our late 30s and would like to become financially independent in about 10 years to allow us to choose how often and how much to work. My husband has a 401K with options to invest in Vanguard. I've read JLCollins' book and appreciate the simplicity and wisdom of holding VTSAX and VBTLX, but neither of those are options in this particular 401K. So what would you recommend?

Here are our current allocations

His 401k = 8.6% (this is the one we're discussing in this post)
His rollover IRA at Schwab = 29.3%. 18 tickers! Plan to transfer to 401K after allocating funds.
Her 403b at Principal = 20.2%. 36 tickers!!! ER from 0.04% - 1.35%. No longer with this employer. Plan to rollover into new 401K.
Her traditional IRA at Schwab = 2%. USCRX. Plan to rollover into new 401K.
Her new 401K = 0%. VFIAX 80%. VBTLX 20%.

His Roth IRA at Schwab 24%. 18 tickers! Was planning to transfer to Vanguard.
Her Roth IRA Victory Capital 15.8%%. USAIX ~50%, ER 0.50%. USAWX ~50%, ER 1.09%. Plan to transfer to Vanguard.

His 401K Options

Vanguard Options
--Intermediate Term Bond Index Fund (VBILX) ER 0.070%
--Balanced Index Fund (VBIAX) ER 0.070%
--Value Index Fund (VVIAX) ER 0.050%
--Growth Index Fund (VIGAX) ER 0.050%
--Mid Cap Index Fund (VIMAX) ER 0.050%
--Small Cap Value Index Fund (VSIAX) ER 0.070%
--Small Cap Index Fund (VSMAX) ER 0.050%
--Small Cap Growth Index Fund (VSGAX) ER 0.070%
--Emerging Markets Stock Index Fund (VEMAX) ER 0.140%

Non VanGuard Options:
--Fidelity Freedom Index Fund (FAPIX) ER 0.060%
--Fidelity Freedom Index [Year] Fund (FQIPX, etc) ER 0.060%
--iShares Russell 1000 Large-Cap Index Fund-Class K (BRGKX) ER 0.080%
--State Street Equity 500 Index Fund-Class K (SSSYX) ER 0.020%
--TIAA-CREF Small-Cap Blend Index Fund Institutional Class (TISBX) 0.060%
--iShares MSCI EAFE International Index Fund Class K (BTMKX) ER 0.040%
--IShares MSCI Total International Index Fund Class K (BDOKX) ER 0.110%


Her new 401K options:

VanEck Emerging Markets Z EMRZX ER 0.90%
Vanguard 500 Index Admiral VFIAX ER 0.04%
Vanguard Mid Cap Index Admiral VIMAX ER 0.05%
T. Rowe Price Mid-Cap Growth I RPTIX ER 0.61%
Vanguard Small Cap Index Adm VSMAX ER 0.05%
JPMorgan Small Cap Equity R6 VSENX ER 0.74%
Vanguard Developed Markets Ind... VTMGX ER 0.07%
Vanguard Emerging Mkts Stock I... VEMAX ER 0.14%
First Eagle Overseas R6 FEORX ER 0.80%
Vanguard Total Bond Market Ind... VBTLX ER 0.05%
Vanguard Total Intl Bd Idx Adm... VTABX ER 0.11%
Vanguard Shrt-Term Infl-Prot S... VTAPX ER 0.06%
Goldman Sachs Stable Value CTF... 381429455 ER 0.32%
JPMorgan Equity Income R6 OIEJX ER 0.47%
T. Rowe Price Instl Large Cap ... TRLGX ER 0.56%
Vanguard Short-Term Bond Index... VBIRX ER 0.07%
Metropolitan West Total Return... MWTSX ER 0.38%
Lord Abbett High Yield R6 LHYVX ER 0.61%
Multiple Time Frame funds that have a wide mix of the above.


I'm now leaning toward:

SSSYX + VBILX or
BRGKX + TISBX + VBILX

Given the mixed opinions on international funds and a desire to keep things as simple as possible, I'm less interested in international funds. I think 80% stocks, 20% bonds.


I'm thinking VVIAX or VIGAX may most closely resemble the VTSAX based on my limited knowledge and reading. I don't know which bond would most closely resemble VBLTX. I appreciate any feedback you may have.

The other question is whether a 401K should hold all the stocks investments while a RothIRA should hold all the bonds investments for tax purposes. Or do you balance each according to age and nearness of retirement?
Last edited by TandL on Thu May 20, 2021 10:38 pm, edited 6 times in total.
dru808
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Re: Which Vanguard Fund to Choose

Post by dru808 »

Half growth index fund, half value index fund for your equity portion.

The intermediate bond fund for your bond portion if you feel you need bonds.
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okwriter
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Re: Which Vanguard Fund to Choose

Post by okwriter »

The other question is whether a 401K should hold all the stocks investments while a RothIRA should hold all the bonds investments for tax purposes.
Ideally the other way around, since Roth IRA has tax-free growth while 401k is only tax-deferred. So you'd want to put high-growth assets (stocks) in the Roth.
Northern Flicker
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Re: Which Vanguard Fund to Choose

Post by Northern Flicker »

VBIAX is equivalent to holding 60% VTSAX and 40% VBTLX. Depending on the ratio of Roth IRA assets to 401K assets, you can build a portfolio around VBIAX as a core holding. Some examples:

Int'l diversication:
VBIAX + VEMAX in 401K
VTMGX in Roth IRA
-or-
VBIAX in 401K
VTIAX in Roth IRA.

US only:
VBIAX in 401K
VTSAX in Roth IRA

You will need to work out the allocation percentages based on asset allocation
Last edited by Northern Flicker on Mon May 17, 2021 4:14 am, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Dude2
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Re: Which Vanguard Fund to Choose

Post by Dude2 »

The most sane approach would be 100% VBIAX. Then maybe buy some total international elsewhere, and maybe some I Bonds.
Then ’tis like the breath of an unfee’d lawyer.
dogagility
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Re: Which Vanguard Fund to Choose

Post by dogagility »

Welcome to the forum
Half growth index fund, half value index fund for your equity portion.
The intermediate bond fund for your bond portion if you feel you need bonds.
I agree with this advice.

You could also choose the Balanced Fund (VBIAX). However, you need to determine your equity:bond asset allocation percentages. Consider all retirement accounts as a single entity for asset allocation purposes. If you choose to have bonds (I wouldn't at your age), VBIAX could be a good choice depending upon how much money you have in the 401k vs other retirement accounts.
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
dan7800
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Re: Which Vanguard Fund to Choose

Post by dan7800 »

OP: You say option to invest in Vanguard. Do you have other options? I ask because there are some perfectly fine funds at companies such as Fidelity that may be better options.
UpperNwGuy
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Re: Which Vanguard Fund to Choose

Post by UpperNwGuy »

dan7800 wrote: Mon May 17, 2021 5:36 am OP: You say option to invest in Vanguard. Do you have other options? I ask because there are some perfectly fine funds at companies such as Fidelity that may be better options.
I agree. I don't like most of the Vanguard options you've listed and would be inclined to invest in other companies' funds in this situation — provided that they were better choices, such as Fidelity or Schwab.

Note: Value Index plus Growth Index does not equal Total Stock.
sycamore
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Re: Which Vanguard Fund to Choose

Post by sycamore »

TandL wrote: Mon May 17, 2021 12:01 am We're learning about investing and looking to rearrange how our retirement funds are invested. We are in our late 30s and would like to become financially independent in about 10 years to allow us to choose how often and how much to work. My husband has a 401K with options to invest in Vanguard. I've read JLCollins' book and appreciate the simplicity and wisdom of holding VTSAX and VBTLX, but neither of those are options in this particular 401K. So what would you recommend? Here are the options:

--Intermediate Term Bond Index Fund (VBILX)
--Balanced Index Fund (VBIAX)
--Value Index Fund (VVIAX)
--Growth Index Fund (VIGAX)
--Mid Cap Index Fund (VIMAX)
--Small Cap Value Index Fund (VSIAX)
--Small Cap Index Fund (VSMAX)
--Small Cap Growth Index Fund (VSGAX)
--Emerging Markets Stock Index Fund (VEMAX)

I'm thinking VVIAX or VIGAX may most closely resemble the VTSAX based on my limited knowledge and reading. I don't know which bond would most closely resemble VBLTX. I appreciate any feedback you may have.

The other question is whether a 401K should hold all the stocks investments while a RothIRA should hold all the bonds investments for tax purposes. Or do you balance each according to age and nearness of retirement?
TandL, to help with your general "learning about investing", I suggest reading this thread about Investment Planning and also the Bogleheads "Investing start-up kit, in particular the step about creating an Investment policy statement. An IPS will guide you to the right set of funds that meet your investing criteria.

Generic info aside, VBILX (Intermediate Term Bond Index) is the one closest to VBTLX (Total Bond). The average duration of the two funds is close. The main differences are:

1) VBILX holds only intermediate term bonds while VBTLX holds bonds across the maturity spectrum that average out to intermediate-term
2) VBILX holds no mortgage-backed securities and has relatively more corporate bonds; VBTLX holds MBSs and has more "safer" Treasury bonds
Reference:
https://investor.vanguard.com/mutual-fu ... olio/vtsax
https://investor.vanguard.com/mutual-fu ... olio/vbilx

Also, there's a BH wiki article with guidelines on how to decide which assets go in which accounts. I'd assign a location for bonds first (e.g., put them the 401k first, if you still need more bonds put them in other tax-advantaged accounts); then place money for stocks in whatever accounts you have left. This usually results in stocks primarily being in Roth but it's okay to have either bonds or stocks in either Trad or Roth accounts depending on your asset allocation.
tibbitts
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Re: Which Vanguard Fund to Choose

Post by tibbitts »

With as many Vanguard options as the OP listed, there are likely other fund families or even a brokerage option available within the plans.
whereskyle
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Re: Which Vanguard Fund to Choose

Post by whereskyle »

TandL wrote: Mon May 17, 2021 12:01 am We're learning about investing and looking to rearrange how our retirement funds are invested. We are in our late 30s and would like to become financially independent in about 10 years to allow us to choose how often and how much to work. My husband has a 401K with options to invest in Vanguard. I've read JLCollins' book and appreciate the simplicity and wisdom of holding VTSAX and VBTLX, but neither of those are options in this particular 401K. So what would you recommend? Here are the options:

--Intermediate Term Bond Index Fund (VBILX)
--Balanced Index Fund (VBIAX)
--Value Index Fund (VVIAX)
--Growth Index Fund (VIGAX)
--Mid Cap Index Fund (VIMAX)
--Small Cap Value Index Fund (VSIAX)
--Small Cap Index Fund (VSMAX)
--Small Cap Growth Index Fund (VSGAX)
--Emerging Markets Stock Index Fund (VEMAX)

I'm thinking VVIAX or VIGAX may most closely resemble the VTSAX based on my limited knowledge and reading. I don't know which bond would most closely resemble VBLTX. I appreciate any feedback you may have.

The other question is whether a 401K should hold all the stocks investments while a RothIRA should hold all the bonds investments for tax purposes. Or do you balance each according to age and nearness of retirement?
VBIAX is the easiest all-in-one choice, if you would like a 60/40 stock/bond allocation, which is a perfectly sensible allocation for most people.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
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ruralavalon
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

TandL wrote: Mon May 17, 2021 12:01 am We're learning about investing and looking to rearrange how our retirement funds are invested. We are in our late 30s and would like to become financially independent in about 10 years to allow us to choose how often and how much to work.

Your most important investing decision will be to establish a high rate of contributions. Forum discussion, link.

Does your husband make the maximum annual employee contribution of $19.5k?

Do you each have a Roth IRA and contribute the annual maximum of $6k each?

TandL wrote: Mon May 17, 2021 12:01 amMy husband has a 401K with options to invest in Vanguard. I've read JLCollins' book and appreciate the simplicity and wisdom of holding VTSAX and VBTLX, but neither of those are options in this particular 401K. So what would you recommend? Here are the options:

--Intermediate Term Bond Index Fund (VBILX)
--Balanced Index Fund (VBIAX)
--Value Index Fund (VVIAX)
--Growth Index Fund (VIGAX)
--Mid Cap Index Fund (VIMAX)
--Small Cap Value Index Fund (VSIAX)
--Small Cap Index Fund (VSMAX)
--Small Cap Growth Index Fund (VSGAX)
--Emerging Markets Stock Index Fund (VEMAX)

I'm thinking VVIAX or VIGAX may most closely resemble the VTSAX based on my limited knowledge and reading. I don't know which bond would most closely resemble VBLTX. I appreciate any feedback you may have.
It's very odd that they don't offer a S&P 500 index fund, large-cap index fund or total stock market index fund. You might double check to see if any are offered.

You could simply use Balanced Index Fund (VBIAX) by itself. This one fund is The equivalent of owning both holding VTSAX and VBTLX.

"The fund (VBIAX) invests roughly 60% in stocks and 40% in bonds by tracking two indexes . . . .." "With 60% of its assets, the fund seeks to track the investment performance of the CRSP US Total Market Index, which represents nearly 100% of the investable U.S. Stock market . . . . . With 40% of its assets, the fund seeks to track the investment performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Bond Index."

Or use a combination of these two funds:
60%, Value Index Fund (VVIAX)
40%, Intermediate Term Bond Index Fund (VBILX)

In my opinion Intermediate Term Bond Index Fund (VBILX) is an excellent bond index fund, it's very diversified with a very low expense ratio. It is the bond fund I use.

TandL wrote: Mon May 17, 2021 12:01 amThe other question is whether a 401K should hold all the stocks investments while a RothIRA should hold all the bonds investments for tax purposes. Or do you balance each according to age and nearness of retirement?
In general it's usually better to hold the bond allocation in a traditional tax-deferred accounts like a traditional 401k.

In general it's usually better to use Roth IRAs to hold stock funds.

Wiki article "Tax-efficient Fund Placement", link.
Last edited by ruralavalon on Mon May 17, 2021 2:26 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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iceport
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Re: Which Vanguard Fund to Choose

Post by iceport »

okwriter wrote: Mon May 17, 2021 2:13 am
The other question is whether a 401K should hold all the stocks investments while a RothIRA should hold all the bonds investments for tax purposes.
Ideally the other way around, since Roth IRA has tax-free growth while 401k is only tax-deferred. So you'd want to put high-growth assets (stocks) in the Roth.
That's a very common misconception. The simple fact is, a traditional 401k typically offers tax-free growth also — or better that that, if the withdrawal-time tax rate is lower than the contribution-time tax rate.

https://www.bogleheads.org/wiki/Traditi ... _situation

With that said, there is still the matter of eventual RMDs, and to minimize those it's best to have more growth in after-tax accounts.
"Discipline matters more than allocation.” ─William Bernstein
Topic Author
TandL
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Re: Which Vanguard Fund to Choose

Post by TandL »

Thank you for all the responses!

We recently learned that my husband's work matches 50% of what he contributes without any ceiling, so we are re-arranging to max out his 401K to max out the match. We are wanting to change how the dollars are invested, and then rollover his outside traditional IRA into this 401K to lessen expenses and simplify things. If we have more to invest, we'll put it into my 401K, which doesn't match but does give 4% no matter how much/little I invest into it. We earn too much to qualify for Roth IRAs anymore, but we are feeling rather grateful for this unique combination of 401Ks that we have!

He does have other options from Fidelity, but their E/R seem a tad higher, and I've heard better things about Vanguard. Fidelity options are Freedom Index Income Fund and then multiple Freedom Index Funds with certain dates listed (2005-2065). There are also iShares, State Equity 500 Index Fund, and TIAA-CREF small cap blend index fund. With my limited knowledge, I figured we would stick with Vanguard but am open to strong feelings otherwise with a good reason to use one of these other funds.

I did just look up State Street Equity since it's a 500 Index Fund, which I think means it more fully represents the entire market? It's E/R is listed as a mere 0.02%! It has no 10 year average annual return...is it too new?

Thank you for clarifying: put any bonds desired into the 401K and then the Roth IRA is preferably all stocks.

I want to better understand the ratio of bonds to stocks. My understanding is people tend to increase percentage of bonds as they get closer to retirement in order to minimize volatility.

I believe what some of you are saying is to take the grand total of retirement savings and then place the desired percentage of bonds into the 401K. For example, if we have $100,000 total between the 401K and Roth IRA and we wants 20% bonds, we would invest $20,000 of the 401K dollars bonds and then make the rest of the 401K money and all of the Roth IRA money stocks. Is that correct? And then "re-balance" annually?

If this is the case, I hesitate on the VBIAX because it's a fixed ratio, which doesn't make it impossible to balance the numbers but does add to the complexity. But if the stocks portion of the VBIAX more closely resembles the total stock index, that may be favorable.

Many thanks for your wisdom. I'll read more of the articles this weekend as I continue to read the Bogleheads book!
Northern Flicker
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Re: Which Vanguard Fund to Choose

Post by Northern Flicker »

The way CRSP indices are set up, the total market index is sliced into a large cap index and small cap index, which is in fact a mid and small cap index. The large cap index is divided into the value and growth indices. The 401K has index funds for each of the three. You can replicate VTSAX by holding VVIAX, VIGAX, and VSMAX in the proper proportion. It does not have to be precise. Based on data on the CRSP site for quarter end 3/2021, I get the following weights.

VIGAX 46.6%
VVIAX 38.8%
VSMAX 14.6%

It changes as the market moves but if you hold them at market weight, they will stay correct. The difficulty is that when you rebalance between stocks and bonds, you will have to recompute the weights to calculate allocation amounts. I do not recommend doing that. I would simplify to something like:

VIGAX 42%
VVIAX 42%
VSMAX 16%

If you just want to hold VVIAX and VIGAX for stock exposure, you would just be holding hold large cap stocks, and might as well just hold an S&P 500 fund for simplicity in that case.

VBILX is a perfectly fine bond index fund.

There is nothing magic about Vanguard funds. Low cost index funds from other providers are also fine.

The simplest thing possible would be to hold a Fidelity Freedom Index fund in the 401K and Target Retirement Fund in the Roth IRA. You could either choose the planned retirement year, it pick the year that currently is 80% stock for each one. This would be a set it and forget it portfolio. Fidelity and Vanguard portfolio managers would manage the allocation and take care of rebalancing.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
UpperNwGuy
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Re: Which Vanguard Fund to Choose

Post by UpperNwGuy »

OP, you mentioned that iShares are available. Which ETFs specifically?
dogagility
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Re: Which Vanguard Fund to Choose

Post by dogagility »

TandL wrote: Mon May 17, 2021 11:23 pm Thank you for all the responses!

We recently learned that my husband's work matches 50% of what he contributes without any ceiling, so we are re-arranging to max out his 401K to max out the match. We are wanting to change how the dollars are invested, and then rollover his outside traditional IRA into this 401K to lessen expenses and simplify things. If we have more to invest, we'll put it into my 401K, which doesn't match but does give 4% no matter how much/little I invest into it. We earn too much to qualify for Roth IRAs anymore, but we are feeling rather grateful for this unique combination of 401Ks that we have!

He does have other options from Fidelity, but their E/R seem a tad higher, and I've heard better things about Vanguard. Fidelity options are Freedom Index Income Fund and then multiple Freedom Index Funds with certain dates listed (2005-2065). There are also iShares, State Equity 500 Index Fund, and TIAA-CREF small cap blend index fund. With my limited knowledge, I figured we would stick with Vanguard but am open to strong feelings otherwise with a good reason to use one of these other funds.

I did just look up State Street Equity since it's a 500 Index Fund, which I think means it more fully represents the entire market? It's E/R is listed as a mere 0.02%! It has no 10 year average annual return...is it too new?
You can trust fund offerings from brokerages other than Vanguard. The important factors are the expense ratios and the actual investments.

The iShares funds could be very good choices. What are the names (or symbols) of these?

I think the State Street Equity 500 Index fund is a better choice than any of your available Vanguard funds... a single, diversified entity rather than the slice-and-dice sector Vanguard funds.
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
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ruralavalon
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

I am a huge fan of Vanguard. Still there are other companies that offer good index funds including Fidelity. Schwab, BlackRock iShares, State Street, and Northern Trust.


TandL wrote: Mon May 17, 2021 11:23 pm Thank you for all the responses!

We recently learned that my husband's work matches 50% of what he contributes without any ceiling, so we are re-arranging to max out his 401K to max out the match. We are wanting to change how the dollars are invested, and then rollover his outside traditional IRA into this 401K to lessen expenses and simplify things. If we have more to invest, we'll put it into my 401K, which doesn't match but does give 4% no matter how much/little I invest into it. We earn too much to qualify for Roth IRAs anymore, but we are feeling rather grateful for this unique combination of 401Ks that we have!
That's an excellent employer match in his employer's 401k plan, you are very fortunate.

That's the right decision to make the maximum annual employee contribution of $19.5k to that account, in order to receive the maximum employer match.

TandL wrote: Mon May 17, 2021 11:23 pmHe does have other options from Fidelity, but their E/R seem a tad higher, and I've heard better things about Vanguard. Fidelity options are Freedom Index Income Fund and then multiple Freedom Index Funds with certain dates listed (2005-2065). There are also iShares, State Equity 500 Index Fund, and TIAA-CREF small cap blend index fund. With my limited knowledge, I figured we would stick with Vanguard but am open to strong feelings otherwise with a good reason to use one of these other funds.

I did just look up State Street Equity since it's a 500 Index Fund, which I think means it more fully represents the entire market? It's E/R is listed as a mere 0.02%! It has no 10 year average annual return...is it too new?
State Street Equity 500 Index Fund (SSSYX???) ER 0.02% would be an excellent choice for investing in U.S. stocks. A S&P 500 index fund covers over 80%of the U.S. stock market investing in stocks of selected large-cap and mid-cap U.S. companies. In the 29 years since the creation of the first total stock market index fund the two types of funds have had almost identical performance. Portfolio Visualizer, 1993-2021.

So unless something better is available I suggest using State Street Equity 500 Index Fund K (SSSYX???) ER 0.02% as one of the funds in his 401k account.

Are any other State Street index funds offered in his employer's 401k plan? If so what are they? Please give fund names, tickers and expense ratios.

What iShares funds are offered in his employer's 401k plan? BlackRock iShares funds are often very good funds to use. Please give fund names, tickers and expense ratios.

What international stock funds are offered in his employer's 401k plan? Please give fund names, tickers and expense ratios.

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.


TandL wrote: Mon May 17, 2021 11:23 pm Thank you for clarifying: put any bonds desired into the 401K and then the Roth IRA is preferably all stocks.
What percentage of your current portfolio is in each account? Like this:
His 401k, aa %
Her 401k, bb %
He is Roth IRA at ???, cc%
Her Roth IRA at ???, dd %
Total = 100%

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

TandL wrote: Mon May 17, 2021 11:23 pmI want to better understand the ratio of bonds to stocks. My understanding is people tend to increase percentage of bonds as they get closer to retirement in order to minimize volatility.

Here is some infomation about fixed income allocation: Graph, "An Efficient Frontier: the power of diversification".
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio";
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?"
5) White Coat Investor (9/23/2016), "In Defense of Bonds"; and
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?"



TandL wrote: Mon May 17, 2021 11:23 pmI believe what some of you are saying is to take the grand total of retirement savings and then place the desired percentage of bonds into the 401K. For example, if we have $100,000 total between the 401K and Roth IRA and we wants 20% bonds, we would invest $20,000 of the 401K dollars bonds and then make the rest of the 401K money and all of the Roth IRA money stocks. Is that correct?
Yes.

TandL wrote: Mon May 17, 2021 11:23 pmAnd then "re-balance" annually?
Some people rebalance annually. Some people rebalance only when the asset allocation is 5% or more off target.

Wiki article, Rebalancing.

TandL wrote: Mon May 17, 2021 11:23 pm If this is the case, I hesitate on the VBIAX because it's a fixed ratio, which doesn't make it impossible to balance the numbers but does add to the complexity. But if the stocks portion of the VBIAX more closely resembles the total stock index, that may be favorable.

With the new information you provided, my suggestion for funds to use in his employer's 401k plan has changed. I suggest instead of Vanguard Balanced Index Fund (VBIAX) using these two funds:
1) State Street Equity 500 Index Fund (SSSYX???) ER 0.02%; and
2) Vanguard Intermediate-term Bond Index Fund (VBILX) ER 0.07%.

If a good international stock fund is offered that could also be included.

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities", available as an archived pdf. Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). The diversification benefit has varied over time. (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
okwriter
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Re: Which Vanguard Fund to Choose

Post by okwriter »

iceport wrote: Mon May 17, 2021 2:25 pm
okwriter wrote: Mon May 17, 2021 2:13 am
The other question is whether a 401K should hold all the stocks investments while a RothIRA should hold all the bonds investments for tax purposes.
Ideally the other way around, since Roth IRA has tax-free growth while 401k is only tax-deferred. So you'd want to put high-growth assets (stocks) in the Roth.
That's a very common misconception. The simple fact is, a traditional 401k typically offers tax-free growth also — or better that that, if the withdrawal-time tax rate is lower than the contribution-time tax rate.

https://www.bogleheads.org/wiki/Traditi ... _situation

With that said, there is still the matter of eventual RMDs, and to minimize those it's best to have more growth in after-tax accounts.
We're using "growth" to mean different things - you're referring to the growth of pre-tax dollars, while I was speaking about the growth of dollars already present in the account. Isn't the latter what matters for deciding asset placement? The linked wiki article is about a different decision (prioritizing which account to contribute to, for which the metric of pre-tax dollar growth makes sense).

Edit: Actually, ignore the above. Iceport is correct. I realized that I was not adjusting the asset allocation for the effect of taxes. Found this WCI article that explains it well.
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TandL
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Re: Which Vanguard Fund to Choose

Post by TandL »

I edited my original post to show non-Vanguard options and to show the percentage of our funds between 401K/traditional IRAs and Roth IRAs. Thanks!
sawhorse
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Re: Which Vanguard Fund to Choose

Post by sawhorse »

I would be tempted to put it in a Fidelity Freedom Index fund. Pick the one that matches your desired asset allocation, keeping in mind that it may not be the one that matches your expected retirement date.
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Re: Which Vanguard Fund to Choose

Post by Northern Flicker »

The TIAA-CREF small cap index fund TISBX is a Russell 2000 index fund. The iShares fund BRGKX is a Russell 1000 index fund. These pair to make a Russell 3000 portfolio which is a total market index portfolio very similar to the index tracked by VTSAX. The easiest way to hold what is for all practical purposes the equivalent of VTSAX is to hold:

90% BRGKX
10% TISBX

VBILX is a good bond index fund.
BDOKX is a total international index fund similar to VTIAX at Vanguard.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
dogagility
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Re: Which Vanguard Fund to Choose

Post by dogagility »

The TIAA-CREF small cap index fund TISBX is a Russell 2000 index fund. The iShares fund BRGKX is a Russell 1000 index fund. These pair to make a Russell 3000 portfolio which is a total market index portfolio very similar to the index tracked by VTSAX. The easiest way to hold what is for all practical purposes the equivalent of VTSAX is to hold:

90% BRGKX
10% TISBX

VBILX is a good bond index fund.
BDOKX is a total international index fund similar to VTIAX at Vanguard.
+1
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
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iceport
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Re: Which Vanguard Fund to Choose

Post by iceport »

okwriter wrote: Tue May 18, 2021 7:47 pm I realized that I was not adjusting the asset allocation for the effect of taxes. Found this WCI article that explains it well.
Well, that was an excellent article, and it's great that it did the trick to get over the conceptual illusion that paying less taxes equates to greater after-tax growth. (It doesn't; minimizing taxes is not the same thing as maximizing after-tax growth.) In my way of looking at it, a review of the two simple growth equations, one for traditional accounts and one for Roth accounts, clearly shows the same thing.

https://www.bogleheads.org/wiki/Traditi ... _situation

By comparing the growth in the two types of accounts, these equations show that traditional accounts produced exactly the same results (assuming constant tax rates) as Roth accounts — as long as taxes are accounted for. (Too often, folks forget to account for taxes *at all* when considering Roth accounts.) And it's conceptually easy and intuitive to see that Roth accounts produce tax-free growth. So if they produce equivalent results, traditional accounts must also produce tax-free growth.

The key concept to understand using either explanation is that only a portion of the pre-tax contribution is really the investor's. The part that would have been lost to taxes if the traditional account were not funded is really the government's cut of the total contribution to the account. In the WCI's article, adjusting AA for the effects of taxes provides the same kind of conceptual framing necessary to overcome faulty perceptions that taxing invested funds before the growth is somehow different than taxing them afterwards.

(It took me an embarrassingly long time to understand this, and that's why I raise the point when the opportunity arises.)

So in the end, for investors in the real world, there might still be a preference for smaller traditional accounts — and thus using them for less risky investments. Avoiding more RMDs would be a legitimate rationale; following the flawed notion that paying more taxes on traditional accounts somehow cuts into the overall portfolio performance is not... typically.
"Discipline matters more than allocation.” ─William Bernstein
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

There are many excellent funds offered in his employer's 401k plan. He is fortunate.

With the new information you provided, my suggestion for funds to use in his employer's 401k plan has changed. I suggest using these three funds in his employer's 401k plan:
1) State Street Equity 500 Index Fund (80% of U.S. stock market) (SSSYX) ER 0.02%;
2) BlackRock iShares MSCI Total International Index Fund (both developed and emerging markets) (BDOKX) ER 0.11%; and
3) Vanguard Intermediate-term Bond Index Fund (intermediate-term, investment-grade bonds) (VBILX) ER 0.07%.

Vanguard, BlackRock and State Street are all excellent fund companies. The three funds are very diversified with very low expense ratios.

TandL wrote: Mon May 17, 2021 12:01 amHere are our current allocations, spread out over multiple accounts, planning to consolidate.
His 401k + traditional IRA 37.8%
Her 403b + traditional IRA 22%
His Roth IRA at Schwab 24%%
Her Roth IRA Victory Capital 15.8%%
For simplicity and convenience, I suggest having both Roth IRAs at a single low cost fund provider like Vanguard, Fidelity or Schwab. It's largely a matter of personal preference, my personal preference is Vanguard. All three offer diversified, low expense index funds.

Do you each also have a traditional Individual Retirement Account (IRA)? (An IRA is different than a 401k or 403b account.) If so which fund firm or brokerage is each traditional IRA with? What funds do you hold in each traditional IRA? Please give fund names tickers and expense ratios.

What funds do you use in her 403b account? What other funds are offered in her employer's 403b plan? Please give fund names, tickers and expense ratios.

Please list the percentage of the total portfolio in each account.

It's often best to coordinate investments among all accounts.

Again please simply add this new information to your original post using the edit button.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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TandL
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Re: Which Vanguard Fund to Choose

Post by TandL »

Updated total %es in original post.

I admit that I'm lost on the tax issue. Reading through this late at night after long days is probably not helping anything.

I learn something new from every post. Again, I must say thank you!
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

Here are our current allocations, spread out over multiple accounts, planning to consolidate.
His 401k = 8.6% (this is the one we're discussing in this post)
His rollover IRA at Schwab = 29.3%. 18 tickers! Plan to transfer to 401K after allocating funds.
Her 403b at Principal = 20.2%. 36 tickers!!! ER from 0.04% - 1.35%. No longer with this employer. Plan to rollover into new 401K.
Her traditional IRA at Schwab = 2%. USCRX. Plan to rollover into new 401K.
Her new 401K = 0%. VFIAX 80%. VBTLX 20%.

His Roth IRA at Schwab 24%. 18 tickers! Was planning to transfer to Vanguard.
Her Roth IRA Victory Capital 15.8%%. USAIX ~50%, ER 0.50%. USAWX ~50%, ER 1.09%. Plan to transfer to Vanguard.

I'm now leaning toward:
SSSYX + VBILX or
BRGKX + TISBX + VBILX
I agree that its a good idea to rollover the traditional IRAs into the current employers' 401k plans. It looks like ia good idea to rollover her old 403b into her current employer's 401k plan. I agree that its a good idea to rollover the Roth IRAs to Roth IRAs at Vanguard.

What is the desired asset allocation (stock/bond mix, and international/domestic stock mix) that you want to aim for?

What funds are offered in her current employer's 401k? Please give fund names, tickers and expense ratios.

Please simply add this to your original post using the edit button.

With this additional information I could suggest an overall portfolio for all accounts (covering the tax issue) for you to consider.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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TandL
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Re: Which Vanguard Fund to Choose

Post by TandL »

Updated again in original post. Thanks!
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

Asset allocation.
Given the mixed opinions on international funds and a desire to keep things as simple as possible, I'm less interested in international funds. I think 80% stocks, 20% bonds.
(n my opinion in your late 30s I suggest about 20% in bonds is within the range of what is reasonable. This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio";
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?"
5) White Coat Investor (9/23/2016), "In Defense of Bonds"; and
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?"

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities", available as an archived pdf. Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). The diversification benefit has varied over time. (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).

I hope that you will consider a modest allocation to international stocks.



Fund selection.
In selecting funds strive for a combination of both broad diversification (to reduce risk) and low expense ratios (to increase your net return). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Please see:
1) Wiki article "Three-fund portfolio";
2) Forum discussion, "The Three-Fund Portfolio"; and
3) Taylor Larimore post, "Articles recommending the three-fund portfolio".

You both have many excellent funds offered in your employers' plans. You are fortunate.

In my opinion in his current employer's 401k plan the better funds to consider using include:
1) State Street Equity 500 Index Fund (80% of U.S. stock market) (SSSYX) ER 0.02%;
2) BlackRock iShares MSCI Total International Index Fund (both developed and emerging markets) (BDOKX) ER 0.11%; and
3) Vanguard Intermediate-term Bond Index Fund (intermediate-term, investment-grade bonds) (VBILX) ER 0.07%.

In my opinion in her current 401k the better funds to consider using include:
1) Vanguard 500 Index Fund Admiral Shares (80% of U.S. stock market) (VFIAX) ER 0.04%;
2) Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) ER 0.07%; and
3) Vanguard Total Bond Market Index Fund (VBTLX) ER 0.05%.

For domestic stocks I suggest using a total stock market index fund where available. "In a 401(k) plan with limited choices one might very well opt for an S&P 500 index fund to serve as the domestic stock component of a three-fund portfolio." Wiki article, Three-fund portfolio, "Other considerations".

In my opinion in a plan that lacks a total stock market index fund, a S&P 500 index fund is good enough by itself for a domestic stock allocation. A S&P 500 index fund covers over 80% of the U.S. stock market investing in stocks of selected large-cap and mid-cap U.S. companies. In the 29 years since the creation of the first total stock market index fund the performance of the two types of funds has been almost identical. Portfolio Visualizer, 1993-2021. Sometimes one type has done a little better, sometimes the other. So it seems that adding a little in mid/small cap stocks trying to mimic the holdings of a total stock market fund has historically made little difference in performance.

See also:
1) Allan Roth, CBS Moneywatch (02/03/2010), "John C. Bogle on the S&P 500 vs. the Total Stock Market"; and
2) Wall Street Physician (01/17/2019), "Should You Invest in the S&P 500 or the Total Stock Market?".

If you want to add some Vanguard Small Cap Index Adm VSMAX ER 0.05%, then an 82/18 mix of the S&P 500 and small-cap index funds will mimic the content of a total stock market index fund. Wiki article, "Approximating total stock market". In my opinion this is not necessary, it is optional if you prefer to do this.




Fund placement.
Bond funds are not very tax-efficient. Ordinarily a bond fund should be placed in a tax-advantaged account, preferably a tax-deferred account like a traditional 401k. Wiki article “Tax-efficient fund placement”, link.

Withdrawals from a traditional account are taxed as ordinary income.

Withdrawals from a Roth IRA are tax free. Stock funds have a higher expected return than bond funds. Morningstar (1/20/2021) "Experts Forecast Stock and Bond Returns: 2021 Edition", link. So in a Roth IRA use stock funds with their higher expected returns, not bond funds.

In a Roth IRA at Vanguard I suggest using Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%, or Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%. I suggest regular mutual funds rather than exchange traded funds (ETFs) because more convenient, you can easily set up automatic investment of new contributions and automatic reinvestment of dividends.

To make portfolio management and rebalancing easy it is often better to have at least one large tax-advantaged account which contains all three basic asset types (bonds, international stocks, and domestic stocks). Do not try to put all components of the asset allocation in every account.


Example portfolio.
Here is an example portfolio that you could consider. This is a three-fund type portfolio, modified as necessary to accommodate the fund offerings in your 401k. The asset allocation is: 80% stocks, 20% bonds.

The percentages given are percentages of the total portfolio, not of a given account. The suggestion is to switch both the existing balances and the new contributions to the funds indicated. All percentages are rounded off, so may not add up exactly. Sometimes I state 00% to indicate funds you might want to add in the future.

His 401k includes rollover of traditional IRA (38%)
28%, State Street Equity 500 Index Fund (80% of U.S. stock market) (SSSYX) ER 0.02%
00%, BlackRock iShares MSCI Total International Index Fund (both developed and emerging markets) (BDOKX) ER 0.11%
10%, Vanguard Intermediate-term Bond Index Fund (intermediate-term, investment-grade bonds) (VBILX) ER 0.07%

Her 401k, includes rollover of traditional IRA (22%)
12%, Vanguard 500 Index Fund Admiral Shares (80% of U.S. stock market) (VFIAX) ER 0.04%
00%, Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) ER 0.07%
10%, Vanguard Total Bond Market Index Fund (VBTLX) ER 0.05%

His Roth IRA @ Vanguard (24%)
24%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%

Her Roth IRA @ Vanguard (16%)
16%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%




Rebalancing.
Because the funds will grow at different and unpredictable rates, it may be necessary every few years to rebalance to maintain the desired asset allocation. Wiki article, "Rebalancing" link. You can easily adjust the asset allocation by exchanging between funds inside the either or both of the 401k accounts.




Education.
A quick education for a do-it-yourself investor is Dr. Bernstein's short pdf book, "If You Can". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.

To go beyond the most basic I suggest that you also read one or two books on investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom".

If you have any questions just ask.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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TandL
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Re: Which Vanguard Fund to Choose

Post by TandL »

Thank you for an incredible summary of your recommendations and thinking behind the recommendations, along with many great resources for learning! I do have a couple follow up questions.

I'll read some more about international stocks. If we opt to include them, I assume we would shift funds from the US stocks to the international stocks. For instance, instead of 80% stocks / 20% bonds, we would do something like 60% US stocks / 20% international stocks / 20% bonds.

Two people suggested that 90% BRGKX + 10% TISBX in His 401K would be a 3000 portfolio, essentially representing a total market index portfolio. Could you elaborate more on why you have more highly recommended SSSYX instead? I appreciate your comments that a 500 is about as close as one can get to total if no other options are available. But this BRGKX + TISBX option would seemingly be even broader. The biggest difference I can see is the ER. Your suggestion has an ER of 0.020%. The BRGKX + TISBX has ERs of 0.080% and 0.060%.

Thank you, thank you!
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Re: Which Vanguard Fund to Choose

Post by Northern Flicker »

Iceport wrote: By comparing the growth in the two types of accounts, these equations show that traditional accounts produced exactly the same results (assuming constant tax rates) as Roth accounts — as long as taxes are accounted for.
That is partially correct. It would be fully correct were there not such a thing as required minimum distributions (RMDs) from traditional IRA/401K accounts. Once the accountholder reaches the age of RMDs (currently 72), withdrawals from a trad account are determined by age and account balance, not by spending needs. Trad assets can increase the tax rate in withdrawals. While this may amplify after-tax return, it works both ways. It also amplifies risk.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
sycamore
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Re: Which Vanguard Fund to Choose

Post by sycamore »

TandL wrote: Fri May 21, 2021 10:48 pm Thank you for an incredible summary of your recommendations and thinking behind the recommendations, along with many great resources for learning! I do have a couple follow up questions.

I'll read some more about international stocks. If we opt to include them, I assume we would shift funds from the US stocks to the international stocks. For instance, instead of 80% stocks / 20% bonds, we would do something like 60% US stocks / 20% international stocks / 20% bonds.

Two people suggested that 90% BRGKX + 10% TISBX in His 401K would be a 3000 portfolio, essentially representing a total market index portfolio. Could you elaborate more on why you have more highly recommended SSSYX instead? I appreciate your comments that a 500 is about as close as one can get to total if no other options are available. But this BRGKX + TISBX option would seemingly be even broader. The biggest difference I can see is the ER. Your suggestion has an ER of 0.020%. The BRGKX + TISBX has ERs of 0.080% and 0.060%.

Thank you, thank you!
I'm not ruralavalon, but regarding the fund choices I'd point out there are other single funds that are closer to "total" than the S&P 500 fund. In fact BRGKX (Russell 1000) is a good example of that - it's about 90% of total market. Reference: Morningstar article Untangling How Index Providers Break the Market Down by Size, exhibit 2.

If you're satisfied with getting 80% of a total market (like S&P 500) then SSSYX is a fine choice.

If 80% of total isn't enough for you, you can get 90% of total market plus the simplicity in a single fund with BRGKX.

If even 90% of total isn't enough, a combination of BRGKX+TISBX will do the job.
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

TandL wrote: Fri May 21, 2021 10:48 pm Thank you for an incredible summary of your recommendations and thinking behind the recommendations, along with many great resources for learning! I do have a couple follow up questions.

I'll read some more about international stocks. If we opt to include them, I assume we would shift funds from the US stocks to the international stocks. For instance, instead of 80% stocks / 20% bonds, we would do something like 60% US stocks / 20% international stocks / 20% bonds.
Yes, you would reduce U.S. stocks to add international stocks. My suggestion would be 60% US stocks / 20% international stocks / 20% bonds.
TandL wrote: Fri May 21, 2021 10:48 pmTwo people suggested that 90% BRGKX + 10% TISBX in His 401K would be a 3000 portfolio, essentially representing a total market index portfolio. Could you elaborate more on why you have more highly recommended SSSYX instead? I appreciate your comments that a 500 is about as close as one can get to total if no other options are available. But this BRGKX + TISBX option would seemingly be even broader. The biggest difference I can see is the ER. Your suggestion has an ER of 0.020%. The BRGKX + TISBX has ERs of 0.080% and 0.060%.

Thank you, thank you!
The size and style classification system and the style box is explained in the wiki article "Approximating total stock market", link.

Using the Morningstar Instant X-Ray tool the Morningstar style box for Street Equity 500 Index Fund-Class K (SSSYX) ER 0.020% is :
21/32/33 - large-cap
05/08/02 - mid-cap
00/00/00 - small-cap

For comparison the Morningstar style box for Vanguard Total Stock Market Index Fund (VTSAX) currently is:
17/27/29 - large-cap
06/09/05 - mid-cap
03/04/02 - small-cap
The makeup of the market does shift over time.

As you can see stocks of small-cap companies represent a only small part of a total stock market index fund, which is why a S&P 500 index fund is almost identical in performance to a total stock market index fund.

Using 90% iShares Russell 1000 Large-Cap Index Fund-Class K (BRGKX) ER 0.080% plus 10% TIAA-CREF Small-Cap Blend Index Fund Institutional Class (TISBX) 0.060% does mimic the makeup of a total stock market fund. For that combination Morningstar Instant X-Ray gives you this style box:
17/26/28 - large-cap
05/06/05 - mid-cap
03/05/03 - small-cap

If you want to add a small-cap fund the using 82% State Street Equity 500 Index Fund-Class K (SSSYX) ER 0.020% plus 18% Vanguard Small Cap Index Fund (VSMAX) ER 0.050% will also mimic the makeup of a total stock market index fund and will give you a lower overall expense ratio. And frankly, it was easier to look up that 82/18 combination on the table in the wiki article "Approximating total stock market", link.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

sycamore wrote: Sat May 22, 2021 10:14 am
TandL wrote: Fri May 21, 2021 10:48 pm Thank you for an incredible summary of your recommendations and thinking behind the recommendations, along with many great resources for learning! I do have a couple follow up questions.

I'll read some more about international stocks. If we opt to include them, I assume we would shift funds from the US stocks to the international stocks. For instance, instead of 80% stocks / 20% bonds, we would do something like 60% US stocks / 20% international stocks / 20% bonds.

Two people suggested that 90% BRGKX + 10% TISBX in His 401K would be a 3000 portfolio, essentially representing a total market index portfolio. Could you elaborate more on why you have more highly recommended SSSYX instead? I appreciate your comments that a 500 is about as close as one can get to total if no other options are available. But this BRGKX + TISBX option would seemingly be even broader. The biggest difference I can see is the ER. Your suggestion has an ER of 0.020%. The BRGKX + TISBX has ERs of 0.080% and 0.060%.

Thank you, thank you!
I'm not ruralavalon, but regarding the fund choices I'd point out there are other single funds that are closer to "total" than the S&P 500 fund. In fact BRGKX (Russell 1000) is a good example of that - it's about 90% of total market. Reference: Morningstar article Untangling How Index Providers Break the Market Down by Size, exhibit 2.

If you're satisfied with getting 80% of a total market (like S&P 500) then SSSYX is a fine choice.

If 80% of total isn't enough for you, you can get 90% of total market plus the simplicity in a single fund with BRGKX.

If even 90% of total isn't enough, a combination of BRGKX+TISBX will do the job.
I see nothing wrong with sycamore's suggestion that you might use BlackRock iShares Russell 1000 Large-Cap Index Fund-Class K (BRGKX) ER 0.080% by itself for investing in U.S. stocks.

BlackRock is an excellent fund company, and that fund has had almost identical performance to a total stock market index fund. Portfolio Visualizer, 2012-2021.

We are talking about small differences among good choices. So don't spend a lot of time worrying about this.

Edit for spelling.
Last edited by ruralavalon on Sat May 22, 2021 11:09 am, edited 2 times in total.
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stan1
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Re: Which Vanguard Fund to Choose

Post by stan1 »

TandL wrote: Mon May 17, 2021 11:23 pm I did just look up State Street Equity since it's a 500 Index Fund, which I think means it more fully represents the entire market? It's E/R is listed as a mere 0.02%! It has no 10 year average annual return...is it too new?
This is a great choice and is what I would use as a foundation in your portfolio. No reason to look at 10 year average annual return; State Street is one of the largest index asset managers in the US; it will perform exactly as the S&P 500 performs.
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Re: Which Vanguard Fund to Choose

Post by Northern Flicker »

Also, VEXAX (vanguard extended market index fund) tracks the market completion index for the S&P500. One could hold an S&P500 fund in 401K and vexax in a vanguard IRA to make a total market portfolio. The S&P500 is about 80% of the market, so would be held in a 4:1 ratio.

Blackrock, iShares (part of Blackrock), Vanguard, State Street, TIAA-CREF, Fidelity, and Schwab are all competent index fund managers.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Which Vanguard Fund to Choose

Post by TandL »

Thank you for all the responses.

Since BRGKX and SSSYX seem so similar in performance, I'll go with the lower ER option of SSSYX.

I've decided to include international stocks for total investment distribution of 40% US stocks / 20% international stocks / 20% bonds.

So this is how I've redistributed the numbers:

His 401k includes rollover of traditional IRA (38%)
18%, State Street Equity 500 Index Fund (80% of U.S. stock market) (SSSYX) ER 0.02%
10%, BlackRock iShares MSCI Total International Index Fund (both developed and emerging markets) (BDOKX) ER 0.11%
10%, Vanguard Intermediate-term Bond Index Fund (intermediate-term, investment-grade bonds) (VBILX) ER 0.07%

Her 401k, includes rollover of traditional IRA (22%)
2%, Vanguard 500 Index Fund Admiral Shares (80% of U.S. stock market) (VFIAX) ER 0.04%
10%, Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) ER 0.07%
10%, Vanguard Total Bond Market Index Fund (VBTLX) ER 0.05%

His Roth IRA @ Vanguard (24%)
24%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%

Her Roth IRA @ Vanguard (16%)
16%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%

Let me know if you see any obvious errors. I'm not sure if it makes sense to have a mere 2% in VFIAX within Her 401K; it does meet the minimum investment amount for admiral shares. Thanks!
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Re: Which Vanguard Fund to Choose

Post by ruralavalon »

TandL wrote: Sun May 23, 2021 11:16 pm Thank you for all the responses.

Since BRGKX and SSSYX seem so similar in performance, I'll go with the lower ER option of SSSYX.

I've decided to include international stocks for total investment distribution of 40% US stocks / 20% international stocks / 20% bonds.

So this is how I've redistributed the numbers:

His 401k includes rollover of traditional IRA (38%)
18%, State Street Equity 500 Index Fund (80% of U.S. stock market) (SSSYX) ER 0.02%
10%, BlackRock iShares MSCI Total International Index Fund (both developed and emerging markets) (BDOKX) ER 0.11%
10%, Vanguard Intermediate-term Bond Index Fund (intermediate-term, investment-grade bonds) (VBILX) ER 0.07%

Her 401k, includes rollover of traditional IRA (22%)
2%, Vanguard 500 Index Fund Admiral Shares (80% of U.S. stock market) (VFIAX) ER 0.04%
10%, Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) ER 0.07%
10%, Vanguard Total Bond Market Index Fund (VBTLX) ER 0.05%

His Roth IRA @ Vanguard (24%)
24%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%

Her Roth IRA @ Vanguard (16%)
16%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%

Let me know if you see any obvious errors. I'm not sure if it makes sense to have a mere 2% in VFIAX within Her 401K; it does meet the minimum investment amount for admiral shares. Thanks!
That looks right to me, no obvious errors. It gives you 60% U.S. stocks, 20% international stocks, 20% bonds.
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