Worst 401K funds ever. What to do?

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kaveh2k
Posts: 21
Joined: Thu Jan 07, 2016 7:42 pm

Worst 401K funds ever. What to do?

Post by kaveh2k »

Hi all, new user just made this account to ask this one question and show you what funds my employer decided to offer lol.

My employers 401K funds are probably the worst you have seen, if someone's is worse then me you win a prize. All the expense ratios are above 1.50%. so I won't list them. What should I do? Not contribute and go open my own vanguard or fidelity?

Here they are:

Eaton Vance Inc Fund Of Boston R Bond

Jpmorgan Core Bond R2 Bond

Davis New York Venture R Large Cap

American Century Equity Income R Large Cap

American Funds Gr Fd Of Amer R1 Large Cap

American Funds New Perspectiv R1 International

Franklin Mutual Global Disc R International

Allianzgi NFJ Dividend Value R Large Cap

Victory Sycamore Small Co Opp R Small Cap

Goldman Sachs Sm/MidCap Growth R Mid Cap

Nuveen Mid Cap Index R3 Mid Cap

American Funds Cp Wld Gr Inc-R1 International

American Funds Inc Fd Of Amer R1 Asset Allocation/Balanced

BlackRock Global Allocation R Asset Allocation/Balanced

BlackRock LifePath 2020 A Asset Allocation/Balanced

BlackRock LifePath 2030 A Asset Allocation/Balanced

BlackRock LifePath 2040 A Asset Allocation/Balanced

BlackRock LifePath 2050 A Asset Allocation/Balanced

BlackRock LifePath Retirement A Asset Allocation/Balanced

Ivy Science And Technology R Specialty

MFS Research International R2 International

Oppenheimer Gold And Spec Min R Specialty

Oppenheimer Real Estate R Specialty

Pioneer Strategic Income R Bond

The Hartford Total Return Bd R3 Bond
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MNGopher
Posts: 564
Joined: Tue Jun 16, 2015 1:44 pm
Location: Minnesota

Re: Worst 401K funds ever. What to do?

Post by MNGopher »

If an employer match is offered, at least do that much.
JDot
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Joined: Fri Apr 24, 2015 10:15 pm

Re: Worst 401K funds ever. What to do?

Post by JDot »

I assume people will want to know more information, such as your tax bracket and other tax advantaged accounts you may have access to, such as an IRA or an HSA. For me personally, I'd probably still max out my 401k even at those expense ratios. But I've never had to do the math.
TravelGeek
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Joined: Sat Oct 25, 2014 3:23 pm

Re: Worst 401K funds ever. What to do?

Post by TravelGeek »

How long do you plan to be with that employer?

My wife's new employer has a similar terrible alignment, but she is unlikely to stay with the company for very long, so there is a rollover in our near future.
Lafder
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Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Worst 401K funds ever. What to do?

Post by Lafder »

You will win a prize if it is the worst 401k ever, we have seen some atrocious fund choices and prices. But we can help you make the most of it.

Unfortunately for you for the extra work it will take, we DO need to you to take the time to add the expense ratios so we can see for ourselves and use the info to make the most of the possibilities. We can not simply look up the ERs because employer funds sometimes add fees, or get better pricing than generally available to the public.

Do you have any other holdings this will be in addition to ?

Fortunately, we can help you make the most of the offerings and offer suggestions on talking to your employer about adding better options.

Lafder
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David Jay
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Location: Michigan

Re: Worst 401K funds ever. What to do?

Post by David Jay »

The traditional advice here at BH is as follows:

1. 401K to get any match that your company provides
2. Maximum IRA contributions (if your income is low enough to qualify), $5500 per spouse.
3. Additional savings into your 401K

If you keep the money in taxable then the taxes will likely eat up more than the 401K fees, even with a 1.5% ER.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
pkcrafter
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Re: Worst 401K funds ever. What to do?

Post by pkcrafter »

All the expense ratios are above 1.50%
I looked up a few of your funds and ERs are high, but less than 1.5% -- American Funds Gr Fd Of Amer R1, ER 1.42

Can you provide the listed expense ratio for this fund? It may be that they have included some of the administrative expenses in the ER. It also looks like your plan does not have to comply to ERISA standards.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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StormShadow
Posts: 1005
Joined: Thu Feb 09, 2012 5:20 pm

Re: Worst 401K funds ever. What to do?

Post by StormShadow »

kaveh2k wrote: All the expense ratios are above 1.50%.
Woof. That sucks.

I'd contribute to the match (if you have one), and thats it. I'd choose the cheapest equity fund available. I'd also quietly lobby your fellow co-workers to petition for a better selection of funds. 8-)

Otherwise, max out your IRA, pay off your loans, and then... frankly... contemplate taxable investments and take advantage of tax loss harvesting.

You could focus on the other stuff like:
Emergency fund squared away?
Have/need term life insurance?
Employment has an HSA with not-so-crummy investment selection?
529 for a kids education?
Side business to set up a solo 401k?
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StormShadow
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Re: Worst 401K funds ever. What to do?

Post by StormShadow »

David Jay wrote: If you keep the money in taxable then the taxes will likely eat up more than the 401K fees, even with a 1.5% ER.
Well, not necessarily. Most of the Vanguard stock funds generate relatively few dividends.

Some folks advocate allocating low dividend yielding index funds such as total stock market/total int'l stock in taxable and just place high dividend yielding funds like REITs/bonds in tax-sheltered instruments like IRA/401k.
cathyr
Posts: 82
Joined: Thu Jan 09, 2014 2:49 pm

Re: Worst 401K funds ever. What to do?

Post by cathyr »

I work for a tiny company, and our 401K has very limited fund selections, with pretty high expense ratios (all American Funds). That being said, I have most of my money/contributions in Growth Fund of America. That seems to be fairly similar to an S&P 500 fund in performance. Not much I can do about it, and want to take advantage of the 401K space.

Good luck!
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