Recommendations on 401k Funds

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mc-lemons
Posts: 4
Joined: Sat Mar 19, 2016 12:41 pm

Recommendations on 401k Funds

Post by mc-lemons » Sat Mar 19, 2016 8:45 pm

Hi all!

First time poster here.

I am a total novice when it comes to investing, but I just recently read Bogle's book "The Little Book of Common Sense Investing" (which was eye-opening for sure!) and it has made me think I need to make some adjustments to the funds I'm investing in in my 401k.

My 401k is run through 5/3. I'm looking for some recommendations on fund selection. The funds & expense ratios are listed below:

International:
Dodge & Cox International Stock - 0.64%
American Funds EuroPacific Gr R4 - 0.84%
Templeton Growth Fund A -1.05%
Virtus Emerging Markets Opportunities A - 1.56%

Specialty:
PIMCO Commodity Real Ret Strat Instl - 0.94%
Voya International Real Estate I - 1.12%

Small Cap:
Columbia Small Cap Index A - 0.45%
T. Rowe Price New Horizon - 0.79%
American Beacon Small Cp Val Inst - 0.81%

Mid Cap:
Columbia Mid Cap Index A - 0.66%
Goldman Sachs Mid Cap Value Instl - 0.75%
American Century Heritage Inv - 1.00%

Large Cap:
Fifth Third Bank Equity Index Fund C - 0.20%
Dodge & Cox Stock Fund - 0.52%
Diamond Hill Large Cap A - 0.99%
T. Rowe Price Growth Stock Fund - Adv - 0.92
Neuberger Berman Socially Resp Tr - 1.03%

Balanced:
American Funds American Balanced R4 - 0.64%

Bonds:
Vanguard Long-Term Bond Index Inv - 0.20%
PIMCO Total Return Instl -0.46%

Fixed:
Morley Stable Value Fund -0.81%

Brokerage (I don't think expense ratios apply here?):
Fifth Third SDB Money Market
Fifth Third SDB Securities
Fifth Third SDB Money Market
Fifth Third SDB Securities


I'm in my late 20's, and following Bogle's advice about low expense Index Funds, I'm thinking of doing the following:
90% - Fifth Third Bank Equity Index Fund C - 0.20%
10% - Vanguard Long-Term Bond Index Inv - 0.20%

However, like I said, I'm a novice to investing, so I'd love to hear what you more seasoned investors thought.

Thanks so much!

nps
Posts: 517
Joined: Thu Dec 04, 2014 10:18 am

Re: Recommendations on 401k Funds

Post by nps » Sun Mar 20, 2016 7:18 am

Welcome! I don't know about the Fifth Third Bank Equity Index Fund, are you referring to a recent list of your 401k options? It looks like Fifth Third sold off or liquidated most or all of its own mutual funds a few years ago. Anyhow, if it's intended to match something like the SP500 index I agree it's probably the best choice given its relatively low ER.

At 10 percent bonds your specific choice between the two options won't make much difference. If your bond allocation percentage grows in the future I would look to move away from holding it entirely in long term bonds.

mc-lemons
Posts: 4
Joined: Sat Mar 19, 2016 12:41 pm

Re: Recommendations on 401k Funds

Post by mc-lemons » Sun Mar 20, 2016 8:00 am

Thanks for the reply! Yes, I am referring to the Fifth Third Bank Equity Index Fund, which is one of my 401k options. It does not have a ticker symbol, so I'm not sure if the fund's details can be looked up anywhere other than inside a 5/3 401k account. The Investment Overview PDF from 5/3's website says this:

"Investment Objective & Strategy: The Fund seeks to replicate, before fees, the performance of the broadly diversified S&P 500 Index."

So it looks like its an appropriate S&P 500 Index Fund.

Some other questions:
1. I'm not positive, but I think there might be target retirement funds available. If not, i know that 5/3 at least offers to manage your fund for you with the options below. Should I be considering any of these, or is the index fund still the better option?
a. ManagedPro — Professional Money Management "For investors who want a professional to select their investments and to manage their account over time" (quarterly fee - not sure on amount)
b. AdviceProSM — Professional Advice "For investors looking to receive specific investment recommendations tailored to their personal financial situation" (quarterly fee - $6.25)
c. GuidanceProSM — Professional Guidance "For investors looking for the most appropriate asset allocation" (no fee)

2. I am currently in a traditional 401k, but I also have the option for a Roth 401k. Should I consider the Roth?

Thanks!
mc

nps
Posts: 517
Joined: Thu Dec 04, 2014 10:18 am

Re: Recommendations on 401k Funds

Post by nps » Sun Mar 20, 2016 8:32 am

Most target retirement funds are just a combination of index funds, not some different animal entirely. Your 90/10 allocation is what Vanguard uses in its TR funds covering your age. Before you consider going that route in your work plan you should verify the fees and the structure of the underlying investments.

Usually for someone young, in the 15 percent federal bracket, and with an expectation of higher earnings in the future, Roth is the recommendation. If this doesn't describe you or if you want some more personalized advice try posting your full details for a portfolio review:

viewtopic.php?t=6212

jimkinny
Posts: 1271
Joined: Sun Mar 14, 2010 1:51 pm

Re: Recommendations on 401k Funds

Post by jimkinny » Sun Mar 20, 2016 9:22 am

Buy these: The Boglehead Guide to Investing and the B. Guide to Retirement.

Both can be bought from Amazon as can this book: Larry Swedroe's book "The Only Guide You'll Ever Need for the Right Financial Plan: Managing Your Wealth, Risk, and Investments" . This book deals a lot with the need, ability and willingness to take risk which is somewhat elusive and hard to determine.

dbr
Posts: 26580
Joined: Sun Mar 04, 2007 9:50 am

Re: Recommendations on 401k Funds

Post by dbr » Sun Mar 20, 2016 9:29 am

jimkinny wrote:Buy these: The Boglehead Guide to Investing and the B. Guide to Retirement.

Both can be bought from Amazon as can this book: Larry Swedroe's book "The Only Guide You'll Ever Need for the Right Financial Plan: Managing Your Wealth, Risk, and Investments" . This book deals a lot with the need, ability and willingness to take risk which is somewhat elusive and hard to determine.
+1 Especially while need, ability, and willingness is a nuanced approach to risk, it is the only approach I have ever seen that actually makes sense of what the issues really are.

mc-lemons
Posts: 4
Joined: Sat Mar 19, 2016 12:41 pm

Re: Recommendations on 401k Funds

Post by mc-lemons » Sun Mar 20, 2016 7:57 pm

Thanks for the recommendations on the books! I will definitely check those out. Also, I will also reply with my full portfolio details here in the near future so you have a better overall picture to give me some advice. Thanks!

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jmndu99
Posts: 341
Joined: Sun Jul 14, 2013 4:18 pm

Re: Recommendations on 401k Funds

Post by jmndu99 » Sun Mar 20, 2016 11:08 pm

jimkinny wrote:Buy these: The Boglehead Guide to Investing and the B. Guide to Retirement.

Both can be bought from Amazon as can this book: Larry Swedroe's book "The Only Guide You'll Ever Need for the Right Financial Plan: Managing Your Wealth, Risk, and Investments" . This book deals a lot with the need, ability and willingness to take risk which is somewhat elusive and hard to determine.
Welcome OP, YOU DO NOT HAVE TO BUY THESE BOOKS

SAVE YOUR MONEY TO INVEST! If you have a local library, you may loan these books out to your library card. If your library doesnt have them, they can be loan through interlibrary loan system

mc-lemons
Posts: 4
Joined: Sat Mar 19, 2016 12:41 pm

Re: Recommendations on 401k Funds

Post by mc-lemons » Mon Mar 21, 2016 5:35 am

Thanks for the recommendation jimkinny. I actually "read" almost all my books through the OverDrive app (I say "read" since I typically get audiobooks). If you are not familiar with it, it is an app that lets you connect to digital content provided by local libraries (many libraries now have movies, e-books, and audibooks available for digital borrowing). The content is somewhat limited, but I have joined 4 local libraries that have digital borrowing, which increases my odds of finding a book. I used OverDrive to read/listen to The Little Book of Common Sense Investing.

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