choosing new 401k investments

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
kitkatnyc
Posts: 48
Joined: Wed Sep 30, 2015 1:39 pm

choosing new 401k investments

Post by kitkatnyc »

My employer just changed providers for our 401k, which means we have to choose new investments. Unfortunately, that means VTSAX is no longer available. My only Vanguard choices are:

VIMAX: Vanguard Mid Cap Index Admiral, mid-cap blend, 0.08 ER
VSMAX: Vanguard Small Cap Index Admiral, small blend, 0.08 ER
VFIAX: Vanguard 500 Index Admiral, large blend, 0.05 ER

What is the best substitute? Our other investments are about 50% in the TSP (government retirement account) C fund (S&P 500 index) and S fund (small cap index), and 50% in VTIAX and VTSAX. My instinct is to go with the VFIAX, but am wondering whether I should take this opportunity to have more exposure to small or mid caps.

If it helps, this is a newish job so I only have $10k in there now - so none of the choices will be significant yet, but going forward could matter.

edited to add relevant info per the "asking for portfolio help":
Married filing jointly, New York City
Age: 40, husband 39
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 30% of stocks

Current retirement assets:

Taxable - 95K
56% VTIAX
44% VTSAX

His 401k - 26K
100% VINIX (will be rolled into TSP in the next few weeks)

Her 403b - 10K
100% VTSAX (for now)

His Roth at Vanguard - 11.6K - we add maximum amount each year through backdoor
100% VTIAX

Her Roth at Vanguard - 45.6K - we add max amount each year through backdoor
100% VTIAX

Our TSPs, together - ~315K
14% G Fund (government backed securities)
14.5% F Fund (bonds)
55.8% C fund (S&P 500 index)
15.6% S fund (small cap index)
The C and S funds were designed to be 4 parts to 1 part to approximate total stock market - they have gotten a bit out of balance but not enough to readjust yet.
Last edited by kitkatnyc on Thu Nov 03, 2016 9:40 am, edited 2 times in total.
Bondman
Posts: 25
Joined: Sun May 08, 2016 6:06 pm

Re: choosing new 401k investments

Post by Bondman »

For least effort, use 100% VFIAX
For some effort, 80% VFIAX, 20% VIMAX
For most effort, use 70% VFIAX, 20% VIMAX, 10% VSMAX
pingo
Posts: 2638
Joined: Sat Sep 19, 2009 8:24 pm

Re: choosing new 401k investments

Post by pingo »

The most narrow question--how to replace Vanguard Total Stock Market Index Fund (VTSAX) has two answers, depending on how simple or how complex you'd like things to be. You are correct that the Vanguard 500 Index Fund (VFIAX) is a legitimate substitute all by itself, but if one wants to replicate the Total Stock Market:

81% Vanguard 500 Index Fund - Admiral (VFIAX)
04% Vanguard Mid Cap Index Fund - Admiral (VIMAX)
15% Vanguard Small Cap Index Fund - Admiral (VSMAX)

(Source: Bogleheads.org Wiki: Approximating Total Stock Market)

One thing that comes to mind is that allocating assets across accounts (which you might already be doing, but I can't tell?), you might be able to only use the VFIAX in the new 401k plan and use the TSP S Fund to complete your Total U.S. Stock exposure (or tilt to size) for all accounts...or use small caps in the new 401k and adjust elsewhere. Bear in mind that the TSP S Fund is an "extended market index fund" (which I like) that follows a completion index of the remaining mid and small caps not found in the S&P 500 or C Fund.

But to help with the bigger picture, we'll need you to post information per the recommended format for asking for portfolio help.
User avatar
ruralavalon
Posts: 26297
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: choosing new 401k investments

Post by ruralavalon »

kitkatnyc wrote:My employer just changed providers for our 401k, which means we have to choose new investments. Unfortunately, that means VTSAX is no longer available. My only Vanguard choices are:

VIMAX: Vanguard Mid Cap Index Admiral, mid-cap blend, 0.08 ER
VSMAX: Vanguard Small Cap Index Admiral, small blend, 0.08 ER
VFIAX: Vanguard 500 Index Admiral, large blend, 0.05 ER

What is the best substitute? Our other investments are about 50% in the TSP (government retirement account) C fund (S&P 500 index) and S fund (small cap index), and 50% in VTIAX and VTSAX. My instinct is to go with the VFIAX, but am wondering whether I should take this opportunity to have more exposure to small or mid caps.

If it helps, this is a newish job so I only have $10k in there now - so none of the choices will be significant yet, but going forward could matter.
For a "newish" account with just $10k so far, the simplest and best substitute is Vanguard 500 Index Fund Admiral Shares (VFIAX) ER 0.05%.

You didn't mention any bond fund. Do you have a bond allocation somewhere? What is your age? If you have no bond allocation, please consider that, perhaps using the G Fund in your TSP account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
kitkatnyc
Posts: 48
Joined: Wed Sep 30, 2015 1:39 pm

Re: choosing new 401k investments

Post by kitkatnyc »

pingo, you are correct that i'm allocating assets across accounts. i didn't do the whole portfolio information in my first post because i felt like it was otherwise well set-up and if there was an easy swap it would be a simple answer, but if it would help i can add it to my original post. i wanted to keep things simple.

ruralavalon, we have bonds in our TSP - i have them at 20% of total portfolio since we (husband and i) are ~40.
User avatar
ruralavalon
Posts: 26297
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: choosing new 401k investments

Post by ruralavalon »

kitkatnyc wrote:ruralavalon, we have bonds in our TSP - i have them at 20% of total portfolio since we (husband and i) are ~40.
I am happy to see that you have a bond allocation.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
kitkatnyc
Posts: 48
Joined: Wed Sep 30, 2015 1:39 pm

Re: choosing new 401k investments

Post by kitkatnyc »

added info to my original post about our overall investments.
pingo
Posts: 2638
Joined: Sat Sep 19, 2009 8:24 pm

Re: choosing new 401k investments

Post by pingo »

Sorry for all the radio silence. Things are crazy right now. I have already begun working on some suggestions in case they're helpful, but I need clarification on a few points:

1. Please separate the TSP amounts into "Hers" and "His".

2. Please indicate on the table/list of investments which accounts are from former employers, which are current employers.

3. It still might be useful to list all the funds available in the Her New 401k plan DESPITE the fact that you're sure you won't use them. (I note that initial post speaks only of 401ks, but it looks like Hers is a 403b...?) Regardless, I'm looking for something I suspect is there, but I'm afraid you may be overlooking it. How's that for criptic?
Topic Author
kitkatnyc
Posts: 48
Joined: Wed Sep 30, 2015 1:39 pm

Re: choosing new 401k investments

Post by kitkatnyc »

pingo wrote:Sorry for all the radio silence. Things are crazy right now. I have already begun working on some suggestions in case they're helpful, but I need clarification on a few points:

1. Please separate the TSP amounts into "Hers" and "His".

2. Please indicate on the table/list of investments which accounts are from former employers, which are current employers.

3. It still might be useful to list all the funds available in the Her New 401k plan DESPITE the fact that you're sure you won't use them. (I note that initial post speaks only of 401ks, but it looks like Hers is a 403b...?) Regardless, I'm looking for something I suspect is there, but I'm afraid you may be overlooking it. How's that for criptic?
hi pingo! no problem - and thanks in advance for your help.

his TSP: $192K
her TSP: $124K

the TSPs are both former employers. The 401k and 403b are current accounts, though as I noted in the original post, his will be rolled into the TSP in the next few weeks since he is changing jobs. (Unfortunately I have no idea yet what the retirement plans will be for the new job.)

My options are:

**Short Bonds/Stable/MMkt
Prudential Guaranteed Income Fund
Lord Abbett Short Duration Income R6 - LDLVX
Thornburg Limited Term Income R6 - THRRX

**Interm./Long-Term Bonds
Pioneer Bond K - PBFKX
Voya Intermediate Bond R6 - IIBZX

**Aggressive Bonds
Prudential High-Yield Z - PHYZX

**Large-Cap Stocks
Vanguard Equity-Income Admiral - VEIRX
Oppenheimer Main Street Y - MIGYX
Vanguard 500 Index Admiral - VFIAX
Parnassus Endeavor Fund - PARWX
T. Rowe Price Blue Chip Growth I - TBCIX

**Small/Mid-Cap Stocks
American Century Mid Cap Value R6 - AMDVX
Oppenheimer Main Street Mid Cap Y - OPMYX
Vanguard Mid Cap Index Adm - VIMAX
Hartford Midcap Y - HMDYX
Principal SmallCap Value II Instl - PPVIX
Goldman Sachs Small Cap Value Instl - GSSIX
Vanguard Small Cap Index Adm - VSMAX
Nationwide Geneva Small Cap Growth Instl - no ticker listed

***International Stocks
Goldman Sachs Intl Eq Insghts R6 - GCIUX
Nationwide Bailard Intl Eqs Instl - NWHMX
Oppenheimer Developing Markets Y - ODVYX


All of the funds except for Vanguard have very high expense ratios - close to 1% and in some cases over.
Of course, I also have a full range of retirement target date funds available.
pingo
Posts: 2638
Joined: Sat Sep 19, 2009 8:24 pm

Re: choosing new 401k investments

Post by pingo »

I'm sorry again for the radio silence, but the information you provide is incomplete.
kitkatnyc wrote:My options are:

**Short Bonds/Stable/MMkt
Prudential Guaranteed Income Fund
Lord Abbett Short Duration Income R6 - LDLVX
Thornburg Limited Term Income R6 - THRRX

**Interm./Long-Term Bonds
Pioneer Bond K - PBFKX
Voya Intermediate Bond R6 - IIBZX

**Aggressive Bonds
Prudential High-Yield Z - PHYZX

**Large-Cap Stocks
Vanguard Equity-Income Admiral - VEIRX
Oppenheimer Main Street Y - MIGYX
Vanguard 500 Index Admiral - VFIAX
Parnassus Endeavor Fund - PARWX
T. Rowe Price Blue Chip Growth I - TBCIX

**Small/Mid-Cap Stocks
American Century Mid Cap Value R6 - AMDVX
Oppenheimer Main Street Mid Cap Y - OPMYX
Vanguard Mid Cap Index Adm - VIMAX
Hartford Midcap Y - HMDYX
Principal SmallCap Value II Instl - PPVIX
Goldman Sachs Small Cap Value Instl - GSSIX
Vanguard Small Cap Index Adm - VSMAX
Nationwide Geneva Small Cap Growth Instl - no ticker listed

***International Stocks
Goldman Sachs Intl Eq Insghts R6 - GCIUX
Nationwide Bailard Intl Eqs Instl - NWHMX
Oppenheimer Developing Markets Y - ODVYX


All of the funds except for Vanguard have very high expense ratios - close to 1% and in some cases over.
Of course, I also have a full range of retirement target date funds available.
You have not listed the ER's of each fund above. When I look them up at Morningstar.com, I see plenty of ERs that are below 1%, in fact I see ERs that would be quite reasonable if one were forced to use them. For us to help you, you need to give us complete information...from your plan. That means ERs. Even if they were the same as we can find at M*, it saves you and us a lot of time when we don't have to look them up one by one at a different website.

I also attempted to hunt down other specifics that I need by searching your prior post history, but it wasn't helpful because other posts do not quite match the information here and it's too confusing trying to pull all the necessary details when they're so spread out.

What are your expected annual contributions in dollar amounts? (It doesn't have to be precise.) By having a taxable account, I can assume you're maxing employer plans and Backdoor Roth IRAs, but I don't know how much your employers are adding in terms of matching contributions, nor do we know how much you're contributing to the taxable account. Knowing this information has an impact on fund location.

Eventually there were to many variables to try to keep straight, so I gave up. If you will kindly edit your initial post again to include the information recommended format for asking for portfolio help, we can have it all in one place and spend the time we have providing the help requested.
Post Reply