Help with measly 401k options

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Rifampin
Posts: 69
Joined: Sat Jan 16, 2016 10:13 am

Help with measly 401k options

Post by Rifampin » Wed Mar 15, 2017 3:35 pm

Hello Bogleheads,

Currently have a 3-fund portfolio with an asset allocation of 90/10. Based on the equity funds offered by my new job, which do you think is best?

Current funds held in taxable:
VLCAX
Vanguard Large Cap Index Fund Admiral Shares
VTIAX
Vanguard Total International Stock Index Fund Admiral Shares

Current funds held in Solo-401k:
FSITX
FIDELITY U.S. BOND INDEX PREMIUM CLASS
FTIPX
FIDELITY TOTAL INTL INDEX FD PREMIUM CL

Funds offered at new job(no match :? )
Franklin Utilities Class C ER 1.23%
MUTF: FRUSX

Deutsche S&P 500 Index Fund Class C ER 1.32%
MUTF: SXPCX

PIMCO StocksPLUS® Fund Class C ER 1.40%
MUTF: PSPCX

bloom2708
Posts: 3784
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Help with measly 401k options

Post by bloom2708 » Wed Mar 15, 2017 3:37 pm

Those are the only 3 funds in your 401k? Lowest expense ratio over 1.2%? :oops:

Are there any target date funds? bond funds? Income funds?
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

Rifampin
Posts: 69
Joined: Sat Jan 16, 2016 10:13 am

Re: Help with measly 401k options

Post by Rifampin » Wed Mar 15, 2017 3:57 pm

There are more however, I did not even list them since the target date funds all start at an ER of 1.6%. Even the money market fund has an ER of 0.46% which is higher than the ER of my whole portfolio!

furwut
Posts: 1292
Joined: Tue Jun 05, 2012 8:54 pm

Re: Help with measly 401k options

Post by furwut » Wed Mar 15, 2017 3:59 pm

For comparsion my 401K offers the Vanguard 500 Index Institutional Class shares for a measley 0.02% ER. :dollar

Among those 3 choices I'd immediately remove from consideration the Utilities fund as that sounds like a pure sector play. The third fund looks to be Small Cap Value. Some people here do like to tilt their portfolios in the small cap arena - though I don't know which way :? It does look like you are lacking small cap exposure overall.

Perhaps a mixture of the 500 Index and Small Cap Value.

furwut
Posts: 1292
Joined: Tue Jun 05, 2012 8:54 pm

Re: Help with measly 401k options

Post by furwut » Wed Mar 15, 2017 4:00 pm

Rifampin wrote:There are more however, I did not even list them since the target date funds all start at an ER of 1.6%. Even the money market fund has an ER of 0.46% which is higher than the ER of my whole portfolio!
Seriously, you need to get a group of fellow employees together and see the HR director pronto. You are being ripped off.

kmurp
Posts: 251
Joined: Fri Jun 01, 2007 1:53 pm

Re: Help with measly 401k options

Post by kmurp » Wed Mar 15, 2017 4:16 pm

I didn't know retirement accounts used class C shares of mutual funds. I'd use the index fund.

deltaneutral83
Posts: 662
Joined: Tue Mar 07, 2017 4:25 pm

Re: Help with measly 401k options

Post by deltaneutral83 » Wed Mar 15, 2017 4:20 pm

furwut wrote:
Rifampin wrote:There are more however, I did not even list them since the target date funds all start at an ER of 1.6%. Even the money market fund has an ER of 0.46% which is higher than the ER of my whole portfolio!
Seriously, you need to get a group of fellow employees together and see the HR director pronto. You are being ripped off.
It's the norm, My portfolio has an average of 1.37x ER. Comical to have an S&P index fund at 1.12X ER which is what mine has. I've thought about it and it's probably easier to get the company to up their contribution 1% than re-invent the wheel by asking them to re-evaluate the company used for the 401k.

Keep in mind 95% of folks have no idea what an ER is, let alone if it's too high.

Rifampin
Posts: 69
Joined: Sat Jan 16, 2016 10:13 am

Re: Help with measly 401k options

Post by Rifampin » Wed Mar 15, 2017 5:08 pm

furwut wrote:For comparsion my 401K offers the Vanguard 500 Index Institutional Class shares for a measley 0.02% ER. :dollar

Among those 3 choices I'd immediately remove from consideration the Utilities fund as that sounds like a pure sector play. The third fund looks to be Small Cap Value. Some people here do like to tilt their portfolios in the small cap arena - though I don't know which way :? It does look like you are lacking small cap exposure overall.

Perhaps a mixture of the 500 Index and Small Cap Value.
It's not ideal but I suppose I am leaning towards the Small Cap value fund. As a new investor, I was initially in VTSAX but TLH'd to VLCAX after a significant loss. Within a few weeks, VLCAX shot up, not allowing me to get back into VTSAX.

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ruralavalon
Posts: 12791
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help with measly 401k options

Post by ruralavalon » Thu Mar 16, 2017 10:43 am

Rifampin wrote:Hello Bogleheads,

Currently have a 3-fund portfolio with an asset allocation of 90/10. Based on the equity funds offered by my new job, which do you think is best?

Current funds held in taxable:
VLCAX
Vanguard Large Cap Index Fund Admiral Shares
VTIAX
Vanguard Total International Stock Index Fund Admiral Shares

Current funds held in Solo-401k:
FSITX
FIDELITY U.S. BOND INDEX PREMIUM CLASS
FTIPX
FIDELITY TOTAL INTL INDEX FD PREMIUM CL

Funds offered at new job(no match :? )
Franklin Utilities Class C ER 1.23%
MUTF: FRUSX

Deutsche S&P 500 Index Fund Class C ER 1.32%
MUTF: SXPCX

PIMCO StocksPLUS® Fund Class C ER 1.40%
MUTF: PSPCX
Because there is no employer match, I suggest first contributing the annual maximum to an IRA. Please see the Bogleheads wiki article "prioritizing investments".

Then I suggest using just the Deutsche S&P 500 Index Fund in the 401k, in spite of the outrageous expense ratio of 1.32%.

I also suggest approaching management about improving the 401k plan by using lower expense ratio funds. There is a Bogleheads wiki article "How to campaign for a better 401k plan".

A low cost provider for small businesses is Employee Fiduciary LLC. Vanguard, Fidelity and Schwab also offer 401ks for small businesses. On the Vanguard website search for "small business plans".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Theoretical
Posts: 1223
Joined: Tue Aug 19, 2014 10:09 pm

Re: Help with measly 401k options

Post by Theoretical » Thu Mar 16, 2017 11:31 am

I'd do the PIMCO because it's both a short term bond fund and an S&P 500 fund (using e-minis). You end up getting a bit more bang for your buck that way. 8bps for a decent active bond strategy is pretty good (relatively speaking).

Please share all options because there may be a less unappealing option.

Also, please indicate if any have loads. That's also very important.

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