Advice on 401k at new job and moving investments

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DinkinFlicka
Posts: 1
Joined: Mon Apr 17, 2017 11:10 pm

Advice on 401k at new job and moving investments

Postby DinkinFlicka » Tue Apr 18, 2017 8:52 pm

Hi there,

I just started a new job and am not really sure what to do about my old 401k (as well as pick funds for my new 401k). This seemed like a good time to also get advice on my investments as a whole.

Emergency funds: 6 months in Ally Online Savings
Debt: None
Tax Filing Status: Single
Tax Rate: 28% Federal, 6.65% State
State of Residence: New York
Age: 23
Desired Asset allocation: 90% stocks / 10% bonds

Current
Portfolio size = low six figures

Current retirement assets


9.36% Cash

Taxable Vanguard
5.23% Vanguard Total Stock Mkt Idx Adm VTSAX 0.04

Taxable American Funds
2.91% American Funds The Bond Fund of America® Class A ABNDX 0.61
3.71% American Funds EuroPacific Growth Fund® Class A AEPGX 0.83
3.09% American Funds The Growth Fund of America® Class A AGTHX 0.66
1.60% American Funds American High-Income Trust® Class A AHITX 0.71
1.12% American Funds Fundamental Investors® Class A ANCFX 0.61
3.31% American Funds Washington Mutual Investors Fund Class A AWSHX 0.58
1.89% American Funds Capital World Bond Fund® Class A CWBFX 0.95
4.09% American Funds SMALLCAP World Fund® Class A SMCWX 1.1

Roth IRA at Vanguard
4.11% Vanguard Target Retirement 2060 Inv VTTSX 0.16

Roth IRA at American Funds
0.33% American Funds The Growth Fund of America® Class A AGTHX 0.66
0.19% American Funds American Mutual Fund® Class A AMRMX 0.59
0.11% American Funds Capital Income Builder® Class A CAIBX 0.6
0.20% American Funds SMALLCAP World Fund® Class A SMCWX 1.1

Old 401k
0.87% State Street S&P 500 Index Securities Lending Series Fund - Class IX SVSPX 0.7
0.75% Invesco Comstock Fund Class A ACSTX 0.85
0.91% Alger Capital Appreciation Instl I ALARX 1.12
1.30% Eaton Vance Atlanta Capital SMID-Cap A EAASX 1.21
0.85% Virtus Contrarian Value Fund Class A FMIVX 1.41
1.84% Oppenheimer International Growth A OIGAX 1.14
0.44% PIMCO Total Return Fund Class A PTTAX 0.85
1.32% Victory Integrity Small-Cap Value Fund Class A VSCVX 1.5
0.44% Ivy High Income Fund Class A WHIAX 0.96

Contributions

New annual Contributions

$18000 401k (employer auto contributes percentage that vests over years of service)
$5500 Roth IRA (Vanguard)
$8400 taxable (Vanguard)

Available funds in new 401K
FID 500 INDEX PR (FUSVX) Large Cap 0.045%
FID CONTRAFUND K (FCNKX) Stock Investments Large Cap 0.58%
FID GROWTH CO K (FGCKX) Stock Investments Large Cap 0.66%
MFS VALUE R6 (MEIKX) Stock Investments Large Cap 0.51%
ARTISAN MD CP VAL IS (APHQX) Stock Investments Mid-Cap 0.96%
BARON ASSET INST (BARIX) Stock Investments Mid-Cap 1.04%
FID EXT MKT IDX PR (FSEVX) Stock Investments Mid-Cap 0.07%
FID VALUE K (FVLKX) Stock Investments Mid-Cap 0.55%
PRU/J MID CAP GR A (PEEAX) Stock Investments Mid-Cap 1.06%
TRP SMALL-CAP VALUE (PRSVX) Stock Investments Small Cap 0.92%
VANG SM CAP IDX ADM (VSMAX) Stock Investments Small Cap 0.08%
FID INTL DISCOVERY K (FIDKX) Stock Investments International 0.86%
FID INTL INDEX PR (FSIVX) Stock Investments International 0.08%
FID WORLDWIDE (FWWFX) Stock Investments International 0.91%
WF EMRG MKTS EQ IS (EMGNX) Stock Investments International 1.27%
FID BALANCED K (FBAKX) Blended Investments* Large Cap 0.46%
FID FREEDOM K 2005 (FFKVX) Blended Investments* 0.49%
FID FREEDOM K 2010 (FFKCX) Blended Investments* 0.53%
FID FREEDOM K 2015 (FKVFX) Blended Investments* 0.56%
FID FREEDOM K 2020 (FFKDX) Blended Investments* 0.58%
FID FREEDOM K 2025 (FKTWX) Blended Investments* 0.61%
FID FREEDOM K 2030 (FFKEX) Blended Investments* 0.65%
FID FREEDOM K 2035 (FKTHX) Blended Investments* 0.67%
FID FREEDOM K 2040 (FFKFX) Blended Investments* 0.67%
FID FREEDOM K 2045 (FFKGX) Blended Investments* 0.67%
FID FREEDOM K 2050 (FFKHX) Blended Investments* 0.67%
FID FREEDOM K 2055 (FDENX) Blended Investments* 0.67%
FID FREEDOM K 2060 (FDKNX) Blended Investments* 0.67%
FID FREEDOM K INCOME (FFKAX) Blended Investments* 0.44%
MIP CL 1 Bond Investments Stable Value 0.77%
FID STRATEGIC INCOME (FSICX) Bond Investments Income 0.7%
FID US BOND IDX PR (FSITX) Bond Investments Income 0.05%
JANUS HIGH YIELD N (JHYNX) Bond Investments Income 0.63%
PIM TOTAL RT INST (PTTRX) Bond Investments Income 0.47%
FMMT RETIRE GOV II (FRTXX) Short-Term Investments 0.42%

Questions:
1. What do I do about my old 401k? The fees seem a little high but I'm unsure whether I should open a traditional IRA and roll the funds into that or roll it into my new company's 401K.
2. How do I go about picking funds for my new 401k? I just started and set 100% of my contribution to go to FID FREEDOM K 2060 (FDKNX). This seems the easiest, but is there substantial benefit in picking the funds with very low fees?
3. The American Mutual accounts are custodial accounts that my parents set up for me that I haven't done anything with. The accounts are managed by my parents financial advisor. Should I move these funds and if so, what is the most efficient way to this?
Last edited by DinkinFlicka on Thu Apr 20, 2017 9:24 pm, edited 2 times in total.

bloom2708
Posts: 1724
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Advice on 401k at new job and moving investments

Postby bloom2708 » Wed Apr 19, 2017 12:46 pm

What if you made it a goal to consolidate everything except your current 401k to Vangaurd?

Taxable to Vanguard (in kind transfer), move out of the American Funds based on gains/losses
2nd Roth to Vanguard, no reason to have two Roth IRAs, consolidate
Old 401k to Vanguard (Rollover IRA) - If you leave the next employer, roll that to your Rollover IRA.

You could roll your old 401k to your new 401k. You have good low cost choices.

The target funds have a higher expense ratio than desired. Especially since you have other very low cost options.

As for your new 401k, I would keep it simple (3 fund approach):

FID 500 INDEX PR (FUSVX) Large Cap 0.045%
FID INTL INDEX PR (FSIVX) Stock Investments International 0.08%
FID US BOND IDX PR (FSITX) Bond Investments Income 0.05%

I tend to recommend 80/20 as the baseline. With 20-30% International. 90/10 is also fine. Take 20% of your stock portion and split between US and International. The 20 or 10 is the bond index.

As mentioned, I would move the American Funds. Breaking up is hard to do, but Vanguard can initiate the transfer and your goal is to consolidate and simplify. The bonus is you lower your expense ratios by quite a bit.

For all accounts, start with a 3 fund approach (Total US, Total International, Total US bond). You can deviate as desired, but fully understand the reasons to alter. Tilt to small cap, 1 fund approach, tax-exempt bonds in taxable, etc.

Good luck!
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead | | Want to buy something? Watch this first: https://vimeo.com/41152287

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ruralavalon
Posts: 10093
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Advice on 401k at new job and moving investments

Postby ruralavalon » Thu Apr 20, 2017 8:09 am

Welcome to the forum :) .

It's great to see that you are debt free, and starting young at saving and investing.

DinkinFlicka wrote:Hi there,

I just started a new job and am not really sure what to do about my old 401k (as well as pick funds for my new 401k). This seemed like a good time to also get advice on my investments as a whole.

Emergency funds: 6 months in Ally Online Savings
Debt: None
Tax Filing Status: Single
Tax Rate: 28% Federal, 6.65% State
State of Residence: New York
Age: 23
Desired Asset allocation: 90% stocks / 10% bonds

At age 23 I suggest about 20 - 25% in bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see also William Bernstein, "The Rebalancing Bonus".

Please see the wiki articles Bogleheads® investment philosophy, "Never bear too much or too little risk", and "Asset allocation".

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". 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).

That works out to about 20% bonds, 20% international stocks, and 60% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your ability, willingness and need to take risk.



DinkinFlicka wrote:Current
Portfolio size = low six figures

Current retirement assets

Taxable
9.36% Cash
5.23% Vanguard Total Stock Mkt Idx Adm VTSAX 0.04
2.91% American Funds The Bond Fund of America® Class A ABNDX 0.61
3.71% American Funds EuroPacific Growth Fund® Class A AEPGX 0.83
3.09% American Funds The Growth Fund of America® Class A AGTHX 0.66
1.60% American Funds American High-Income Trust® Class A AHITX 0.71
1.12% American Funds Fundamental Investors® Class A ANCFX 0.61
3.31% American Funds Washington Mutual Investors Fund Class A AWSHX 0.58
1.89% American Funds Capital World Bond Fund® Class A CWBFX 0.95
4.09% American Funds SMALLCAP World Fund® Class A SMCWX 1.1

What is the unrealized capital gain/loss (in dollars) in each of the funds in your taxable account? Where is the taxable account located? You can simply add this to your original post using the edit button, so that all of your information is in one place.

That will determine whether or how you might wish to change those funds to index funds.


DinkinFlicka wrote:Roth IRA at Vanguard
4.11% Vanguard Target Retirement 2060 Inv VTTSX 0.16

Roth IRA at American Mutual
0.33% American Funds The Growth Fund of America® Class A AGTHX 0.66
0.19% American Funds American Mutual Fund® Class A AMRMX 0.59
0.11% American Funds Capital Income Builder® Class A CAIBX 0.6
0.20% American Funds SMALLCAP World Fund® Class A SMCWX 1.1

Old 401k
0.87% State Street S&P 500 Index Securities Lending Series Fund - Class IX SVSPX 0.7
0.75% Invesco Comstock Fund Class A ACSTX 0.85
0.91% Alger Capital Appreciation Instl I ALARX 1.12
1.30% Eaton Vance Atlanta Capital SMID-Cap A EAASX 1.21
0.85% Virtus Contrarian Value Fund Class A FMIVX 1.41
1.84% Oppenheimer International Growth A OIGAX 1.14
0.44% PIMCO Total Return Fund Class A PTTAX 0.85
1.32% Victory Integrity Small-Cap Value Fund Class A VSCVX 1.5
0.44% Ivy High Income Fund Class A WHIAX 0.96

Contributions

New annual Contributions

$18000 401k (employer auto contributes percentage that vests over years of service)
$5500 Roth IRA (Vanguard)
$8400 taxable (Vanguard)

Available funds in new 401K
FID 500 INDEX PR (FUSVX) Large Cap 0.045%
FID CONTRAFUND K (FCNKX) Stock Investments Large Cap 0.58%
FID GROWTH CO K (FGCKX) Stock Investments Large Cap 0.66%
MFS VALUE R6 (MEIKX) Stock Investments Large Cap 0.51%
ARTISAN MD CP VAL IS (APHQX) Stock Investments Mid-Cap 0.96%
BARON ASSET INST (BARIX) Stock Investments Mid-Cap 1.04%
FID EXT MKT IDX PR (FSEVX) Stock Investments Mid-Cap 0.07%
FID VALUE K (FVLKX) Stock Investments Mid-Cap 0.55%
PRU/J MID CAP GR A (PEEAX) Stock Investments Mid-Cap 1.06%
TRP SMALL-CAP VALUE (PRSVX) Stock Investments Small Cap 0.92%
VANG SM CAP IDX ADM (VSMAX) Stock Investments Small Cap 0.08%
FID INTL DISCOVERY K (FIDKX) Stock Investments International 0.86%
FID INTL INDEX PR (FSIVX) Stock Investments International 0.08%
FID WORLDWIDE (FWWFX) Stock Investments International 0.91%
WF EMRG MKTS EQ IS (EMGNX) Stock Investments International 1.27%
FID BALANCED K (FBAKX) Blended Investments* Large Cap 0.46%
FID FREEDOM K 2005 (FFKVX) Blended Investments* 0.49%
FID FREEDOM K 2010 (FFKCX) Blended Investments* 0.53%
FID FREEDOM K 2015 (FKVFX) Blended Investments* 0.56%
FID FREEDOM K 2020 (FFKDX) Blended Investments* 0.58%
FID FREEDOM K 2025 (FKTWX) Blended Investments* 0.61%
FID FREEDOM K 2030 (FFKEX) Blended Investments* 0.65%
FID FREEDOM K 2035 (FKTHX) Blended Investments* 0.67%
FID FREEDOM K 2040 (FFKFX) Blended Investments* 0.67%
FID FREEDOM K 2045 (FFKGX) Blended Investments* 0.67%
FID FREEDOM K 2050 (FFKHX) Blended Investments* 0.67%
FID FREEDOM K 2055 (FDENX) Blended Investments* 0.67%
FID FREEDOM K 2060 (FDKNX) Blended Investments* 0.67%
FID FREEDOM K INCOME (FFKAX) Blended Investments* 0.44%
MIP CL 1 Bond Investments Stable Value 0.77%
FID STRATEGIC INCOME (FSICX) Bond Investments Income 0.7%
FID US BOND IDX PR (FSITX) Bond Investments Income 0.05%
JANUS HIGH YIELD N (JHYNX) Bond Investments Income 0.63%
PIM TOTAL RT INST (PTTRX) Bond Investments Income 0.47%
FMMT RETIRE GOV II (FRTXX) Short-Term Investments 0.42%

Questions:
1. What do I do about my old 401k? The fees seem a little high but I'm unsure whether I should open a traditional IRA and roll the funds into that or roll it into my new company's 401K.

The new 401k has a good selection of diversified index funds with low expense ratios. Will your new 401k accept an incoming rollover from your old 401k?

If so it's probably better to roll the old 401k over into the new 401k. That makes things simpler, and gives you one less account to keep track of and manage. Also that keeps open the possibility of later using the backdoor Roth IRA in the event your income later becomes high enough to prevent direct Roth IRA contributions. You lose that possibility if you have a significant traditional IRA.


DinkinFlixka wrote:2. How do I go about picking funds for my new 401k? I just started and set 100% of my contribution to go to FID FREEDOM K 2060 (FDKNX). This seems the easiest, but is there substantial benefit in picking the funds with very low fees?

In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

I suggest using these funds in your new 401k:
Fidelity 500 Index Fund Premium Class (FUSVX) ER 0.045%, <= 80% of U.S. stock market, almost identical performance to a total stock market index fund
Fidelity International Index Fund Premium Class (FSIVX) ER 0.08%, <= stocks of larger companies in developed markets except Canada
Fidelity U.S. Bond Index Fund Premium Class (FSITX) ER 0.05%, <= a total bond market fund

There is substantial benefit in picking the funds with very low fees. Low expenses are critical to long-term investing performance. The Fidelity Freedom Fund 2060 (FDKNX) ER 0.67% has a much higher expense ratio, high enough to make a real difference in your investing returns. Over 40 years an extra 0.50% in expense ratios costs you about 18% in the end value of your investment. Vanguard blog post, "Stopping the silent killer of returns". Please see the table at the end of the post, "Cumulative impact of fees on ending wealth at various time horizons." Also, here is a calculator you could use to estimate the impact of investing expenses. Bankrate.com, "Mutual fund fees calculator".


DinkinFlicka wrote:3. The American Mutual accounts are custodial accounts that my parents set up for me that I haven't done anything with. The accounts are managed by my parents financial advisor. Should I move these funds and if so, what is the most efficient way to this?

Yes you should move the American Mutual taxable account and the American Mutual Roth IRA to a low cost provider like Vanguard or Fidelity.

My own personal preference is Vanguard, because they have by far the largest selection of low expense mutual funds offered anywhere. Since your new 401k uses Fidelity you may want instead to use Fidelity, which does have a good selection of core index funds with low expense ratios.

Do you have a preference between Fidelity and Vanguard?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
Posts: 28554
Joined: Thu Jan 10, 2008 12:56 pm

Re: Advice on 401k at new job and moving investments

Postby retiredjg » Thu Apr 20, 2017 8:25 am

1) I'd roll the old 401k to the new 401k using the funds already mentioned by the two previous posters. I would also use the Extended Market fund to complete the 500 Index.

2) Roll the high cost Roth IRA into the low cost Roth IRA.

3) The taxable account could use a lot of cleanup. Are you ready and interested in doing that?

aristotelian
Posts: 1262
Joined: Wed Jan 11, 2017 8:05 pm

Re: Advice on 401k at new job and moving investments

Postby aristotelian » Thu Apr 20, 2017 9:56 am

+1, new 401K is superior to the old one. Roll the old one into the new one, choose a very simple allocation such as Fid S&P and Fid US Bond in the allocation to your risk tolerance.

Also +1 on transferring the Roth and Taxable in-kind and getting out of American Funds. Do it now while your gains haven't had a chance to build up and your tax bracket is low.


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