401k mix investments

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Topic Author
mxw22
Posts: 3
Joined: Sun Jan 15, 2017 11:42 am

401k mix investments

Post by mxw22 »

Hi all,

I just started a new job and have to pick my 401k investment options and haven't determined the best course of action. I'm 22 and have never had to option to choose these before (My last job chose for me and I have to find that 401k information to get it rolled over). The default choosing is BLACKROCK LIFEPATH IND 2055NLF and I can't help but think perhaps I should be mixing my own investments. The other options are as follows:

Domestic Sector Equity: FIDELITY REAL ESTATE INCOME FD

Global/International: BLACKROCK MSCI ACWI EX-US IDX; EATON VANCE EMG MKTS EQ UNT I; MFS INSTITUTIONAL INT'L EQUITY

Small-Cap Domestic Equity: WASATCH SM CAP GRWTH FUND INST

Mid-Cap Domestic Equity: DIAMOND HILL SMALL-MID CAP Y; JACKSON SQR LRG CP FCSD GRWTH

Large/Multicap Domestic Equity: BLACKROCK LRG CP US EQ IN NL F; BLACKROCK RUSSELL 2500 IDX NL; DODGE & COX STOCK FUND

Income/Bond: HARBOR HIGH-YIELD BND FD RET; MFS EMERGING MRKT DEBT CIT CL2; US DEBT INDEX NON-LENDABLE W; VAN SHRT TRM BND IND INST PLUS; WELLS FARGO CORE BOND R6

Capital Preservation: FEDERATED GOV OBLIGATIONS FUND

Mixed Asset: BLACKROCK LIFEPATH IND 2020NLF; BLACKROCK LIFEPATH IND 2025NLF; BLACKROCK LIFEPATH IND 2030NLF; BLACKROCK LIFEPATH IND 2035NLF; BLACKROCK LIFEPATH IND 2040NLF; BLACKROCK LIFEPATH IND 2045NLF; BLACKROCK LIFEPATH IND 2050NLF; BLACKROCK LIFEPATH IND 2055NLF; BLACKROCK LIFEPATH IND 2060NLF; BLACKROCK LIFEPATH IND RET NLF; GMO BENCHMARK FREE ALLOC R6

I'm not in a rush to retire or anything so risk isn't an issue. I just was wondering how you should mix these or if there was a specific one not to go for? Any advice? I'm assuming I'd want to at the minimum invest in domestic and global and go from there? :confused
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whaleknives
Posts: 1220
Joined: Sun Jun 24, 2012 7:19 pm

Re: 401k mix investments

Post by whaleknives »

mxw22 wrote:. . . I'm not in a rush to retire or anything so risk isn't an issue. I just was wondering how you should mix these or if there was a specific one not to go for? Any advice? I'm assuming I'd want to at the minimum invest in domestic and global and go from there? :confused
Welcome. You'll get better responses and people will have a better idea of what to recommend if you can provide the information in Asking Portfolio Questions, especially the expense ratios and fund tickers. Just edit your original post.
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Duckie
Posts: 7953
Joined: Thu Mar 08, 2007 2:55 pm

Re: 401k mix investments

Post by Duckie »

mxw22 wrote:I just started a new job and have to pick my 401k investment options and haven't determined the best course of action.
<snip>
The other options are as follows
Without knowing your plan expense ratios, the following appear to be the best/cheapest options:
  • BLACKROCK LRG CP US EQ IN NL F -- Large caps, 80% of US stocks
  • BLACKROCK RUSSELL 2500 IDX NL -- Mid/small caps, 20% of US stocks
  • BLACKROCK MSCI ACWI EX-US IDX -- Almost complete international stocks
  • US DEBT INDEX NON-LENDABLE W -- US bonds
Or you could pick the BLACKROCK LIFEPATH IND fund that comes closest to your desired Asset allocation. You pick a target-date fund by the AA inside, not the date in the title.

For example, at age 22 I'd go with an AA of 80% stocks, 20% bonds, with 30% of stocks in international. That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. If the 401k is your only retirement asset you could have something like:

Portfolio #1, which is precise and cheaper
401k -- 100%
45% (N/A) BlackRock U.S. Large Cap Equity Index Fund (0.03%)
11% (N/A) BlackRock Russell 2500 Index Fund (0.07%)
24% (N/A) BlackRock MSCI ACWI ex-US Index Fund (0.11%)
20% (N/A) BlackRock U.S. Debt Index Fund (0.07%)

or

Portfolio #2, which is easier
401k -- 100%
100% (N/A) BlackRock LifePath Index 2035 Fund (0.36%)

Edit: Added plan expense ratios.
Last edited by Duckie on Wed Jun 21, 2017 2:15 pm, edited 1 time in total.
Topic Author
mxw22
Posts: 3
Joined: Sun Jan 15, 2017 11:42 am

Re: 401k mix investments

Post by mxw22 »

FIDELITY REAL ESTATE INCOME FD -> Annual Gross Expense Ratio 0.82%
BLACKROCK MSCI ACWI EX-US IDX -> Annual Gross Expense Ratio 0.11%
EATON VANCE EMG MKTS EQ UNT I -> Annual Gross Expense Ratio 0.78%
MFS INSTITUTIONAL INT'L EQUITY -> Annual Gross Expense Ratio 0.71%
WASATCH SM CAP GRWTH FUND INST -> Annual Gross Expense Ratio 1.12%
DIAMOND HILL SMALL-MID CAP Y -> Annual Gross Expense Ratio 0.85%
JACKSON SQR LRG CP FCSD GRWTH -> Annual Gross Expense Ratio 0.40%
BLACKROCK LRG CP US EQ IN NL F -> Annual Gross Expense Ratio 0.03%
BLACKROCK RUSSELL 2500 IDX NL -> Annual Gross Expense Ratio 0.07%
DODGE & COX STOCK FUND -> Annual Gross Expense Ratio 0.52%
HARBOR HIGH-YIELD BND FD RET -> Annual Gross Expense Ratio 0.63%
MFS EMERGING MRKT DEBT CIT CL2 -> Annual Gross Expense Ratio 0.70%
US DEBT INDEX NON-LENDABLE W -> Annual Gross Expense Ratio 0.07%
VAN SHRT TRM BND IND INST PLUS -> Annual Gross Expense Ratio 0.04%
WELLS FARGO CORE BOND R6 -> Annual Gross Expense Ratio 0.45%
FEDERATED GOV OBLIGATIONS FUND -> Annual Gross Expense Ratio 0.29%
BLACKROCK LIFEPATH IND 2020NLF -> Annual Gross Expense Ratio 0.36%
BLACKROCK LIFEPATH IND 2025NLF -> Annual Gross Expense Ratio 0.36%
BLACKROCK LIFEPATH IND 2030NLF -> Annual Gross Expense Ratio 0.36%
BLACKROCK LIFEPATH IND 2035NLF -> Annual Gross Expense Ratio 0.36%
BLACKROCK LIFEPATH IND 2040NLF -> Annual Gross Expense Ratio 0.36%
BLACKROCK LIFEPATH IND 2045NLF -> Annual Gross Expense Ratio 0.36%
BLACKROCK LIFEPATH IND 2050NLF -> Annual Gross Expense Ratio 0.36%
BLACKROCK LIFEPATH IND 2055NLF -> Annual Gross Expense Ratio 0.37%
BLACKROCK LIFEPATH IND 2060NLF -> Annual Gross Expense Ratio 0.37%
BLACKROCK LIFEPATH IND RET NLF -> Annual Gross Expense Ratio 0.36%
GMO BENCHMARK FREE ALLOC R6 -> Annual Gross Expense Ratio 1.00%

So there are my expense ratios. I'm assuming I don't want to invest in anything particularly high in ratio? Also, any idea why the 2055-2060 is 1% higher than years below it?
indexonlyplease
Posts: 1571
Joined: Thu Apr 30, 2015 12:30 pm
Location: Florida

Re: 401k mix investments

Post by indexonlyplease »

Hellow mxw22

Most companies now put their employees in a default Target Dated Fund. I beleive this is a great thing they are doing for new and young employees that know nothing about investing. Also helps them take advantage righ away of the company match.

You are young 22 yrs. You have so many better thing to do with your free time so don't get so caught up in the investments that you make many mistakes like most of us. Your best bet would be to keep your Money and bi weekly contributuions in the Target Dated Fund. Here we talk a lot about the 3 fund portfolio for easy investing. But your Target Dated Fund does all that for you.

My cousin works for Hilton. His default investments were the Target Dated Fund. After 10 years he still just puts in his biweekly contributions and has done really well. Also, he has never got involve in understanding investments.
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goingup
Posts: 3994
Joined: Tue Jan 26, 2010 1:02 pm

Re: 401k mix investments

Post by goingup »

I'd suggest you pick the Target Fund 2055 and contribute 15% of your gross income if possible. When your balance reaches $100K consider breaking into component funds if you like. The key for early savers is relentless saving in a diversified way. A Target Fund is a perfect solution.
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Duckie
Posts: 7953
Joined: Thu Mar 08, 2007 2:55 pm

Re: 401k mix investments

Post by Duckie »

mxw22 wrote:Also, any idea why the 2055-2060 is 1% higher than years below it?
It might be because the higher the date the more the equities. Stocks can be a little more expensive to handle than bonds. It's the same with Vanguard. 2010 is 0.13% and 2060 is 0.16%. (And it's not 1% higher, it's 0.01% higher. That's an extra dollar cost for every $10K invested. Don't sweat it.)
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flamesabers
Posts: 1824
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: 401k mix investments

Post by flamesabers »

Duckie wrote:
mxw22 wrote:I just started a new job and have to pick my 401k investment options and haven't determined the best course of action.
<snip>
The other options are as follows
Without knowing your plan expense ratios, the following appear to be the best/cheapest options:
  • BLACKROCK LRG CP US EQ IN NL F -- Large caps, 80% of US stocks
  • BLACKROCK RUSSELL 2500 IDX NL -- Mid/small caps, 20% of US stocks
  • BLACKROCK MSCI ACWI EX-US IDX -- Almost complete international stocks
  • US DEBT INDEX NON-LENDABLE W -- US bonds
Or you could pick the BLACKROCK LIFEPATH IND fund that comes closest to your desired Asset allocation. You pick a target-date fund by the AA inside, not the date in the title.

For example, at age 22 I'd go with an AA of 80% stocks, 20% bonds, with 30% of stocks in international. That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. If the 401k is your only retirement asset you could have something like:

Portfolio #1, which is precise and cheaper
401k -- 100%
45% (N/A) BlackRock U.S. Large Cap Equity Index Fund (0.03%)
11% (N/A) BlackRock Russell 2500 Index Fund (0.07%)
24% (N/A) BlackRock MSCI ACWI ex-US Index Fund (0.11%)
20% (N/A) BlackRock U.S. Debt Index Fund (0.07%)

or

Portfolio #2, which is easier
401k -- 100%
100% (N/A) BlackRock LifePath Index 2035 Fund (0.36%)

Edit: Added plan expense ratios.
OP,

I would recommend going with Portfolio #1 as described by Duckie. It's unlikely you'll be working for this employer until you hit retirement, so it's not like you'll have to do a lot of rebalancing with these four funds. Once you move on to a new job, you could always transfer this 401k into an IRA with someone who has cheaper target retirement funds like Vanguard.
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