Unsure where to start with 401k choices

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Topic Author
cleague
Posts: 8
Joined: Thu Apr 27, 2017 8:36 pm

Unsure where to start with 401k choices

Post by cleague »

Hi Bogleheads,

I'm trying to help out a family member with sorting through her 401k choices. I think I've converted her to the idea of a three fund portfolio and would like some input on the best options out of the list below. I know the ERs aren't the best with the exception of that one lonely Vanguard fund, but at this time, she does not want to move the 401k. I'm guessing Vanguard will be the way to go for US stocks, but any thoughts on the international funds/bonds? Thanks in advance for the advice!

Stocks
Blue Chip Growth Fund (TRBCX)(0.72%)
Fidelity Contrafund (FCNTX)(0.68%)
Fidelity Small Cap Discovery (FSCRX)(1.01%)
Hennessy Focus Institutional(HFCIX)(1.13%)
Invesco Small Cap Value Y(VSMIX)(0.87%)
Ivy International Core Equity N(IINCX)(0.83%)
JP Morgan Mid Cap Value L(FLMVX)(0.75%)
Oakmark Equity and Income I(OAKBX)(0.89%)
Oakmark International I(OAKIX)(1.05%)
Putnam Equity Income R6(PEQSX)(0.55%)
Vanguard Institutional Index Fund(VINIX)(0.04%)
Wells Fargo Small Co Grow (WSCGX)(0.95%)

Bonds
Pimco Total Return Institutional Fund(PTTRX)(0.47%)
TCW Total Return Bond I(TGLMX)(0.49%)
PFInterest
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Joined: Sun Jan 08, 2017 12:25 pm

Re: Unsure where to start with 401k choices

Post by PFInterest »

Vanguard institutional + one of those bond funds should be fine (whichever is more indexy...Didn't look)
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njboater74
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Re: Unsure where to start with 401k choices

Post by njboater74 »

I don't think it makes much of a difference on the International Fund. May as well pick the lower cost option: IINCX. IINCX also looks like it has better balance across sectors:
http://portfolios.morningstar.com/fund/ ... ture=en-US

Not sure why they have two similar bond funds. Probably won't make much of a difference there either, I'd probably go with TCW, since I don't usually go for foreign bonds (Pimco is 20% foreign), but if that's your personal preference to have foreign bonds, nothing wrong with that.
When the mob and the press and the whole world tell you to move, your job is to plant yourself like a tree beside the river of truth and tell the whole world - 'No, YOU move'--Captain America, Boglehead
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njboater74
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Re: Unsure where to start with 401k choices

Post by njboater74 »

They're both good bond funds, as actively managed bond funds go.
When the mob and the press and the whole world tell you to move, your job is to plant yourself like a tree beside the river of truth and tell the whole world - 'No, YOU move'--Captain America, Boglehead
Topic Author
cleague
Posts: 8
Joined: Thu Apr 27, 2017 8:36 pm

Re: Unsure where to start with 401k choices

Post by cleague »

Thanks for the input yall! :D
TIAX
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Re: Unsure where to start with 401k choices

Post by TIAX »

Those bond funds aren't great so if you have access to a better fund somewhere else (like an IRA, HSA, or taxable account), I would go 100% Vanguard Institutional Index Fund(VINIX)(0.04%).
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BolderBoy
Posts: 5188
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Location: Colorado

Re: Unsure where to start with 401k choices

Post by BolderBoy »

TIAX wrote:Those bond funds aren't great so if you have access to a better fund somewhere else (like an IRA, HSA, or taxable account), I would go 100% Vanguard Institutional Index Fund(VINIX)(0.04%).
OP - you didn't say how old the family member is. I'd probably second the above depending upon her age.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
BogleAlltheWay
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Re: Unsure where to start with 401k choices

Post by BogleAlltheWay »

I agree with that you should see if they can hold 100% Vanguard Institutional Index Fund and get bonds from another account.
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flamesabers
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Location: Rochester, MN

Re: Unsure where to start with 401k choices

Post by flamesabers »

While Vanguard is the clear winner for the equity fund, the bond funds leave a lot to be desired I think. Perhaps she could put a bonds fund in a IRA or HSA? Or even go with I-Bonds to fulfill her bond allocation? If she wants international equity, I recommend she put it in a taxable account.
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ruralavalon
Posts: 20177
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Unsure where to start with 401k choices

Post by ruralavalon »

cleague wrote:Hi Bogleheads,

I'm trying to help out a family member with sorting through her 401k choices. I think I've converted her to the idea of a three fund portfolio and would like some input on the best options out of the list below. I know the ERs aren't the best with the exception of that one lonely Vanguard fund, but at this time, she does not want to move the 401k. I'm guessing Vanguard will be the way to go for US stocks, but any thoughts on the international funds/bonds? Thanks in advance for the advice!

Stocks
Blue Chip Growth Fund (TRBCX)(0.72%)
Fidelity Contrafund (FCNTX)(0.68%)
Fidelity Small Cap Discovery (FSCRX)(1.01%)
Hennessy Focus Institutional(HFCIX)(1.13%)
Invesco Small Cap Value Y(VSMIX)(0.87%)
Ivy International Core Equity N(IINCX)(0.83%)
JP Morgan Mid Cap Value L(FLMVX)(0.75%)
Oakmark Equity and Income I(OAKBX)(0.89%)
Oakmark International I(OAKIX)(1.05%)
Putnam Equity Income R6(PEQSX)(0.55%)
Vanguard Institutional Index Fund(VINIX)(0.04%)
Wells Fargo Small Co Grow (WSCGX)(0.95%)

Bonds
Pimco Total Return Institutional Fund(PTTRX)(0.47%)
TCW Total Return Bond I(TGLMX)(0.49%)
I suggest Vanguard Institutional Index Fund (VINIX) ER 0.04% for domestic stocks, and PIMCO Total Return Institutional (PTTRX) ER 0.47% for bonds, and just skipping the international stock funds.

The expense ratios on the international stock funds are too high (0.83-1.05%) to even consider in my opinion. The expense ratios are high enough to cancel the historically expected diversification benefit (0.75%) from investing in international stocks.

The PIMCO fund even though actively managed is a very good intermediate-term bond fund with a moderate expense ratio. There is no good reason to avoid using this fund in my opinion.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Valuethinker
Posts: 41782
Joined: Fri May 11, 2007 11:07 am

Re: Unsure where to start with 401k choices

Post by Valuethinker »

ruralavalon wrote:
cleague wrote:Hi Bogleheads,

I'm trying to help out a family member with sorting through her 401k choices. I think I've converted her to the idea of a three fund portfolio and would like some input on the best options out of the list below. I know the ERs aren't the best with the exception of that one lonely Vanguard fund, but at this time, she does not want to move the 401k. I'm guessing Vanguard will be the way to go for US stocks, but any thoughts on the international funds/bonds? Thanks in advance for the advice!

Stocks
Blue Chip Growth Fund (TRBCX)(0.72%)
Fidelity Contrafund (FCNTX)(0.68%)
Fidelity Small Cap Discovery (FSCRX)(1.01%)
Hennessy Focus Institutional(HFCIX)(1.13%)
Invesco Small Cap Value Y(VSMIX)(0.87%)
Ivy International Core Equity N(IINCX)(0.83%)
JP Morgan Mid Cap Value L(FLMVX)(0.75%)
Oakmark Equity and Income I(OAKBX)(0.89%)
Oakmark International I(OAKIX)(1.05%)
Putnam Equity Income R6(PEQSX)(0.55%)
Vanguard Institutional Index Fund(VINIX)(0.04%)
Wells Fargo Small Co Grow (WSCGX)(0.95%)

Bonds
Pimco Total Return Institutional Fund(PTTRX)(0.47%)
TCW Total Return Bond I(TGLMX)(0.49%)
I suggest Vanguard Institutional Index Fund (VINIX) ER 0.04% for domestic stocks, and PIMCO Total Return Institutional (PTTRX) ER 0.47% for bonds, and just skipping the international stock funds.

The expense ratios on the international stock funds are too high (0.83-1.05%) to even consider in my opinion. The expense ratios are high enough to cancel the historically expected diversification benefit (0.75%) from investing in international stocks.

The PIMCO fund even though actively managed is a very good intermediate-term bond fund with a moderate expense ratio. There is no good reason to avoid using this fund in my opinion.
The above is a good analysis.

International funds the fees are too high, and should be avoided in this account. VINIX will be about 60% of quoted world developed stocks by market cap. It's enough.

If there is a cheaper way to get bonds in another account I would do that and just be 100% in the above fund. If not, then the PIMCO fund is probably fairly OK.
Dottie57
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Location: Earth Northern Hemisphere

Re: Unsure where to start with 401k choices

Post by Dottie57 »

PFInterest wrote:Vanguard institutional + one of those bond funds should be fine (whichever is more indexy...Didn't look)
+1
Topic Author
cleague
Posts: 8
Joined: Thu Apr 27, 2017 8:36 pm

Re: Unsure where to start with 401k choices

Post by cleague »

Thanks again for all the help! I think y'all are probably right that there's not much benefit to international funds in this account. Will go with the VINIX and see what she wants to do about the bonds. She's in her 50s so I don't want to be too aggressive stock wise.
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