Help creating lazy portfolio using American Funds (paradox)

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bad78andy
Posts: 149
Joined: Tue Mar 03, 2015 11:25 am
Location: Tampa, Florida

Help creating lazy portfolio using American Funds (paradox)

Post by bad78andy » Tue Nov 14, 2017 10:26 am

Bogleheads:

I've changed employers and am forced to use American Funds. I'm used to Vanguard fund; have to create a 3 fund lazy portfolio using American Funds, preferably 70/30. ER is atrocious, but employer's HR says I can propose changing to Vanguard/Fidelity/Schwab and showing data (will work on this over Christmas), this is a small company 50-100 employees.

Emergency funds: Covered
Debt: Primary Home Mortgage balance ~$115000 @ 3%, <13 of 15 years remaining
Tax Filing Status: Married Filing Jointly
State of Residence: FL
Age: 39 (both), planning to retire from full-time work ~52-55

Current retirement assets

Taxable
None

His old 401k
Vanguard 3-fund Lazy Portfolio

Her IRA
American Funds 2045 Target Retirement Fund ER 0.79

Contributions

Annual Contributions 
Max out 401k & IRA annually
Him: put in 6% and employer adds 4.5%
Her: put in 3% and employer adds 3%

Available funds 

Funds available in his new 401(k) due to employer change

All are American Funds Share Class R2, no front-load charge.

EuroPacific Growth Fund AEPFX 1.48
The Growth Fund of America GFFFX 1.42
Growth Portfolio RGWBX 1.58
New World Fund RNWBX 1.79
SmallCap World Fund RSLBX 1.84
Capital World Growth and Income Fund RWIBX 1.54
Fundamental Investors RFNBX 1.39
Washington Mutual Investors Fund RWMBX 1.39
Capital Income Builder RIRBX 1.40
American Balanced Fund RLBBX 1.37
Balanced Portfolio RBABX 1.52
Bond Fund of America RBFBX 1.35
Money Market Fund RABXX 1.44
2060 Target Date Retirement Fund RBNTX 1.73
2055 Target Date Retirement Fund RBMTX 1.54
2050 Target Date Retirement Fund RBITX 1.53
2045 Target Date Retirement Fund RBHTX 1.53
2040 Target Date Retirement Fund RBKTX 1.52
2035 Target Date Retirement Fund RBFTX 1.51
2030 Target Date Retirement Fund RBETX 1.50

Questions:
1. Current Vanguard portfolio is about 70/30 stock/bond, with 20% of stock International, and minor fraction, less than 2% being REIT.

2. I’ve changed employers and need help with designing a lazy portfolio using American Funds. Current retirement accounts are with Vanguard, except for wife’s IRA. I’m familiar with reading MorningStar ratings, etc. but am stumped with picking from American Funds. I prefer total domestic and international stock, and total domestic bond, 70/30 split.

Thank you in advance.

chevca
Posts: 434
Joined: Wed Jul 26, 2017 11:22 am

Re: Help creating lazy portfolio using American Funds (paradox)

Post by chevca » Tue Nov 14, 2017 12:38 pm

Yuck, those are some high fees! I would keep it really lazy in that one and just use the balanced fund they offer. Looks like it's close to 70/30 like you want. You could increase international in another account to make up for the lack in the balanced fund, if you wanted.

I would just pick the best of the worst in the 401k.

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