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Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 11:13 am
by sksbog
I will be eligible for 401 starting Jan 01. This will be traditional and/or Roth 401 K.
Below are the choices presented to me by the retirement benefits.
Using bogleheads philosophy, what would you pick ?

Age: 43
I was thinking American target 2035, but expense ration looks high.






Fund Type Fund Name Ticker Expense Ratio

Money Market Schwab Government Money Inv SNVXX 0.35%

Intermediate-Term Bond Western Asset Core Bond IS WACSX 0.42%

Inflation-Protected Bond Vanguard Inflation-Protected Secs Adm VAIPX 0.10%

Large Value Vanguard Value Index Adm VVIAX 0.06%

Large Blend Vanguard 500 Index Admiral VFIAX 0.04%

Large Growth Fidelity NASDAQ Composite Index FNCMX 0.30%

Mid-Cap Blend Vanguard Mid Cap Index Admiral VIMAX 0.06%

Small Blend Vanguard Small Cap Index Adm VSMAX 0.06%

Foreign Large Growth Fidelity Overseas FOSFX 1.03%

Diversified Emerging Mkts Vanguard Emerging Mkts Stock Idx Adm VEMAX 0.14%

Real Estate Cohen & Steers Real Estate Securities I CSDIX 0.91%

Target-Date 2000-2010 American Funds 2010 Trgt Date Retire R6 RFTTX 0.35%

Target-Date 2015 American Funds 2015 Trgt Date Retire R6 RFJTX 0.35%

Target-Date 2020 American Funds 2020 Trgt Date Retire R6 RRCTX 0.37%

Target-Date 2025 American Funds 2025 Trgt Date Retire R6 RFDTX 0.39%

Target-Date 2030 American Funds 2030 Trgt Date Retire R6 RFETX 0.41%

Target-Date 2035 American Funds 2035 Trgt Date Retire R6 RFFTX 0.42%

Target-Date 2040 American Funds 2040 Trgt Date Retire R6 RFGTX 0.43%

Target-Date 2045 American Funds 2045 Trgt Date Retire R6 RFHTX 0.43%

Target-Date 2050 American Funds 2050 Trgt Date Retire R6 RFITX 0.43%

Target-Date 2055 American Funds 2055 Trgt Date Retire R6 RFKTX 0.45%

Target-Date 2060+ American Funds 2060 Trgt Date Retire R6 RFUTX 0.46%

Re: Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 11:16 am
by kerplunk
What is your asset allocation?

Re: Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 11:22 am
by sksbog
75% stocks 25% bonds.
Usual 3 or 4 fund lazy portfolio.
60-40 domestic and international.

Re: Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 11:51 am
by rkhusky
I would go with Vanguard 500 Index Admiral VFIAX and Western Asset Core Bond IS WACSX. According to Morningstar the target date funds are a mix of 19 other funds and appear to be mainly large cap stocks with a leaning towards growth, so are not ideal and the expense ratio is only mediocre, not terrible. You could go with the 401k up to the employer match and then contribute to an IRA, where I would put Vanguard Total International, although you could also put bonds there (e.g. Vanguard Total Bond). Once the IRA is maxed, go back to the 401K.

It all depends on how much complexity you want. You could also add Vanguard Small Cap Index Adm VSMAX to the 401K to add some US small caps (80% VFIAX and 20% VSMAX for US stocks). International could be anywhere from 20%-50% of stocks, depending on your preferences and the constraints of the 401K and IRA limits.

Re: Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 12:06 pm
by retiredjg
sksbog wrote:
Sun Dec 24, 2017 11:22 am
75% stocks 25% bonds.
Usual 3 or 4 fund lazy portfolio.
60-40 domestic and international.
The only way to get near that in this plan is to use the target fund that is closest to 75% stocks and 25% bonds (maybe about 2030 or so?) The ER is not great, but it is not terrible either.

If you have other accounts that could hold your international allocation, in the 401k I'd use the 500 Index + Small Cap Index at about 80/20 to be something close to total US stocks, and the Core Bond fund for part of the bond allocation. That bond fund took a dip in the last crash so I might water it down with something else in another account.

Re: Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 12:12 pm
by livesoft
At age 43, I suspect you may have another tax-deferred account that you have funded from age 0 to age 42. What's in it?

Also, you readily mentioned your desired asset allocation which also suggests that you have other investments elsewhere.

So you can probably put your bond and foreign allocations in the other investments and in this new 401(k) just use some funds with expense ratio below 0.06%. Of course, since this 401(k) will likely not have a lot of money in it for awhile, your other investments will need some US equities, too.

Re: Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 3:48 pm
by LadyGeek
This thread is now in the Investing - Help with Personal Investments forum (portfolio help).

Re: Need help in selecting funds for 401K

Posted: Sun Dec 24, 2017 7:21 pm
by KSActuary
For simplicity, I would pick the closest target date fund as the American Funds have performed well over time.

Re: Need help in selecting funds for 401K

Posted: Mon Dec 25, 2017 1:20 am
by evilityb
You're right that the American target funds have high expense ratios.

I would go with:
Inflation-Protected Bond Vanguard Inflation-Protected Secs Adm VAIPX
Large Blend Vanguard 500 Index Admiral VFIAX
Mid-Cap Blend Vanguard Mid Cap Index Admiral VIMAX
Small Blend Vanguard Small Cap Index Adm VSMAX

The ratio you choose depends on a number of factors, including your risk tolerance and any other investments you have elsewhere. For your age, a blend of ~70% stocks and ~30% bonds would be reasonable.

Re: Need help in selecting funds for 401K

Posted: Mon Dec 25, 2017 2:06 am
by TropikThunder
evilityb wrote:
Mon Dec 25, 2017 1:20 am
You're right that the American target funds have high expense ratios.

I would go with:
Inflation-Protected Bond Vanguard Inflation-Protected Secs Adm VAIPX
Large Blend Vanguard 500 Index Admiral VFIAX
Mid-Cap Blend Vanguard Mid Cap Index Admiral VIMAX
Small Blend Vanguard Small Cap Index Adm VSMAX

The ratio you choose depends on a number of factors, including your risk tolerance and any other investments you have elsewhere. For your age, a blend of ~70% stocks and ~30% bonds would be reasonable.
Why would you have his only bond allocation in TIPS at age 43?

Re: Need help in selecting funds for 401K

Posted: Mon Dec 25, 2017 11:13 am
by evilityb
TropikThunder wrote:
Mon Dec 25, 2017 2:06 am
evilityb wrote:
Mon Dec 25, 2017 1:20 am
You're right that the American target funds have high expense ratios.

I would go with:
Inflation-Protected Bond Vanguard Inflation-Protected Secs Adm VAIPX
Large Blend Vanguard 500 Index Admiral VFIAX
Mid-Cap Blend Vanguard Mid Cap Index Admiral VIMAX
Small Blend Vanguard Small Cap Index Adm VSMAX

The ratio you choose depends on a number of factors, including your risk tolerance and any other investments you have elsewhere. For your age, a blend of ~70% stocks and ~30% bonds would be reasonable.
Why would you have his only bond allocation in TIPS at age 43?

You're right. I overlooked OP's other bond option.

I would also add:
Intermediate-Term Bond Western Asset Core Bond IS WACSX

Re: Need help in selecting funds for 401K

Posted: Thu Jan 11, 2018 5:01 pm
by sksbog
Thanks everyone. this is how i think i will go. Please let me know how this looks. i understand and there is no foreign component here. is there an option i can do or i would need to adjust my IRA to increase foreign allocation.

Intermediate-Term Bond Western Asset Core Bond IS 20.00%
Inflation-Protected Bond Vanguard Inflation-Protected S 10.00%
Large Blend Vanguard 500 Index Admiral 35.00%
Mid-Cap Blend Vanguard Mid Cap Index Admiral 25.00%
Small Blend Vanguard Small Cap Index Adm 10.00%
Total

100.00%

Re: Need help in selecting funds for 401K

Posted: Fri Jan 12, 2018 8:50 am
by retiredjg
Your idea is fine. There is no good choice for foreign stocks in your 401k so I'd put that in an IRA or a taxable account if you have one.

Re: Need help in selecting funds for 401K

Posted: Fri Jan 12, 2018 2:14 pm
by pingo
You've come up with a solid plan. I find no fault with it.

I do want to say that I like American Funds Target Date fund series when the price is right...

...and the price is right in your 401k. I doubt you'll find them any cheaper.

Using a single AF TD fund will keep things simple and you'll get the international exposure.

American Funds likes to put the word "growth" in some of its fund names and the Morningstar 9-box chart usually shows their funds as being skewed in that direction. "Growth" tends to be a bad word around here, so that worries some posters.

That said, AF is one company that has served its investors extremely well over the decades with a high level of stewardship from skilled management that eats its own cooking. I'd feel lucky to have them in my employer-sponsored plan.

Food for thought.