New Investor Eligible for 401k- Help

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BooRadley
Posts: 3
Joined: Sat Feb 03, 2018 8:12 am

New Investor Eligible for 401k- Help

Post by BooRadley » Wed Jun 13, 2018 6:14 pm

I would appreciate any help in putting together the best plan possible for our situation.

Married, 31 years old.

Getting our financial ducks in a row here recently.

We recently opened a Roth IRA for my wife and one for myself, almost, and soon to be, maxed out for the year. No other retirement savings beyond that.

Currently everything is in Vanguard Total Stock index, due to not meeting $3k minimum threshold to get into the international stock and total domestic bond funds.

Asset allocation desired at 80/20 or even 90/10 for now, achieved within the 3 fund portfolio.

Eligible for company 401k on July 1st. 4% employee to get 2% match.

Listed below are the options for our 401k. To my rookie eye, the Vanguard and American Funds options look best.

In low tax bracket, living in a very low cost of living area.

(I can't get it to paste the way I want it to, but the key for interpreting the numbers is at the very top.)

INVESTMENT
MIX
ASSET CLASS
1 YR
5 YEAR
10 YR / INCEP
GROSS
EXP %

T. Rowe Price Balanced Fund
3763 Asset Allocation
4.91%
4.91%
4.97%
0.56%

T. Rowe Price 2005 Fund
3565 Asset Allocation
4.57%
5.17%
5.15%
0.58%

T. Rowe Price 2010 Fund
4060 Asset Allocation
5.23%
5.75%
5.35%
0.57%

T. Rowe Price 2015 Fund
4852 Asset Allocation
6.23%
6.63%
5.83%
0.59%

T. Rowe Price 2020 Fund
5743 Asset Allocation
7.51%
7.59%
6.27%
0.63%

T. Rowe Price 2025 Fund
6535 Asset Allocation
8.55%
8.41%
6.61%
0.67%

T. Rowe Price 2030 Fund
7327 Asset Allocation
9.65%
9.15%
6.95%
0.69%

T. Rowe Price 2035 Fund
7921 Asset Allocation
10.42%
9.68%
7.18%
0.72%

T. Rowe Price 2040 Fund
8416 Asset Allocation
11.14%
10.06%
7.42%
0.74%
T. Rowe Price 2045 Fund
8614 Asset Allocation
11.43%
10.17%
7.48%
0.74%

T. Rowe Price 2050 Fund
8614 Asset Allocation
11.47%
10.19%
7.48%
0.74%

T. Rowe Price 2055 Fund
8713 Asset Allocation
11.45%
10.17%
7.46%
0.74%

American Funds EuroPacific Gr R6
946 International Funds
13.05%
8.18%
4.20%
0.49%

American Funds New Perspective R6
946 International Funds
15.61%
11.68%
7.86%
0.45%

Franklin Intl Small Cap Growth A
973 International Funds
7.98%
8.11%
7.83%
1.38%

TIF International Equity Series
964 International Funds
6.63%
4.44%
1.96%
0.79%

Deutsche Real Estate Securities A
100 Specialty
2.62%
6.96%
5.98%
0.99%

PGIM Jennison Natural Resources Z
982 Specialty
20.55%
-1.83%
-3.86%
0.88%

Franklin Small Cap Value Adv
946 Small Cap Funds
15.24%
10.32%
8.59%
0.82%

PGIM Jennison Small Company Z
973 Small Cap Funds
17.67%
12.15%
9.05%
0.81%

T. Rowe Price Small-Cap Stock
973 Small Cap Funds
19.54%
12.48%
11.95%
0.89%

Great-West T Rowe Price MdCp Gr Fund Inv
955 Mid Cap Funds
15.17%
14.35%
10.80%
1.03%

JPMorgan Mid Cap Equity I
964 Mid Cap Funds
13.81%
12.06%
9.53%
1.02%

JPMorgan Mid Cap Value L
982 Mid Cap Funds
6.87%
10.47%
9.53%
0.86%

American Funds AMCAP R6
8911 Large Cap Funds
20.96%
14.20%
10.73%
0.36%

American Funds Washington Mutual R6
955 Large Cap Funds
14.04%
12.13%
8.87%
0.30%

Vanguard Total Stock Mkt Idx Adm
991 Large Cap Funds
15.11%
12.83%
9.32%
0.04%

American Funds American Balanced R6
5446 Balanced Funds
8.77%
9.17%
7.97%
0.28%

BlackRock Global Allocation Instl
5941 Balanced Funds
4.72%
5.04%
4.32%
0.89%

PGIM High-Yield A
0100 Bond Funds
2.20%
4.84%
7.34%
0.81%

Templeton Global Bond Adv
0100 Bond Funds
-0.21%
1.57%
5.50%
0.78%

Vanguard Interm-Term Bond Index Adm
0100 Bond Funds
-1.66%
1.94%
4.64%
0.07

dknightd
Posts: 575
Joined: Wed Mar 07, 2018 11:57 am

Re: New Investor Eligible for 401k- Help

Post by dknightd » Wed Jun 13, 2018 6:26 pm

Honestly at this stage it does not matter much where you put your money. The key is to start saving it as soon as you can. Vanguard Total Stock index is fine (probably good). Contribute as much as you need to get the employer match (free money). Contribute as much as you can afford. I'd do tax deferred first, but it may be better to use roth. Roth was not an option when I started saving for retirement. When you are starting out Roth might make more sense since you are still likely in a low tax bracket. I'd do at least up to employer match, then, maybe 50/50 roth and traditional. In the end what matters is that you live below your income. Sounds to me you are on the track :)

ExitStageLeft
Posts: 723
Joined: Sat Jan 20, 2018 4:02 pm

Re: New Investor Eligible for 401k- Help

Post by ExitStageLeft » Wed Jun 13, 2018 6:55 pm

Here's a condensed list:

T. Rowe Price Balanced Fund 0.56%
T. Rowe Price 20XX Fund 0.58% to 0.74%
American Funds EuroPacific Gr R6 0.49%
American Funds New Perspective R6 0.45%
Franklin Intl Small Cap Growth A 1.38%
TIF International Equity Series 0.79%
Deutsche Real Estate Securities A 0.99%
PGIM Jennison Natural Resources Z 0.88%
Franklin Small Cap Value Adv 0.82%
PGIM Jennison Small Company Z 0.81%
T. Rowe Price Small-Cap Stock 0.89%
Great-West T Rowe Price MdCp Gr Fund Inv 1.03%
JPMorgan Mid Cap Equity I 1.02%
JPMorgan Mid Cap Value L 0.86%
American Funds AMCAP R6 0.36%
American Funds Washington Mutual R6 0.30%
Vanguard Total Stock Mkt Idx Adm 0.04%
American Funds American Balanced R6 0.28%
BlackRock Global Allocation Instl 0.89%
PGIM High-Yield A 0.81%
Templeton Global Bond Adv 0.78%
Vanguard Interm-Term Bond Index Adm 0.07%

I would go with 80% or 90% in Vanguard Total Stock Market with the balance in Vanguard Total Bond. Expense ratio 0.046% for an 80/20 allocation. Contribute as much as you possibly can up to $18,500.

Edit to add: Once you've started building up your 401k then you can look to allocate across it and your IRA accounts. You may opt to add some international stock funds for better diversification. Your options in the 401k are bit on the high side for expenses compared to what you can get in your Roth accounts. In a few years you may have an overall prtfolio that looks like:

His Roth IRA
10% Vanguard Total International Stock (VTIAX)

Her Roth IRA
10% Vanguard Total International Stock (VTIAX)

His 401k
60% Vanguard Total Stock Market (VTSAX)
20% Vanguard Total Bond (VBTLX)
Last edited by ExitStageLeft on Wed Jun 13, 2018 7:09 pm, edited 1 time in total.

Jablean
Posts: 193
Joined: Sat Jun 02, 2018 2:38 pm

Re: New Investor Eligible for 401k- Help

Post by Jablean » Wed Jun 13, 2018 6:56 pm

I'd pick a 2040 target fund and start plugging money in for a year. Come back then and add another.

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Duckie
Posts: 5808
Joined: Thu Mar 08, 2007 2:55 pm

Re: New Investor Eligible for 401k- Help

Post by Duckie » Thu Jun 14, 2018 3:47 pm

BooRadley wrote:Listed below are the options for our 401k.
The best options are:
  • Vanguard Total Stock Mkt Idx Adm 0.04% -- Complete US stocks
  • American Funds EuroPacific Gr R6 0.49% -- Good international stock fund, expensive
  • Vanguard Interm-Term Bond Index Adm 0.07% -- US bonds
I'd use the 401k for bonds and US stocks, and the Roth IRAs for international stocks.

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