New job, new 401k

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Topic Author
thatoneguylol
Posts: 3
Joined: Mon Nov 05, 2018 1:19 pm

New job, new 401k

Post by thatoneguylol » Mon Nov 05, 2018 1:22 pm

Just started a new job. They match 4% in their 401K. They use Fidelity. The market is so freaking high... What should I invest in? I set it to money market for now. :confused

I am 35 years old.
I have 50K in an IRA.
50K in savings.

EDIT:

Zero debt.
No dependents.
Married.
30 Years until retirement.
Job is in tech so... volatile.

I've spent the last 5 years playing with a small amount of money trying individual stocks, ETFs, vanguard funds, etc. I've learned I suck at picking winners and Vanguard's CEO had it right the whole time as everyone on here knows.

So what I took away from all this is:
1. You can't time the market.
2. Individual stocks are essentially casino gambling.
3. Buying something that tracks the S&P 500 with as low a management cost as possible seems like the "safest" way to go over time... if you believe in the future of the USA...

Sorry for the lack of information. Here are the funds available.

Blended Investment -- VANG TARGET RET 2015
%
Blended Investment -- VANG TARGET RET 2020
%
Blended Investment -- VANG TARGET RET 2025
%
Blended Investment -- VANG TARGET RET 2030
%
Blended Investment -- VANG TARGET RET 2035
%
Blended Investment -- VANG TARGET RET 2040
%
Blended Investment -- VANG TARGET RET 2045
%
Blended Investment -- VANG TARGET RET 2050
%
Blended Investment -- VANG TARGET RET 2055
%
Blended Investment -- VANG TARGET RET 2060
%
Blended Investment -- VANG TARGET RET INC
%
Bond Investments Income METWEST TOT RTN BD I
%
Bond Investments Income VANG TOT BD MKT ADM
%
Short-Term Investments -- VANG VMMR-FED MMKT 100%
%
Stock Investments Large Cap DODGE & COX STOCK
%
Stock Investments Large Cap PRMCP ODYSSEY GROWTH
%
Stock Investments Large Cap VANG 500 INDEX ADM
%
Stock Investments Mid-Cap VANG EXT MKT IDX ADM
%
Stock Investments Small Cap DFA US SM CAP VALUE
%
Stock Investments Small Cap J H TRITON N
%
Stock Investments International OPPHMR INTL DIVSF I
%
Stock Investments International VANG TOT INTL STK AD
%
Stock Investments -- VANG TOT WLD STK INV
%
Last edited by thatoneguylol on Fri Nov 16, 2018 5:53 pm, edited 3 times in total.

User avatar
Earl Lemongrab
Posts: 6237
Joined: Tue Jun 10, 2014 1:14 am

Re: New job, new 401k

Post by Earl Lemongrab » Mon Nov 05, 2018 5:56 pm

Don't try to time the market. Come up with a reasonable allocation, then start investing to plan.

Post all of your current holdings and choices in the new plan as outlined in the sticky note at the top of the subforum.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Flyer24
Posts: 602
Joined: Sun Apr 08, 2018 4:21 pm

Re: New job, new 401k

Post by Flyer24 » Mon Nov 05, 2018 6:54 pm

Would you have thought the same thing in 2016 when the Dow was at 18,000? You should read about dollar cost averaging. Do no time the market. You are not an expert.

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ruralavalon
Posts: 14490
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Location: Illinois

Re: New job, new 401k

Post by ruralavalon » Tue Nov 06, 2018 11:45 am

Welcome to the forum :) .

Don't try to guess whether this is a good time to invest. If worried you could invest in a conservative balanced fund or mix of funds.

thatoneguylol wrote:
Mon Nov 05, 2018 1:22 pm
Just started a new job. They match 4% in their 401K. They use Fidelity. The market is so freaking high... What should I invest in? I set it to money market for now. :confused

I am 35. I have 50K in an IRA. 50K in savings.
What funds are offered in your 401k? Please give fund names, tickers and expense ratios. (We can't possibly suggest what funds to invest in without knowing what the available choices are.)

Are you contributing enough to your 401k to get the full employer match offered?

What fund firm is your IRA with, and what investments are in it? How much do you contribute annually to your IRA?

You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
thatoneguylol
Posts: 3
Joined: Mon Nov 05, 2018 1:19 pm

Re: New job, new 401k

Post by thatoneguylol » Thu Nov 08, 2018 1:52 pm

Sorry for the lack of information! Edited!

b42
Posts: 300
Joined: Thu Apr 11, 2013 7:00 pm

Re: New job, new 401k

Post by b42 » Thu Nov 08, 2018 2:03 pm

Welcome to the forums!

Depending on your other holdings, you could do 100% in the Vanguard Target Retirement 2050 Fund to start. That would get you a diversified portfolio.

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vineviz
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Re: New job, new 401k

Post by vineviz » Thu Nov 08, 2018 2:07 pm

b42 wrote:
Thu Nov 08, 2018 2:03 pm
Welcome to the forums!

Depending on your other holdings, you could do 100% in the Vanguard Target Retirement 2050 Fund to start. That would get you a diversified portfolio.
I agree. This is an easy path to excellence.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

jpelder
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Joined: Mon Jan 26, 2015 3:56 pm
Location: Charlotte, NC

Re: New job, new 401k

Post by jpelder » Thu Nov 08, 2018 2:07 pm

b42 wrote:
Thu Nov 08, 2018 2:03 pm
Welcome to the forums!

Depending on your other holdings, you could do 100% in the Vanguard Target Retirement 2050 Fund to start. That would get you a diversified portfolio.
I second this recommendation. Target-Date funds are great for nervous investors (sounds like you're feeling a little nervous) because you can choose a single fund for a reasonable price, and then not mess with it. Messing with it is a sure route to mistakes if you're an emotional investor

TSWNY
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Joined: Sun Mar 13, 2016 1:05 pm

Re: New job, new 401k

Post by TSWNY » Thu Nov 08, 2018 2:09 pm

Time in the market is always better than timing the market. You probably have 20,25,30 more years of working, right? Over that time you are going to see many many market "highs". Set an asset allocation that you feel comfortable with and start contributing now.

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ruralavalon
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Location: Illinois

Re: New job, new 401k

Post by ruralavalon » Fri Nov 09, 2018 11:45 am

thatoneguylol wrote:
Thu Nov 08, 2018 1:52 pm
Sorry for the lack of information! Edited!
Please add the ticker symbols and expense ratios. Expense ratios are critical in fund selection. Sometimes a 401k charges different expense ratios for funds than are charged to the general public.

There are many very good funds offered in your 401k plan, you are fortunate.

I encourage you to contribute as much as practical to your 401k plan.


jpelder wrote:
Thu Nov 08, 2018 2:07 pm
b42 wrote:
Thu Nov 08, 2018 2:03 pm
Welcome to the forums!

Depending on your other holdings, you could do 100% in the Vanguard Target Retirement 2050 Fund to start. That would get you a diversified portfolio.
I second this recommendation. Target-Date funds are great for nervous investors (sounds like you're feeling a little nervous) because you can choose a single fund for a reasonable price, and then not mess with it. Messing with it is a sure route to mistakes if you're an emotional investor
A target date fund could a good idea for you. If you are nervous ("market is so freaking high") and want to be conservative, then you could pick a target date fund with a high bond allocation and not just rely on the year stated in the fund name to make your choice.

In the alternative to a target date fund, funds to consider might be:
1) Vanguard 500 Index Fund Admiral Shares;
2) Vanguard Total International Stock Index Fund Admiral Shares; and
3) Vanguard Total Bond Market Index Fund Admiral Shares.

Either way you need to pick an asset allocation (stock/bond mix, and domestic/international stock mix) that is comfortable for you based on your own ability, willingness and need to take risk.

What is your age, and years to expected retirement? Do you have any debt? If so what types, amounts and interest rates? Any dependents? How safe is your job, your employer, and the industry you work in? How would you describe your tolerance for risk?

Again you can simply add this to your original post using the edit button, so that all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
thatoneguylol
Posts: 3
Joined: Mon Nov 05, 2018 1:19 pm

Re: New job, new 401k

Post by thatoneguylol » Fri Nov 16, 2018 5:48 pm

Zero debt. No dependents. Married. 30 Years until retirement. Job is in tech so... volatile.

I've spent the last 5 years playing with a small amount of money trying individual stocks, ETFs, vanguard funds, etc. I've learned I suck at picking winners and Vanguard's CEO had it right the whole time as everyone on here knows.

So what I took away from all this is:
1. You can't time the market.
2. Individual stocks are essentially casino gambling.
3. Buying something that tracks the S&P 500 with as low a management cost as possible seems like the "safest" way to go over time... if you believe in the future of the USA...

User avatar
ruralavalon
Posts: 14490
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: New job, new 401k

Post by ruralavalon » Fri Nov 16, 2018 8:05 pm

thatoneguylol wrote:
Fri Nov 16, 2018 5:48 pm
Zero debt. No dependents. Married. 30 Years until retirement. Job is in tech so... volatile.
Asset allocation.
At age 30 I would ordinarily suggest about 20% in bonds. This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

At age 30, with volatile employment, and nervous about investing ("market is so freaking high") I suggest about 40% bonds. Here are outstanding write ups on the 60/40 stock/bond allocation by Peter Bernstein, Bloomberg Personal Finance (2002) , "The 60/40 Solution", and by Rick Ferri, etf.com (2/25/15), "Wisdom Of 60/40 Portfolios Timeless"".

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).

That works out to bout 40% bonds, 15% international stocks, and 45% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.



Fund selection.
In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

A target date fund could a good idea for you. If you are nervous ("market is so freaking high") and want to be conservative, then you could pick a target date fund with a high bond allocation and not just rely on the year stated in the fund name to make your choice. Vanguard Target Retirement 2025 Fund has about 40% in bonds.

In the alternative to a target date fund, funds to consider might be:
1) 60%, Vanguard 500 Index Fund Admiral Shares;
2) 15%, Vanguard Total International Stock Index Fund Admiral Shares; and
3) 40%, Vanguard Total Bond Market Index Fund Admiral Shares.

For domestic stocks I suggest using a total stock market index fund where available; otherwise an S&P 500 index fund is good enough by itself for domestic stocks. "In a 401(k) plan with limited choices one might very well opt for an S&P 500 index fund to serve as the domestic stock component of a three-fund portfolio." Wiki article, Three-fund portfolio, "Other considerations".

An S&P 500 index fund covers 81% of the U.S. stock market investing in stocks of selected large-cap and mid-cap U.S. companies, and in the 26 years since the creation of the first total stock market index fund the total return of the two types of funds has been almost identical. Morningstar, "growth of $10k" graph, VTSAX vs VFIAX. In the first 10 years the S&P 500 fund did better, in the last 10 years the total market fund did better, and over the 26 years the total market fund gave a little more return (0.11% per year), but at the cost of a little more volatility (risk): nisiprius post, in the forum discussion "Exchanging the S&P 500 for the TSM". See also Allan Roth, CBS Moneywatch, "John C. Bogle on the S&P 500 vs. the Total Stock Market". So it seems that adding a little in mid/small cap stocks trying to mimic the holdings of a total stock market fund has historically made little difference in performance.

If you want to add the extended market fund, then an 81/19 mix of S&P 500 and extended market will approximate the content of a total stock market index fund. Wiki article, "Approximating total stock market". In my opinion this is not necessary, it is optional if you prefer to do this.

. . . . .

I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.

If you have any questions just ask.

I hope that this helps.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Mr.BB
Posts: 668
Joined: Sun May 08, 2016 10:10 am

Re: New job, new 401k

Post by Mr.BB » Fri Nov 16, 2018 9:34 pm

Do you think the market will be higher in the next 15-20 years? If yes, then don't worry about it. In fact since you have so much time left before retirement, you should hope for a good market downturn, so you can invest even more at the point.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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