Negative 13.6% return in 401K for 2018

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Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 2:51 pm

Hello folks,

I am new to Bogle heads. I am Male, 30, have around 40K in my Vanguard 401K with my employer. I do not have target retirement fund, but it is goes into a variety of mutual funds. The first 8 months of 2018 were good, but the last 4 months made me have a -13.6% return causing my assets to drop significantly. Have been saving last 3 years in my 401k, and in 2018 maxed-out my 401K contribution limit, contributing $18,500. My allocation is 93% stocks and 7% bonds.

What could I have done to prevent this negative return? Is this negative return expected or should I have made wiser investing decisions? What Vanguard mutual funds are best to invest for 2019? I am trying to post my funds and graph image from my 401K Vanguard so you can see the funds and allocation details but cannot seem to post it in the forum. Any guidance is appreciated!

bloom2708
Posts: 5260
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Negative 13.6% return in 401K for 2018

Post by bloom2708 » Tue Jan 08, 2019 3:13 pm

Completely normal.

We just have not had a "stocks go way down" moment much in the past 4-5 years. Really since March 2009. With blips in 2011 and a few other times.

2007 to 2009, stocks dropped ~55%, so this has been mild.

At 30, it is a good time to evaluate your risk tolerance. I'm a pretty firm believer that 15-20% bonds is good at any age. Yes, you have a long horizon. Keep buying. When you have $1 million and you lose 14%, 20%, 30%, it hurts too. The difference is you have a shorter window to recover when you are 45, 50, 55.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

ge1
Posts: 462
Joined: Sat Apr 28, 2012 8:15 pm

Re: Negative 13.6% return in 401K for 2018

Post by ge1 » Tue Jan 08, 2019 3:14 pm

arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
Hello folks,

I am new to Bogle heads. I am Male, 30, have around 40K in my Vanguard 401K with my employer. I do not have target retirement fund, but it is goes into a variety of mutual funds. The first 8 months of 2018 were good, but the last 4 months made me have a -13.6% return causing my assets to drop significantly. Have been saving last 3 years in my 401k, and in 2018 maxed-out my 401K contribution limit, contributing $18,500. My allocation is 93% stocks and 7% bonds.

What could I have done to prevent this negative return? Nothing. Stocks can decrease 10%, 20%, 30% or more at time in value, that's part of the game. People here believe in long term investing in low cost index funds based on your asset allocation.
Is this negative return expected or should I have made wiser investing decisions? See first answer.
What Vanguard mutual funds are best to invest for 2019? See first answer. Buy broad index funds such as Vanguard Total US Market and/or Vanguard Total International and keep it simple.
I am trying to post my funds and graph image from my 401K Vanguard so you can see the funds and allocation details but cannot seem to post it in the forum. Any guidance is appreciated!
Welcome to the forum. See answers above.

02nz
Posts: 924
Joined: Wed Feb 21, 2018 3:17 pm

Re: Negative 13.6% return in 401K for 2018

Post by 02nz » Tue Jan 08, 2019 3:18 pm

arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
What could I have done to prevent this negative return?
Very simple! You should've had a crystal ball to tell you when the market was going to drop, and then sold just before that! :happy

No, not really. The Bogleheads philosophy advises against market-timing like that because it's a fool's errand and has led many people to do worse than the market. Your 401k dropped 13.5% in '18 because you bought more when the market was up, and then it dropped. Don't focus on this number, because it will get better over time. You won't care when you retire in 2050 (or whenever) what your return in calendar year '18 was.

If you post details about what you're invested in for your entire portfolio, we may be able to make specific suggestions. But in general the best approach is to make sure you're well-diversified, in low-cost funds, and in an asset allocation that you're comfortable with through the market's ups and downs, rather than focusing on short-term returns, which almost never ends well.

ETA: Look at your 401k a different way. What was the balance on January 1, 2018, and what was the balance on December 31 (or January 7, 2019)? Despite the negative returns, I'll bet you ended with a higher balance. So keep plowing money in and don't worry too much.

Flyer24
Posts: 599
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Re: Negative 13.6% return in 401K for 2018

Post by Flyer24 » Tue Jan 08, 2019 3:26 pm

You are young. Keep in mind, the drop in market also allows you to purchase more shares for your money. Your focus at your age should be share accumulation. You are in it for the long haul.

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 5:16 pm

Thank you, all for your wonderful responses! Below is my asset allocation at various funds. All my 401K is in Vanguard funds.

Any suggestions to re-balance / re-allocate my funds for 2019?

401K:

1. RERGX, Quantity 302.563, price $45.65, current balance $13,812.01, current investment mix 34.8%

2. CSRIX, Quantity 0.003, price $39.22, current balance $0.12, current investment mix 0.00%

3. ODVYX, Quantity 0.055, price $38.23, current balance $2.10, current investment mix 0.01%

4. VFIJX, Quantity 317.272, price $10.27, current balance $2,258.38, current investment mix 8.21%

5. VINIX, Quantity 58.930, price $231.51, current balance $13,642.88, current investment mix 34.38%

6. VIMAX, Quantity 27.070, price $174.99, current balance $4,736.98, current investment mix 11.94%

7. VSMAX, Quantity 64.729, price $65.4, current balance $4,233.27, current investment mix 10.67%

ge1
Posts: 462
Joined: Sat Apr 28, 2012 8:15 pm

Re: Negative 13.6% return in 401K for 2018

Post by ge1 » Tue Jan 08, 2019 5:22 pm

I‘m too lazy to look up these symbols... but let me ask you, what is your target asset allocation? I.e. how much in US stocks, how much in International, how much in bonds etc.

nix4me
Posts: 98
Joined: Sat Oct 13, 2018 9:32 am

Re: Negative 13.6% return in 401K for 2018

Post by nix4me » Tue Jan 08, 2019 5:37 pm

You are 92% stocks with 30% of that in a high priced international growth fund. International has been terrible for quite some time.

MathWizard
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Re: Negative 13.6% return in 401K for 2018

Post by MathWizard » Tue Jan 08, 2019 5:46 pm

Look at it this way, the stocks that you are buying are cheaper now, and your paper loss was only about $5K.
You'd much rather have stocks be cheaper now when you are first getting in.

My paper loss was about $60 K with a much more conservative allocation. Of course I am much further along in
my investing career.

aristotelian
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Re: Negative 13.6% return in 401K for 2018

Post by aristotelian » Tue Jan 08, 2019 5:53 pm

The bigger question for OP: why do you have .003 shares of CSRIX worth 12 cents?

MotoTrojan
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Re: Negative 13.6% return in 401K for 2018

Post by MotoTrojan » Tue Jan 08, 2019 5:55 pm

I’d simplify your portfolio to 2-3 holdings, if not a single fund of funds.

Maybe post all available options including full name and expense ratio and we can help from there.

stimulacra
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Re: Negative 13.6% return in 401K for 2018

Post by stimulacra » Tue Jan 08, 2019 5:55 pm

arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
What could I have done to prevent this negative return? Is this negative return expected or should I have made wiser investing decisions?
Unless you moved everything to cash or bonds, you haven't lost anything yet.

Negative returns early in your accumulation phase are better for you. It lets you buy shares at a discount versus buying those same shares at higher and higher prices. Keep doing what you are doing and let the business cycle do its thing.

The best thing I ever did in 2008-2009 was ignore the noise, ignore my annual returns, and increase my contributions to my 401k and IRA.

SrGrumpy
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Re: Negative 13.6% return in 401K for 2018

Post by SrGrumpy » Tue Jan 08, 2019 6:02 pm

Don't worry about it. It's an extremely cheap education you just got - and you'll smile about it in years to come. Anyway, at your age, you should be wishing for a sustained bear market.

H-Town
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Re: Negative 13.6% return in 401K for 2018

Post by H-Town » Tue Jan 08, 2019 6:03 pm

arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
Hello folks,

I am new to Bogle heads. I am Male, 30, have around 40K in my Vanguard 401K with my employer. I do not have target retirement fund, but it is goes into a variety of mutual funds. The first 8 months of 2018 were good, but the last 4 months made me have a -13.6% return causing my assets to drop significantly. Have been saving last 3 years in my 401k, and in 2018 maxed-out my 401K contribution limit, contributing $18,500. My allocation is 93% stocks and 7% bonds.

What could I have done to prevent this negative return? Is this negative return expected or should I have made wiser investing decisions? What Vanguard mutual funds are best to invest for 2019? I am trying to post my funds and graph image from my 401K Vanguard so you can see the funds and allocation details but cannot seem to post it in the forum. Any guidance is appreciated!
As it's hard for you to believe, it is a blessing. 10 years after 2009, now you finally have a chance to get rich faster.

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F150HD
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Re: Negative 13.6% return in 401K for 2018

Post by F150HD » Tue Jan 08, 2019 6:05 pm

OP - maybe list the funds available to you, it might yield positive suggestions on where to put your $$.

Hiwatter
Posts: 80
Joined: Tue Aug 16, 2016 3:43 pm

Re: Negative 13.6% return in 401K for 2018

Post by Hiwatter » Tue Jan 08, 2019 6:12 pm

In my 401K I contribute to only 2 funds, (which you also have):

VINIX and VSMAX

VINIX is the S&P500 Index. I put 80% of my contribution there

VSMAX is the US Small Cap Index. I put 20% contribution there

These 2 funds at approximately and 80/20 split essentially gives you the Total US Stock Market.

If you're asking for advice, here's mine: use the 2 funds I listed above and drop (exchange out) of the rest. Keep adding $$ and don't change a thing until you get older and feel the need to move some money into bonds.

30 is a great age to be getting this dialed in and time is on your side! I wish I was a Boglehead at 30...

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dwickenh
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Re: Negative 13.6% return in 401K for 2018

Post by dwickenh » Tue Jan 08, 2019 6:28 pm

Hiwatter wrote:
Tue Jan 08, 2019 6:12 pm
In my 401K I contribute to only 2 funds, (which you also have):

VINIX and VSMAX

VINIX is the S&P500 Index. I put 80% of my contribution there

VSMAX is the US Small Cap Index. I put 20% contribution there

These 2 funds at approximately and 80/20 split essentially gives you the Total US Stock Market.

If you're asking for advice, here's mine: use the 2 funds I listed above and drop (exchange out) of the rest. Keep adding $$ and don't change a thing until you get older and feel the need to move some money into bonds.

30 is a great age to be getting this dialed in and time is on your side! I wish I was a Boglehead at 30...
I agree with Hiwatter on this other than looking for a decent Foreign stock fund to keep 20-30% of your stock funds.

I would lean more to 55% in US stocks, 25% in foreign stocks, and 20% in bonds.

If the only Foreign fund you have is the American Funds Europacific growth, I would still use it vs nothing.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:30 pm

nix4me wrote:
Tue Jan 08, 2019 5:37 pm
You are 92% stocks with 30% of that in a high priced international growth fund. International has been terrible for quite some time.
Thank you for your feedback!

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:32 pm

MathWizard wrote:
Tue Jan 08, 2019 5:46 pm
Look at it this way, the stocks that you are buying are cheaper now, and your paper loss was only about $5K.
You'd much rather have stocks be cheaper now when you are first getting in.

My paper loss was about $60 K with a much more conservative allocation. Of course I am much further along in
my investing career.
Thank you, that helps to know!!

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:32 pm

aristotelian wrote:
Tue Jan 08, 2019 5:53 pm
The bigger question for OP: why do you have .003 shares of CSRIX worth 12 cents?
I have no idea, will try to opt out of it.

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:33 pm

stimulacra wrote:
Tue Jan 08, 2019 5:55 pm
arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
What could I have done to prevent this negative return? Is this negative return expected or should I have made wiser investing decisions?
Unless you moved everything to cash or bonds, you haven't lost anything yet.

Negative returns early in your accumulation phase are better for you. It lets you buy shares at a discount versus buying those same shares at higher and higher prices. Keep doing what you are doing and let the business cycle do its thing.

The best thing I ever did in 2008-2009 was ignore the noise, ignore my annual returns, and increase my contributions to my 401k and IRA.
Thank you!

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:35 pm

SrGrumpy wrote:
Tue Jan 08, 2019 6:02 pm
Don't worry about it. It's an extremely cheap education you just got - and you'll smile about it in years to come. Anyway, at your age, you should be wishing for a sustained bear market.
Thank you!!

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:35 pm

H-Town wrote:
Tue Jan 08, 2019 6:03 pm
arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
Hello folks,

I am new to Bogle heads. I am Male, 30, have around 40K in my Vanguard 401K with my employer. I do not have target retirement fund, but it is goes into a variety of mutual funds. The first 8 months of 2018 were good, but the last 4 months made me have a -13.6% return causing my assets to drop significantly. Have been saving last 3 years in my 401k, and in 2018 maxed-out my 401K contribution limit, contributing $18,500. My allocation is 93% stocks and 7% bonds.

What could I have done to prevent this negative return? Is this negative return expected or should I have made wiser investing decisions? What Vanguard mutual funds are best to invest for 2019? I am trying to post my funds and graph image from my 401K Vanguard so you can see the funds and allocation details but cannot seem to post it in the forum. Any guidance is appreciated!
As it's hard for you to believe, it is a blessing. 10 years after 2009, now you finally have a chance to get rich faster.
Hopefully :) :happy

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:46 pm

F150HD wrote:
Tue Jan 08, 2019 6:05 pm
OP - maybe list the funds available to you, it might yield positive suggestions on where to put your $$.
Thank you, please see funds available to me in my 401K plan:

BOND FUNDS:

1. Metropolitan West Total Return Bd Admin (MWTNX)
2. Vanguard GNMA Fund Admiral Shares (VFIJX)
3. PIMCO Commodity Real Ret Strat Instl (PCRIX)

BALANCED FUNDS (STOCKS AND BONDS)

1. Vanguard Balanced Index Fund inst (VBAIX)

DOMESTIC STOCK FUNDS

1. Cohen & Steers Instl Realth Shares (CSRIX)
2. Emerald Growth Institutional (FGROX)
3. Janus Henderson Small Cap Value N (JDSNX)
4. Vanguard Equity Income Fund Adm (VEIRX)
5. Vanguard Growth Index Fund Inst (VIGIX)
6. Vanguard Inst Index Fund Inst (VINIX)
7. Vanguard Mid-Cap Index Fund Adm (VIMAX)
8. Vanguard PRIMECAP Fund Admiral (VPMAX)
9. Vanguard Small-Cap Index Fund Adm (VSMAX)

INTERNATIONAL STOCK FUNDS

1. American Funds Europacific Growth R6 (RERGX)
2. Oppenheimer Developing Markets Y (ODVYX)

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:49 pm

Hiwatter wrote:
Tue Jan 08, 2019 6:12 pm
In my 401K I contribute to only 2 funds, (which you also have):

VINIX and VSMAX

VINIX is the S&P500 Index. I put 80% of my contribution there

VSMAX is the US Small Cap Index. I put 20% contribution there

These 2 funds at approximately and 80/20 split essentially gives you the Total US Stock Market.

If you're asking for advice, here's mine: use the 2 funds I listed above and drop (exchange out) of the rest. Keep adding $$ and don't change a thing until you get older and feel the need to move some money into bonds.

30 is a great age to be getting this dialed in and time is on your side! I wish I was a Boglehead at 30...
Thanks for your nice feedback! I have listed all my 401k funds available to me, if you can take a look and suggest will greatly appreciate it. I like your idea, but prefer to have at least 5-7% in bonds although I'm young at 30.

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Tue Jan 08, 2019 7:51 pm

dwickenh wrote:
Tue Jan 08, 2019 6:28 pm
Hiwatter wrote:
Tue Jan 08, 2019 6:12 pm
In my 401K I contribute to only 2 funds, (which you also have):

VINIX and VSMAX

VINIX is the S&P500 Index. I put 80% of my contribution there

VSMAX is the US Small Cap Index. I put 20% contribution there

These 2 funds at approximately and 80/20 split essentially gives you the Total US Stock Market.

If you're asking for advice, here's mine: use the 2 funds I listed above and drop (exchange out) of the rest. Keep adding $$ and don't change a thing until you get older and feel the need to move some money into bonds.

30 is a great age to be getting this dialed in and time is on your side! I wish I was a Boglehead at 30...
I agree with Hiwatter on this other than looking for a decent Foreign stock fund to keep 20-30% of your stock funds.

I would lean more to 55% in US stocks, 25% in foreign stocks, and 20% in bonds.

If the only Foreign fund you have is the American Funds Europacific growth, I would still use it vs nothing.
Thank you, I like your asset allocation split %, although I'd like to have 65% US Stocks, 25% International Stocks, and 10% in bonds.

tibbitts
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Joined: Tue Feb 27, 2007 6:50 pm

Re: Negative 13.6% return in 401K for 2018

Post by tibbitts » Tue Jan 08, 2019 8:03 pm

arengarajsug88 wrote:
Tue Jan 08, 2019 7:30 pm
nix4me wrote:
Tue Jan 08, 2019 5:37 pm
You are 92% stocks with 30% of that in a high priced international growth fund. International has been terrible for quite some time.
Thank you for your feedback!
Which isn't to say you should have less foreign.

You should go back and edit your original post to include fund names.

lakpr
Posts: 423
Joined: Fri Mar 18, 2011 9:59 am

Re: Negative 13.6% return in 401K for 2018

Post by lakpr » Tue Jan 08, 2019 10:08 pm

For someone in early 30's, I usually suggest a 80/20 or 85/15 stocks/bonds allocation; so my recommendation would be:
15-20% Vanguard GNMA Fund Admiral Shares (VFIJX)
65% Vanguard Inst Index Fund Inst (VINIX)
20-15% Vanguard Small Cap Index Admiral Shares (VSMAX)

However, I ask you to really take a deep introspection and determine your risk tolerance. If a 13% drop in stock market valuations had given you sleepless nights and turned you to seek advice on this forum, perhaps a higher allocation of bonds is right for you. VBIAX (Vanguard Balanced Index Fund) had an year-to-date return of just -2.96%. Would that be a more appropriate fund for you? You can choose to direct 100% of your contributions into that fund, it has a 50/50 constant stocks-to-bonds allocation.

Hiwatter
Posts: 80
Joined: Tue Aug 16, 2016 3:43 pm

Re: Negative 13.6% return in 401K for 2018

Post by Hiwatter » Wed Jan 09, 2019 12:11 am

arengarajsug88 wrote:
Tue Jan 08, 2019 7:49 pm
Hiwatter wrote:
Tue Jan 08, 2019 6:12 pm
In my 401K I contribute to only 2 funds, (which you also have):

VINIX and VSMAX

VINIX is the S&P500 Index. I put 80% of my contribution there

VSMAX is the US Small Cap Index. I put 20% contribution there

These 2 funds at approximately and 80/20 split essentially gives you the Total US Stock Market.

If you're asking for advice, here's mine: use the 2 funds I listed above and drop (exchange out) of the rest. Keep adding $$ and don't change a thing until you get older and feel the need to move some money into bonds.

30 is a great age to be getting this dialed in and time is on your side! I wish I was a Boglehead at 30...
Thanks for your nice feedback! I have listed all my 401k funds available to me, if you can take a look and suggest will greatly appreciate it. I like your idea, but prefer to have at least 5-7% in bonds although I'm young at 30.
If you feel the need to hold bonds at age 30, the Vanguard Bond you listed is the clear and obvious choice.

I wouldn't touch either of your International options! If you want International open a Roth IRA and contribute to VGTSX

OldSport
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Re: Negative 13.6% return in 401K for 2018

Post by OldSport » Wed Jan 09, 2019 12:18 am

If I were you, I'd invest 25% in each of the following funds:

Vanguard Inst Index Fund Inst (VINIX)
Vanguard Mid-Cap Index Fund Adm (VIMAX)
Vanguard PRIMECAP Fund Admiral (VPMAX)
Vanguard Small-Cap Index Fund Adm (VSMAX)

Aggressive, yes, but you have access to Primecap, which I would love and is closed to most.

AlphaLess
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Location: Kentucky

Re: Negative 13.6% return in 401K for 2018

Post by AlphaLess » Wed Jan 09, 2019 12:27 am

OldSport wrote:
Wed Jan 09, 2019 12:18 am
Aggressive, yes, but you have access to Primecap, which I would love and is closed to most.
What's so special about Vanguard PRIMECAP?
"You can get more with a kind word and a gun than with just a kind word." George Washington

02nz
Posts: 924
Joined: Wed Feb 21, 2018 3:17 pm

Re: Negative 13.6% return in 401K for 2018

Post by 02nz » Wed Jan 09, 2019 2:15 am

AlphaLess wrote:
Wed Jan 09, 2019 12:27 am
OldSport wrote:
Wed Jan 09, 2019 12:18 am
Aggressive, yes, but you have access to Primecap, which I would love and is closed to most.
What's so special about Vanguard PRIMECAP?
It's one of the few actively managed funds with a following here, because of its long-term track record and low costs (for an active fund). The fact it's closed to most probably adds to its allure. :happy

Valuethinker
Posts: 37032
Joined: Fri May 11, 2007 11:07 am

Re: Negative 13.6% return in 401K for 2018

Post by Valuethinker » Wed Jan 09, 2019 5:21 am

arengarajsug88 wrote:
Tue Jan 08, 2019 7:46 pm
F150HD wrote:
Tue Jan 08, 2019 6:05 pm
OP - maybe list the funds available to you, it might yield positive suggestions on where to put your $$.
Thank you, please see funds available to me in my 401K plan:

BOND FUNDS:

1. Metropolitan West Total Return Bd Admin (MWTNX)
2. Vanguard GNMA Fund Admiral Shares (VFIJX)
3. PIMCO Commodity Real Ret Strat Instl (PCRIX)

BALANCED FUNDS (STOCKS AND BONDS)

1. Vanguard Balanced Index Fund inst (VBAIX)

DOMESTIC STOCK FUNDS

1. Cohen & Steers Instl Realth Shares (CSRIX)
2. Emerald Growth Institutional (FGROX)
3. Janus Henderson Small Cap Value N (JDSNX)
4. Vanguard Equity Income Fund Adm (VEIRX)
5. Vanguard Growth Index Fund Inst (VIGIX)
6. Vanguard Inst Index Fund Inst (VINIX)
7. Vanguard Mid-Cap Index Fund Adm (VIMAX)
8. Vanguard PRIMECAP Fund Admiral (VPMAX)
9. Vanguard Small-Cap Index Fund Adm (VSMAX)

INTERNATIONAL STOCK FUNDS

1. American Funds Europacific Growth R6 (RERGX)
2. Oppenheimer Developing Markets Y (ODVYX)
You have not given us the expense ratios.

However given you reaction to the -13% drop, I would suggest you simply use the Vanguard Balanced Fund.

You could do 10% in the Small-Cap index fund as a tilt.

Olemiss540
Posts: 748
Joined: Fri Aug 18, 2017 8:46 pm

Re: Negative 13.6% return in 401K for 2018

Post by Olemiss540 » Wed Jan 09, 2019 7:16 am

This is a GREAT time for us 30 somethings to experience a market correction. I am hoping for much greater losses soon so I can buy shares at steeply discounted prices.

The only prices that matter are the price when you buy and price when you sell. Dont sweat inconsistent and shifting prices in between as you are only worried about the equity prices 30 YEARS from now!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

ddurrett896
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Joined: Wed Nov 05, 2014 3:23 pm

Re: Negative 13.6% return in 401K for 2018

Post by ddurrett896 » Wed Jan 09, 2019 8:04 am

arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
The first 8 months of 2018 were good, but the last 4 months made me have a -13.6% return causing my assets to drop significantly.
What was your 2017 return?

User avatar
Toons
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Location: Hills of Tennessee

Re: Negative 13.6% return in 401K for 2018

Post by Toons » Wed Jan 09, 2019 9:10 am

All In
VINIX-Vanguard Institutional Index Fund Institutional Shares
Simple and Elegant.
Strive For Simplicity.
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

AlphaLess
Posts: 1220
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Negative 13.6% return in 401K for 2018

Post by AlphaLess » Wed Jan 09, 2019 10:02 am

02nz wrote:
Wed Jan 09, 2019 2:15 am
AlphaLess wrote:
Wed Jan 09, 2019 12:27 am
OldSport wrote:
Wed Jan 09, 2019 12:18 am
Aggressive, yes, but you have access to Primecap, which I would love and is closed to most.
What's so special about Vanguard PRIMECAP?
It's one of the few actively managed funds with a following here, because of its long-term track record and low costs (for an active fund). The fact it's closed to most probably adds to its allure. :happy
Thanks for the explanation.

Is this a similar fund to these?
http://www.odysseyfunds.com/index.html

So, the fee on VPMAX is 0.32%, and the fee on VPMCX is 0.39%.

Also, while the minimum purchase for VPMAX is $50K, the maximum purchase is $25K (per year).
That seems odd.

Do you have any insights why this awkward structure?
"You can get more with a kind word and a gun than with just a kind word." George Washington

User avatar
greg24
Posts: 3357
Joined: Tue Feb 20, 2007 10:34 am

Re: Negative 13.6% return in 401K for 2018

Post by greg24 » Wed Jan 09, 2019 10:16 am

When the market goes up, I'm happy my portfolio increased in value.

When the market goes down, I'm happy that my automatic future contributions buy more shares.

Elysium
Posts: 1458
Joined: Mon Apr 02, 2007 6:22 pm

Re: Negative 13.6% return in 401K for 2018

Post by Elysium » Wed Jan 09, 2019 10:38 am

arengarajsug88 wrote:
Tue Jan 08, 2019 7:46 pm
F150HD wrote:
Tue Jan 08, 2019 6:05 pm
OP - maybe list the funds available to you, it might yield positive suggestions on where to put your $$.
Thank you, please see funds available to me in my 401K plan:

BOND FUNDS:

1. Metropolitan West Total Return Bd Admin (MWTNX)
2. Vanguard GNMA Fund Admiral Shares (VFIJX)
3. PIMCO Commodity Real Ret Strat Instl (PCRIX)

BALANCED FUNDS (STOCKS AND BONDS)

1. Vanguard Balanced Index Fund inst (VBAIX)

DOMESTIC STOCK FUNDS

1. Cohen & Steers Instl Realth Shares (CSRIX)
2. Emerald Growth Institutional (FGROX)
3. Janus Henderson Small Cap Value N (JDSNX)
4. Vanguard Equity Income Fund Adm (VEIRX)
5. Vanguard Growth Index Fund Inst (VIGIX)
6. Vanguard Inst Index Fund Inst (VINIX)
7. Vanguard Mid-Cap Index Fund Adm (VIMAX)
8. Vanguard PRIMECAP Fund Admiral (VPMAX)
9. Vanguard Small-Cap Index Fund Adm (VSMAX)

INTERNATIONAL STOCK FUNDS

1. American Funds Europacific Growth R6 (RERGX)
2. Oppenheimer Developing Markets Y (ODVYX)
OP,

You have received a lot of responses already, and I do not wish to confuse you more. The only thing I will offer is a different perspective from what you already heard, and what you are not likely to hear from most people here.

First, is this the only retirement account you have? Are there any Roth IRA accounts? if not, you could establish one and contribute to the max if possible. That is one way to get diversification using funds that aren't available to you in the 401k plan. For instance, I would not use the international funds in your plan, and skip international altogether if you cannot get a better cheaper fund. International diversifiction is not worth the cost, if you have to depend on inferior funds like the ones listed above.

That said, I would consider Vanguard Primecap Fund as one of your core holdings. This is an excellent fund with long track record, and contrary to what you will hear this is one of the very few active managed funds that you can depend on. Obviously there are no guarantees, however, chances are very good you will come out ahead of the market / s&p 500 index with this fund in the next 10-15 years if you can simply buy & hold it.

If you are still skeptical, then I would split 50/50 VPMAX and 500 Index fund.

I would then look at Vanguard GNMA for your bond allocation. This fund is as good as the Total Bond Index, and good core bond holding. Again, something you will not hear often, but its track record speaks for itself.

Lastly, round out with an allocation to mid-caps or small-caps. I would lean towards Vanguard Mid-Cap Index Fund instead of small-cap index, because midcaps are slightly less risky than small caps but deliver almost same results, and it has some large caps also in it, so a good mix.

Given that, I would propose:
80% equity
20% bonds

30% Primecap VPMAX
30% Instl Index VINIX
20% Mid-cap Index VIMAX
20% GNMA VFIJX

Go for a Roth IRA account for Intl diversification.

02nz
Posts: 924
Joined: Wed Feb 21, 2018 3:17 pm

Re: Negative 13.6% return in 401K for 2018

Post by 02nz » Wed Jan 09, 2019 10:44 am

AlphaLess wrote:
Wed Jan 09, 2019 10:02 am
02nz wrote:
Wed Jan 09, 2019 2:15 am
AlphaLess wrote:
Wed Jan 09, 2019 12:27 am
OldSport wrote:
Wed Jan 09, 2019 12:18 am
Aggressive, yes, but you have access to Primecap, which I would love and is closed to most.
What's so special about Vanguard PRIMECAP?
It's one of the few actively managed funds with a following here, because of its long-term track record and low costs (for an active fund). The fact it's closed to most probably adds to its allure. :happy
Thanks for the explanation.

Is this a similar fund to these?
http://www.odysseyfunds.com/index.html

So, the fee on VPMAX is 0.32%, and the fee on VPMCX is 0.39%.

Also, while the minimum purchase for VPMAX is $50K, the maximum purchase is $25K (per year).
That seems odd.

Do you have any insights why this awkward structure?
The Odyssey funds are offered by PRIMECAP Management Company directly, rather than by Vanguard. There are three Odyssey funds. The Odyssey Growth Fund (POGRX), which is open to new investors, is the closest match for the Vanguard PRIMECAP Fund. The Odyssey funds have somewhat higher expense ratios than the Vanguard counterparts.

VPMAX is the Admiral class of the PRIMECAP Fund, so it has a slightly lower expense ratio. It's not much lower because it's an actively managed fund.

Not sure where you're seeing a $50K minimum initial purchase for VPMAX but it's closed to most investors. The cap is $25K/yr for those that have access to it (e.g., Flagship clients).

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Wed Jan 09, 2019 7:47 pm

OldSport wrote:
Wed Jan 09, 2019 12:18 am
If I were you, I'd invest 25% in each of the following funds:

Vanguard Inst Index Fund Inst (VINIX)
Vanguard Mid-Cap Index Fund Adm (VIMAX)
Vanguard PRIMECAP Fund Admiral (VPMAX)
Vanguard Small-Cap Index Fund Adm (VSMAX)

Aggressive, yes, but you have access to Primecap, which I would love and is closed to most.
Thank you for your inputs!

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Wed Jan 09, 2019 7:47 pm

Olemiss540 wrote:
Wed Jan 09, 2019 7:16 am
This is a GREAT time for us 30 somethings to experience a market correction. I am hoping for much greater losses soon so I can buy shares at steeply discounted prices.

The only prices that matter are the price when you buy and price when you sell. Dont sweat inconsistent and shifting prices in between as you are only worried about the equity prices 30 YEARS from now!
Point taken, thanks!

Topic Author
arengarajsug88
Posts: 33
Joined: Fri Jan 04, 2019 2:55 pm

Re: Negative 13.6% return in 401K for 2018

Post by arengarajsug88 » Wed Jan 09, 2019 7:56 pm

Elysium wrote:
Wed Jan 09, 2019 10:38 am
arengarajsug88 wrote:
Tue Jan 08, 2019 7:46 pm
F150HD wrote:
Tue Jan 08, 2019 6:05 pm
OP - maybe list the funds available to you, it might yield positive suggestions on where to put your $$.
Thank you, please see funds available to me in my 401K plan:

BOND FUNDS:

1. Metropolitan West Total Return Bd Admin (MWTNX)
2. Vanguard GNMA Fund Admiral Shares (VFIJX)
3. PIMCO Commodity Real Ret Strat Instl (PCRIX)

BALANCED FUNDS (STOCKS AND BONDS)

1. Vanguard Balanced Index Fund inst (VBAIX)

DOMESTIC STOCK FUNDS

1. Cohen & Steers Instl Realth Shares (CSRIX)
2. Emerald Growth Institutional (FGROX)
3. Janus Henderson Small Cap Value N (JDSNX)
4. Vanguard Equity Income Fund Adm (VEIRX)
5. Vanguard Growth Index Fund Inst (VIGIX)
6. Vanguard Inst Index Fund Inst (VINIX)
7. Vanguard Mid-Cap Index Fund Adm (VIMAX)
8. Vanguard PRIMECAP Fund Admiral (VPMAX)
9. Vanguard Small-Cap Index Fund Adm (VSMAX)

INTERNATIONAL STOCK FUNDS

1. American Funds Europacific Growth R6 (RERGX)
2. Oppenheimer Developing Markets Y (ODVYX)
OP,

You have received a lot of responses already, and I do not wish to confuse you more. The only thing I will offer is a different perspective from what you already heard, and what you are not likely to hear from most people here.

First, is this the only retirement account you have? Are there any Roth IRA accounts? if not, you could establish one and contribute to the max if possible. That is one way to get diversification using funds that aren't available to you in the 401k plan. For instance, I would not use the international funds in your plan, and skip international altogether if you cannot get a better cheaper fund. International diversifiction is not worth the cost, if you have to depend on inferior funds like the ones listed above.

That said, I would consider Vanguard Primecap Fund as one of your core holdings. This is an excellent fund with long track record, and contrary to what you will hear this is one of the very few active managed funds that you can depend on. Obviously there are no guarantees, however, chances are very good you will come out ahead of the market / s&p 500 index with this fund in the next 10-15 years if you can simply buy & hold it.

If you are still skeptical, then I would split 50/50 VPMAX and 500 Index fund.

I would then look at Vanguard GNMA for your bond allocation. This fund is as good as the Total Bond Index, and good core bond holding. Again, something you will not hear often, but its track record speaks for itself.

Lastly, round out with an allocation to mid-caps or small-caps. I would lean towards Vanguard Mid-Cap Index Fund instead of small-cap index, because midcaps are slightly less risky than small caps but deliver almost same results, and it has some large caps also in it, so a good mix.

Given that, I would propose:
80% equity
20% bonds

30% Primecap VPMAX
30% Instl Index VINIX
20% Mid-cap Index VIMAX
20% GNMA VFIJX

Go for a Roth IRA account for Intl diversification.
Thank you, for your detailed insights! Much appreciate it!

I also have a Roth IRA account, have around $3k in it, all contributed in 2018. Started my Roth IRA only last year. Below are my Roth IRA stocks:

1. SCHWAB U S DIVIDEND EQUITY ETF, SCHD, Quantity 2, current balance $96.26
2. VANGUARD INFORMATION TECHNOLOGY ETF, VGT, Quantity 5, current balance $855.75
3. VANGUARD TOTAL STOCK MARKET ETF, VTI, Quantity 7, balance $925.12
4. VANGUARD HIGH DIVIDEND YIELD ETF, VYM, Quantity 11, balance $879.45

All of these 4 ETFs are trading at a lesser value than I originally bought them for, so I remained skeptic and did not max-out my Roth IRA limit of $5,500 for 2018. Are these ETFs good in a Roth IRA? Are there better options (stocks or ETFs) in Vanguard Roth IRA that I could use and do you suggest to max-out my Roth IRA for 2019? Thank you.

AlphaLess
Posts: 1220
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Negative 13.6% return in 401K for 2018

Post by AlphaLess » Wed Jan 09, 2019 11:31 pm

02nz wrote:
Wed Jan 09, 2019 10:44 am
AlphaLess wrote:
Wed Jan 09, 2019 10:02 am
02nz wrote:
Wed Jan 09, 2019 2:15 am
AlphaLess wrote:
Wed Jan 09, 2019 12:27 am
OldSport wrote:
Wed Jan 09, 2019 12:18 am
Aggressive, yes, but you have access to Primecap, which I would love and is closed to most.
What's so special about Vanguard PRIMECAP?
It's one of the few actively managed funds with a following here, because of its long-term track record and low costs (for an active fund). The fact it's closed to most probably adds to its allure. :happy
Thanks for the explanation.

Is this a similar fund to these?
http://www.odysseyfunds.com/index.html

So, the fee on VPMAX is 0.32%, and the fee on VPMCX is 0.39%.

Also, while the minimum purchase for VPMAX is $50K, the maximum purchase is $25K (per year).
That seems odd.

Do you have any insights why this awkward structure?
The Odyssey funds are offered by PRIMECAP Management Company directly, rather than by Vanguard. There are three Odyssey funds. The Odyssey Growth Fund (POGRX), which is open to new investors, is the closest match for the Vanguard PRIMECAP Fund. The Odyssey funds have somewhat higher expense ratios than the Vanguard counterparts.

VPMAX is the Admiral class of the PRIMECAP Fund, so it has a slightly lower expense ratio. It's not much lower because it's an actively managed fund.

Not sure where you're seeing a $50K minimum initial purchase for VPMAX but it's closed to most investors. The cap is $25K/yr for those that have access to it (e.g., Flagship clients).
Thanks for the explanation.
When I try to purchase it through my Flagship account, I see two things:
- min purchase: $50K,
- but then, when I enter any amount higher than $25K, it says: "Maximum annual purchase, $25K".

I guess they want you to start buying the investor shares, and when you accumulate $50K, they will automatically convert the share class for you.
"You can get more with a kind word and a gun than with just a kind word." George Washington

Elysium
Posts: 1458
Joined: Mon Apr 02, 2007 6:22 pm

Re: Negative 13.6% return in 401K for 2018

Post by Elysium » Wed Jan 09, 2019 11:52 pm

arengarajsug88 wrote:
Wed Jan 09, 2019 7:56 pm
Elysium wrote:
Wed Jan 09, 2019 10:38 am
arengarajsug88 wrote:
Tue Jan 08, 2019 7:46 pm
F150HD wrote:
Tue Jan 08, 2019 6:05 pm
OP - maybe list the funds available to you, it might yield positive suggestions on where to put your $$.
Thank you, please see funds available to me in my 401K plan:

BOND FUNDS:

1. Metropolitan West Total Return Bd Admin (MWTNX)
2. Vanguard GNMA Fund Admiral Shares (VFIJX)
3. PIMCO Commodity Real Ret Strat Instl (PCRIX)

BALANCED FUNDS (STOCKS AND BONDS)

1. Vanguard Balanced Index Fund inst (VBAIX)

DOMESTIC STOCK FUNDS

1. Cohen & Steers Instl Realth Shares (CSRIX)
2. Emerald Growth Institutional (FGROX)
3. Janus Henderson Small Cap Value N (JDSNX)
4. Vanguard Equity Income Fund Adm (VEIRX)
5. Vanguard Growth Index Fund Inst (VIGIX)
6. Vanguard Inst Index Fund Inst (VINIX)
7. Vanguard Mid-Cap Index Fund Adm (VIMAX)
8. Vanguard PRIMECAP Fund Admiral (VPMAX)
9. Vanguard Small-Cap Index Fund Adm (VSMAX)

INTERNATIONAL STOCK FUNDS

1. American Funds Europacific Growth R6 (RERGX)
2. Oppenheimer Developing Markets Y (ODVYX)
OP,

You have received a lot of responses already, and I do not wish to confuse you more. The only thing I will offer is a different perspective from what you already heard, and what you are not likely to hear from most people here.

First, is this the only retirement account you have? Are there any Roth IRA accounts? if not, you could establish one and contribute to the max if possible. That is one way to get diversification using funds that aren't available to you in the 401k plan. For instance, I would not use the international funds in your plan, and skip international altogether if you cannot get a better cheaper fund. International diversifiction is not worth the cost, if you have to depend on inferior funds like the ones listed above.

That said, I would consider Vanguard Primecap Fund as one of your core holdings. This is an excellent fund with long track record, and contrary to what you will hear this is one of the very few active managed funds that you can depend on. Obviously there are no guarantees, however, chances are very good you will come out ahead of the market / s&p 500 index with this fund in the next 10-15 years if you can simply buy & hold it.

If you are still skeptical, then I would split 50/50 VPMAX and 500 Index fund.

I would then look at Vanguard GNMA for your bond allocation. This fund is as good as the Total Bond Index, and good core bond holding. Again, something you will not hear often, but its track record speaks for itself.

Lastly, round out with an allocation to mid-caps or small-caps. I would lean towards Vanguard Mid-Cap Index Fund instead of small-cap index, because midcaps are slightly less risky than small caps but deliver almost same results, and it has some large caps also in it, so a good mix.

Given that, I would propose:
80% equity
20% bonds

30% Primecap VPMAX
30% Instl Index VINIX
20% Mid-cap Index VIMAX
20% GNMA VFIJX

Go for a Roth IRA account for Intl diversification.
Thank you, for your detailed insights! Much appreciate it!

I also have a Roth IRA account, have around $3k in it, all contributed in 2018. Started my Roth IRA only last year. Below are my Roth IRA stocks:

1. SCHWAB U S DIVIDEND EQUITY ETF, SCHD, Quantity 2, current balance $96.26
2. VANGUARD INFORMATION TECHNOLOGY ETF, VGT, Quantity 5, current balance $855.75
3. VANGUARD TOTAL STOCK MARKET ETF, VTI, Quantity 7, balance $925.12
4. VANGUARD HIGH DIVIDEND YIELD ETF, VYM, Quantity 11, balance $879.45

All of these 4 ETFs are trading at a lesser value than I originally bought them for, so I remained skeptic and did not max-out my Roth IRA limit of $5,500 for 2018. Are these ETFs good in a Roth IRA? Are there better options (stocks or ETFs) in Vanguard Roth IRA that I could use and do you suggest to max-out my Roth IRA for 2019? Thank you.
4 funds splitting 3k is too much. In fact, I even 30k for that matter. You should contribute the maximum to Roth IRA every year you are eligible to, because that space is too precious to give up. You can always get your contributions out without penalty and taxes in case of extreme situation, as long as at least 5 years have passed.

I would recommend you keep only 1 fund in the beginning in Roth IRA, and later as the account grows you could add another one if needed.

Out of the 4 ETFs you have listed, apart from the Technology sector ETF which is concentrated in tech, all others are good core holdings. Although I would avoid holding two dividend paying funds and a total stock fund, there is just too much overlap.

I would hold on to these funds until they recover back the losses, because these are good core holdings you can do that. After that, I would sell it once they become profitable in exchange for an International fund you may want to add for diversification. If you like lower volatility of Dividend Growth combined with international allocation then you can look at something like VIGI Vanguard International Dividend Appreciation Index ETF.

This would round out your portfolio with good low cost core holdings that you can set it and forget for many years to come.

MotoTrojan
Posts: 2953
Joined: Wed Feb 01, 2017 8:39 pm

Re: Negative 13.6% return in 401K for 2018

Post by MotoTrojan » Thu Jan 10, 2019 12:39 am

Target retirement in Roth (depending on desired AA), S&P500 in 401K (VINIX) and let it ride. Hands off and gets you really close to the above mentioned AA.

sid hartha
Posts: 136
Joined: Fri Dec 09, 2016 2:17 pm

Re: Negative 13.6% return in 401K for 2018

Post by sid hartha » Thu Jan 10, 2019 7:46 am

There's nothing you can do.
Stock returns are by nature lumpy.
There will be up years and down years.
Over a long period of time however it offers great returns.
Don't try and time the market.
The 401k is a wealth accumulation vehicle.
And it's time in the market that will ultimately make it work for you.
Make your max monthly contribution, get the employer match if available.
You have a lot of time before you need the money.
Ignore the noise and focus on the long term. Stay the course and stick to the plan.
Avoid the financial news / infotainment programs etc. it will cause unnecessary anxiety.
Nobody knows what the market will do.
I'd probably simplify your investments with either a 3 fund portfolio or lifecycle fund.
Focus on what you can control -- asset mix, risk tolerance, your own knee jerk and emotional reactions etc.
That's all I got.
Last edited by sid hartha on Thu Jan 10, 2019 8:05 am, edited 7 times in total.

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jharkin
Posts: 1985
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: Negative 13.6% return in 401K for 2018

Post by jharkin » Thu Jan 10, 2019 7:58 am

You got tons of good advice above ^^^ Its normal, you ill recover.. In fact you probably will forget about this one which was just a minor blip so far.

As you will learn the more you read around here, most moves you might try to make to avoid such situations are actually counterproductive in the long run - there is a reason "Stay the course" is the mantra of this forum.

When I was 30 it was just a couple years before the great recession happened and everyone I knew was loosing over 50%. And that was after having lived though loosing half my savings in the dot com crash only a few years prior... I survived both and my savings have grown significantly since then. Yours will too :sharebeer

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ruralavalon
Posts: 14484
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Negative 13.6% return in 401K for 2018

Post by ruralavalon » Thu Jan 10, 2019 4:02 pm

arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
Hello folks,

I am new to Bogle heads. I am Male, 30, have around 40K in my Vanguard 401K with my employer. I do not have target retirement fund, but it is goes into a variety of mutual funds. The first 8 months of 2018 were good, but the last 4 months made me have a -13.6% return causing my assets to drop significantly. Have been saving last 3 years in my 401k, and in 2018 maxed-out my 401K contribution limit, contributing $18,500. My allocation is 93% stocks and 7% bonds.

What could I have done to prevent this negative return? . . .
Consider a larger bond allocation using a diversified bond fund with a low expense ratio. In your 401k that would be Vanguard GNMA Fund (VFIJX) ER 0.11%.


Asset allocation.
At age 30 I suggest an asset allocation with around 20% in bonds. Please see the wiki article "Asset Allocation".

I agree with the suggestion to use around 20-30% of stocks in international stocks. Historically that would have captured almost all of the diversification benefit from adding international stocks to the mix.

This works out to about 20% bonds, 20% international stocks,and 60% domestic stocks. Asset allocation is a very personal decision, which you must make based on your own ability, willingness and need to take risk.


arengarasjug88 wrote: . . . Is this negative return expected or should I have made wiser investing decisions? . . .

2018 was simply a bad year for stock investments, bond funds had smaller losses or even small gains. Minus 13.6% sounds about what you could expect in 2018 from a 93/7 stock/bond allocation.


arengarasjug88 wrote: . . . What Vanguard mutual funds are best to invest for 2019? I am trying to post my funds and graph image from my 401K Vanguard so you can see the funds and allocation details but cannot seem to post it in the forum. Any guidance is appreciated!
Please see the wiki article "Three-fund Portfolio" and the forum discussion "The Three-fund Portfolio".

It's not possible to predict what will do "best" in any particular year.

Pick an asset allocation (stock/bond mix) that will suit your personal ability, willingness and need to take risk. Asset allocation is a very personal decision, which you must make based on your own ability, willingness and need to take risk.


Fund selection and placement.
In selecting funds to use strive for a combination of both broad diversification (to decrease risk) and low expense ratios (to increase net return).

It's usually better to coordinate investments among all accounts, treating all accounts together as a single unified portfolio, rather than try to put all elements of the desired asset allocation in each account. This lets you avoid having to use good well diversified, but more expensive, funds in your 401k like American Funds EuroPacific Growth R6 (RERGX) ER 0.49%.

I suggest that you switch both the existing balance and new contributions to your 401k ($40k, 93% of total portfolio) to these three funds:
1) 60%, Vanguard Institutional Index Fund (a S&P 500 index) (VINIX) ER 0.04%;
2) 13%, American Funds EuroPacific Growth Fund R6 (both developed and emerging markets) (RERGX) ER 0.49%; and
3) 20%, Vanguard GNMA Fund Admiral Shares (VFIJX) ER 0.11%.


Domestic stocks.
In my opinion a S&P 500 index fund (like Vanguard Institutional Index Fund in your 401k) is good enough by itself for the domestic stock allocation. A 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. In the 26 years since the creation of the first total stock market index fund , the two types of funds have had almost identical performance.

I would not hesitate to use Vanguard Institutional Index Fund by itself for domestic stocks in a 401k which lacks a total stock market index fund.


International Stocks.
American Funds EuroPacific Growth Fund R6 (RERGX) ER 0.49% is a good, actively managed, well diversified, international stock fund with a moderate expense ratio.

I would not hesitate to use American Funds EuroPacific Growth Fund in a 401k which lacks a good international stock index fund.

I suggest that you switch both the existing balance of your Roth IRA ($3k, 7% of total portfolio) and the new contributions to your Roth IRA to Vanguard Total Stock Market Index Fund. Then use American Funds EuroPacific Growth in your 401k for the rest (13%) of your international stock allocation.


Bonds.
In my opinion Vanguard GNMA Fund is by far the best bond fund choice offered in your 401k. Metropolitan West Total Return Administrative Class (MWTNX) ER 0.78% is a good, well diversified, activity managed bond fund, but has a fairly high expense ratio.


Accounts and contributions.
If your Roth IRA is elsewhere, then I suggest rolling it over to a Roth IRA at Vanguard so you can use Vanguard Total Stock Market Index Fund. Just call Vanguard and they will do most the work on the rollover.

It's good to see that you have been making the maximum annual contributions to your 401k, in 2019 the annual maximum is $19k.

In the future I suggest increasing Roth IRA contributions tothe annual maximum, which in 2019 is $6k.

. . . . .

I suggest that you read one or two books on general investing. Please see the wiki article "Books: Recommendations and Reviews".

If you have any questions just ask.

I hope that this helps.
Last edited by ruralavalon on Thu Jan 10, 2019 5:53 pm, edited 9 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Northern Flicker
Posts: 4138
Joined: Fri Apr 10, 2015 12:29 am
Location: Taking a break from Bogleheads

Re: Negative 13.6% return in 401K for 2018

Post by Northern Flicker » Thu Jan 10, 2019 4:16 pm

arengarajsug88 wrote:
Tue Jan 08, 2019 2:51 pm
Hello folks,

I am new to Bogle heads. I am Male, 30, have around 40K in my Vanguard 401K with my employer. I do not have target retirement fund, but it is goes into a variety of mutual funds. The first 8 months of 2018 were good, but the last 4 months made me have a -13.6% return causing my assets to drop significantly. Have been saving last 3 years in my 401k, and in 2018 maxed-out my 401K contribution limit, contributing $18,500. My allocation is 93% stocks and 7% bonds.

What could I have done to prevent this negative return? Is this negative return expected or should I have made wiser investing decisions? What Vanguard mutual funds are best to invest for 2019? I am trying to post my funds and graph image from my 401K Vanguard so you can see the funds and allocation details but cannot seem to post it in the forum. Any guidance is appreciated!
What funds are you holding?

Some 2018 returns...

Vtsax ... -5.17% (total US stocks)
Vtiax ... -14.43% (total int’l stocks)
Vbtlx ... -.03% (total US bonds)
Vasgx ... -6.9% (Lifestrategy Aggressive Growth)

Nobody knows which funds will perform the best, but you can be guaranteed not to underperform the broad market by holding the broad market. You probably want to rebalance back to asset allocation. You could probably accomplish that and also avoid underperforming the market in the future by moving to a Target Retirement or LifeStrategy fund or by holding the first three funds in the list above weighted at say 62% vtsax, 31% vtiax, 7% vbtlx.
Taking a break from Bogleheads.

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