401K Investments

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Capybara90
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Joined: Mon Jul 23, 2018 9:26 pm

401K Investments

Post by Capybara90 » Mon Feb 11, 2019 12:13 pm

I have a 401K through and I'd like an opinion on my investments. Is this a good mix of funds or would I be better off using a Vanguard Target Date Fund 2060 (VTTSX - exp ratio .15%)? The funds and allocations are shown below.

SWPPX SP 500 Index Fund (exp ratio .02%) - 40%
VIMAX Vanguard Midcap Index Fund (exp ratio . 05%) - 15%
VSMAX Vanguard Smallcap Index Fund (exp ratio . 05%) - 15%
VTMGX Vanguard Developed Market Index Fund (exp ratio . 07%) - 30%

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David Jay
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Re: 401K Investments

Post by David Jay » Mon Feb 11, 2019 12:37 pm

The funds you have selected are reasonable (although larger international holding than I would choose) Without knowing what you hold in other accounts, I am leery of a 100% stock portfolio.

The TargetDate fund holds 10% bonds and does automatic rebalancing. It is an attractive option.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Wiggums
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Re: 401K Investments

Post by Wiggums » Mon Feb 11, 2019 12:41 pm

The funds you selected look fine to me. I agree with the previous response regarding 100 percent stock which may or may not be the case.

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ruralavalon
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Re: 401K Investments

Post by ruralavalon » Mon Feb 11, 2019 12:47 pm

Capybara90 wrote:
Mon Feb 11, 2019 12:13 pm
I have a 401K through and I'd like an opinion on my investments. Is this a good mix of funds or would I be better off using a Vanguard Target Date Fund 2060 (VTTSX - exp ratio .15%)? The funds and allocations are shown below.

SWPPX SP 500 Index Fund (exp ratio .02%) - 40%
VIMAX Vanguard Midcap Index Fund (exp ratio . 05%) - 15%
VSMAX Vanguard Smallcap Index Fund (exp ratio . 05%) - 15%
VTMGX Vanguard Developed Market Index Fund (exp ratio . 07%) - 30%
You are overweight in mid-cap and small-cap U.S. stocks. Please see the wiki article "Approximating Total Stock Market". You are missing stocks of companies in emerging markets. You are missing a bond fund.

All of those funds you picked are good funds, with very low expense ratios. Without a list of the other funds offered in your 401k plan, it's not possible to say if you could pick better funds.

Is there a reason that you don't have a bond fund in your 401k account?

Do you hold a bond fund in some other account?

Do you have any accounts in addition to your 401k, such as an IRA?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Capybara90
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Joined: Mon Jul 23, 2018 9:26 pm

Re: 401K Investments

Post by Capybara90 » Mon Feb 11, 2019 1:07 pm

Yes, I have Roth IRA as well. I plan to max it out later this year. I have a few etfs in it so far (VXUS, VEA, VWO, VUG, VTV, and VTI)

My 401K does offer more intl funds, but they have high expense ratios.

iShares MSCI ACWI ex U.S. ETF exp ratio .31%
DODFX Dodge and Cox International Stock exp ratio .63%
TFSCX Templeton Ins Small exp ratio .99%

Here are the bond funds they offer. I think SWAGX is the best option and I could invest 10% there.

SWAGX exp ratio .04%
MWTIX exp ratio .45%
Bloomberg Barclays US Aggregate Bond TR USD
BBgBarc US Government TR USD

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ruralavalon
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Re: 401K Investments

Post by ruralavalon » Mon Feb 11, 2019 1:33 pm

Your 401k plan offers several good fund choices for both international stocks, and for domestic bonds. You are fortunate.
Capybara90 wrote:
Mon Feb 11, 2019 1:07 pm
Yes, I have Roth IRA as well. I plan to max it out later this year. I have a few etfs in it so far (VXUS, VEA, VWO, VUG, VTV, and VTI)

My 401K does offer more intl funds, but they have high expense ratios.

iShares MSCI ACWI ex U.S. ETF exp ratio .31%
DODFX Dodge and Cox International Stock exp ratio .63%
TFSCX Templeton Ins Small exp ratio .99%
BlackRock iShares MSCI ACWI EX-U.S ETF (ACWX) ER 0.31% is a very diversified international stock index fund, which includes stocks of companies in both developed and emerging markets. The better diversification may well be worth the higher expense ratio, 0.31% is a fairly modest expense ratio for an international stock fund. I suggest using this ETF.

Dodge & Cox International Stock Fund (DODFX) ER 0.63% is a good actively managed international stock fund, which includes stocks of companies in both developed and emerging markets, with a moderate expense ratio. But I prefer can good index fund over a good actively managed fund.


Capybara90 wrote:Here are the bond funds they offer. I think SWAGX is the best option and I could invest 10% there.

SWAGX exp ratio .04%
MWTIX exp ratio .45%
Bloomberg Barclays US Aggregate Bond TR USD
BBgBarc US Government TR USD
You are correct, in my opinion Schwab U.S. Aggregate Bond Index Fund (SWAGX) ER 0.04% is the better choice. It has a very low expense ratio, and is very diversified using Bloomberg Barclays U.S. Aggregate Bond Index. I suggest using this fund.

Metropolitan West Total Return Institutional (MWTIX) ER 0.45% is a good actively managed intermediate-term bond fund with a moderate expense ratio, but my preference is a good index fund over a good actively managed fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Capybara90
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Joined: Mon Jul 23, 2018 9:26 pm

Re: 401K Investments

Post by Capybara90 » Mon Feb 11, 2019 2:31 pm

Thanks, based on your feedback here is my proposed allocation.

40% SWPPX (SP 500)
VIMAX 10% (Mid cap)
VSMAX 10% (Small Cap)
SWAGX 10% (Bonds)
VTMGX 20% (Developed Intl)
BlackRock iShares MSCI ACWI EX-U.S ETF (ACWX) 10% (Emerging + Developed Intl)

Otherwise, I can just put everything in VTTSX, the Vanguard Target Retirement Fund.

What do you think is the best option?

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ruralavalon
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Re: 401K Investments

Post by ruralavalon » Mon Feb 11, 2019 2:44 pm

Capybara90 wrote:
Mon Feb 11, 2019 2:31 pm
Thanks, based on your feedback here is my proposed allocation.

40% SWPPX (SP 500)
VIMAX 10% (Mid cap)
VSMAX 10% (Small Cap)
SWAGX 10% (Bonds)
VTMGX 20% (Developed Intl)
BlackRock iShares MSCI ACWI EX-U.S ETF (ACWX) 10% 30% (Emerging + Developed Intl)

Otherwise, I can just put everything in VTTSX, the Vanguard Target Retirement Fund.

What do you think is the best option?
Vanguard Developed Markets Index Fund (VTMGX) is not necessary when you use BlackRock iShares MSCI ACWI EX-U.S ETF (ACWX).

The choice of target date versus individual funds is largely a matter of personal preference primarily based on how much one values simplicity in investing.

For what it's worth I use individual funds, rather than a target date fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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