401k Fund Allocation help

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Topic Author
ronney
Posts: 134
Joined: Sun Sep 30, 2007 2:35 pm

401k Fund Allocation help

Post by ronney »

Hi,

I have just started my 401k plan with ADP. I wanted to get some advice in fund allocation as i am totally new to this field. My age is 24.

Here are my options

FUND NAME FUND PRICE

Income
---------------
SSgA Government Money Market Fund $1.000000
PIMCO Total Return Fund - Class A $10.500000
DWS High Income Plus Fund - Class S $7.510000

Growth & Income
---------------------
SSgA Life SolutionsSM Income & Growth Fund $9.381119
SSgA Life SolutionsSM Balanced Growth Fund $19.762107
SSgA Life SolutionsSM Growth Fund $30.679843

Growth
--------
AllianceBernstein Growth and Income Fund - Class A $4.850000
DWS Large Cap Value Fund - Class A $24.880000
SSgA S&P® 500 Index Fund $42.620649
Oppenheimer Capital Appreciation Fund - Class A $54.780000
Fidelity® Advisor Equity Growth Fund - Class T $64.450000
Franklin Rising Dividends Fund - Class A $37.910000
SSgA S&P® MidCap 400 Index Strategy Fund $12.638337
Alger MidCap Growth Institutional Fund - Class I $22.300000

Aggressive Growth
----------------------
Janus Adviser International Growth Fund - Class S $69.710000
Templeton Growth Fund, Inc. - Class R $26.900000
Allianz NFJ Small-Cap Value Fund - Class A $35.080000
SSgA Russell® 2000 Index Strategy Fund $21.678511
Alger SmallCap Growth Institutional Fund - Class I $29.030000

I am not going to touch this 401k Account until i get retire.
How do i categorize my fund allocation what percentages of my money i should invest in what fund?

As of right now i have 100% allocation of my funds into
SSgA Life SolutionsSM Growth Fund this Fund.
User avatar
Vig Oren
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Location: NC (near Raleigh)

Post by Vig Oren »

Who is ADP?

It seems that your employer's 401(k) is full with hi expense ratios and commissions funds and ETFs. Do you know what are these expenses that effect you?
Last edited by Vig Oren on Tue Oct 02, 2007 5:13 pm, edited 1 time in total.
InvestingMom
Posts: 503
Joined: Mon Aug 20, 2007 2:45 pm

Post by InvestingMom »

You may not be getting much of a response because it is hard to tell what kind of funds these are?

Also, not knowing anything else about you makes it a bit difficult. Are you a conservative or agressive investor? If I assume you are just starting out and have no other investments or even a beginning balance and because of your age assume you can be somewhat agressive then I would go for the SSgA S&P® 500 Index Fund because it looks like an index fund that follows the S&P500. As your account grows then you can broaden it to include some foreign funds, small cap funds.....and bonds as you age. Look for index funds that have low costs.

That all being said, the first thing you need to do is decide your asset allocation plan which is how much stock versus bonds you want to hold. I assumed because of your age you would not need to start with bonds, but this is really a personal decision. You can read a bit more about it in the sticky which Laura authored at the top of the forum.

I would also recommend investing for Dummies or Mutual funds for dummies if you are a beginner. Then go back to your HR dept and tell them they need to offer more index funds such as those with Vanguard :wink:
InvestingMom
Posts: 503
Joined: Mon Aug 20, 2007 2:45 pm

ADP

Post by InvestingMom »

Vig Oren wrote:Who is ADP?

It seems that your employer's 401(k) is full with hi expense ratios and commissions funds and ETFs. Do you know what are these expenses that effect you?
I assumed ADP is his/her employer. However ADP happens to be a payroll processor as well and so I wondered if he/she was refering to a statement from ADP that indicates his/her 401k choices.

I agree that many of these funds are high expense funds.
grok87
Posts: 9276
Joined: Tue Feb 27, 2007 9:00 pm

Welcome

Post by grok87 »

ronney wrote:Hi,

I have just started my 401k plan with ADP. I wanted to get some advice in fund allocation as i am totally new to this field. My age is 24.

Here are my options

FUND NAME FUND PRICE

Income
---------------
SSgA Government Money Market Fund $1.000000
PIMCO Total Return Fund - Class A $10.500000
DWS High Income Plus Fund - Class S $7.510000

Growth & Income
---------------------
SSgA Life SolutionsSM Income & Growth Fund $9.381119
SSgA Life SolutionsSM Balanced Growth Fund $19.762107
SSgA Life SolutionsSM Growth Fund $30.679843

Growth
--------
AllianceBernstein Growth and Income Fund - Class A $4.850000
DWS Large Cap Value Fund - Class A $24.880000
SSgA S&P® 500 Index Fund $42.620649
Oppenheimer Capital Appreciation Fund - Class A $54.780000
Fidelity® Advisor Equity Growth Fund - Class T $64.450000
Franklin Rising Dividends Fund - Class A $37.910000
SSgA S&P® MidCap 400 Index Strategy Fund $12.638337
Alger MidCap Growth Institutional Fund - Class I $22.300000

Aggressive Growth
----------------------
Janus Adviser International Growth Fund - Class S $69.710000
Templeton Growth Fund, Inc. - Class R $26.900000
Allianz NFJ Small-Cap Value Fund - Class A $35.080000
SSgA Russell® 2000 Index Strategy Fund $21.678511
Alger SmallCap Growth Institutional Fund - Class I $29.030000

I am not going to touch this 401k Account until i get retire.
How do i categorize my fund allocation what percentages of my money i should invest in what fund?

As of right now i have 100% allocation of my funds into
SSgA Life SolutionsSM Growth Fund this Fund.
Hi Ronney and welcome to the forum,
I think InvestingMom has already directed you to the stickies by Laura at the top of the page. The fund prices are not useful information- we need to know the expense ratios. Also please post any other investments/accounts you might have. It is best to manage all of your accounts as one portfolio. Often the best strategy is to pick the "least bad" fund in your 401k and then fill in the gaps with your other accounts where you have more flexibility.

cheers
grok
Topic Author
ronney
Posts: 134
Joined: Sun Sep 30, 2007 2:35 pm

401 K Fund Types

Post by ronney »

Thanks for all your help.

Here is all the information You need. Yes I like the aggressive approach.
My company is small around 20 employee. This is the best what i think they can offer as of right now.

It would be very helpful if you guys give me the % break down by fund
e.g

20% in Janus
30% S&P 500 Index something like this.

Here is the file that can give you more details about the funds i can choose
This is Monthly Performance Summary.

This forum is very very helpful to newbie like me. Again thanks for all your help


Investment Type = Income


Fund Name : SSgA Government Money Market Fund
Morningstar Category : N/A
Inception Date : 03/1983
Ticker : N/A
Month QTR 1 Yr 3 Yr 5 Yr 10Yrs Expense Ratio
0.39% 1.16% 4.69% 3.45% 2.26% 3.24% 0.75%


Fund Name : PIMCO Total Return Fund - Class A
MorningStar Category : Intermediate-Term Bond
Inception Date : 01/1997
Ticker : PTTAX
Month QTR 1 Yr 3 Yr 5 Yr 10Yrs Expense Ratio
1.33% 2.31% 4.25% 3.32% 4.35% 6.08% 0.90%


Fund Name : DWS High Income Plus Fund - Class S
MornignStar Category : High Yield Bond
Inception Date : 05/2005
Ticker : SGHSX
Month QTR 1 Yr 3 Yr 5 Yr 10Yrs Expense Ratio
0.89% -3.95% 5.39% N/A N/A 7.89%(Inception) 0.64%

---------------------------------------------------------------------

Investment Type = Growth & Income


Fund Name : SSgA Life Solutions(SM) Income & Growth Fund
MorningStar Category : N/A
Inception Date : 03/1995
Ticker : N/A
Month QTR 1 Yr 3 Yr 5 Yr 10Yrs Expense Ratio
1.11% -0.63% 8.48% 6.98% 7.29% 5.38% 0.85%


Fund Name : SSgA Life Solutions(SM) Balanced Growth Fund
MorningStar Category : N/A
Inception Date : 03/1995
Ticker : N/A
Month QTR 1 Yr 3 Yr 5 Yr 10Yrs Expense Ratio
1.01% -1.71% 10.60% 9.28% 9.34% 5.66% 0.85%


Fund Name : SSgA Life Solutions(SM) Growth Fund
MorningStar Category : N/A
Inception Date : 03/1995
Ticker : N/A
Month QTR 1 Yr 3 Yr 5 Yr 10Yrs Expense Ratio
0.91% -2.78% 12.73% 11.58% 11.29% 5.78% 0.85%


----------------------------------------------------------------------

Investment Type = Growth


Fund Name: AllianceBernstein Growth and Income Fund - Class A
MorningStar Category : Large Value
Inception Date: 07/1932
Ticker: CABDX
Month QTR 1 Yr 3 Yr 5 Yr 10Yrs Expense Ratio
2.41% -3.11% 15.50% 11.88% 12.17% 8.19% 1.00%

DWS Large Cap Value Fund - Class A
Large Value 03/1988 KDCAX
1.77% -2.36% 12.90% 10.35% 11.12% 7.30% 1.02%

SSgA S&P® 500 Index Fund
N/A 01/1978 N/A
1.42% -3.44% 14.39% 11.43% 11.27% 6.04% 0.70%

Oppenheimer Capital Appreciation Fund - Class A
Large Growth 01/1981 OPTFX
1.74% 0.23% 17.61% 10.69% 10.65% 6.93% 1.07%

Fidelity® Advisor Equity Growth Fund - Class T
Large Growth 09/1992 FAEGX
2.17% 4.26% 22.40% 12.56% 10.73% 5.70% 1.29%

Franklin Rising Dividends Fund - Class A
Large Blend 01/1987 FRDPX
1.66% -3.42% 9.82% 9.54% 10.15% 8.51% 1.00%

SSgA S&P® MidCap 400 Index Strategy Fund
N/A 08/1989 N/A
0.88% -5.68% 15.71% 14.99% 14.83% 11.23% 0.70%

Alger MidCap Growth Institutional Fund - Class I
Mid-Cap Growth 11/1993 ALMRX
2.88% 3.03% 34.94% 20.44% 17.76% 13.82% 1.13%


--------------------------------------------------------------
Investment Type : Aggressive Growth

Janus Adviser International Growth Fund - Class S
Foreign Large Growth 05/1997 JIGRX
-1.67% -0.16% 35.29% 37.83% 26.75% 14.22% 1.23%

Templeton Growth Fund, Inc. - Class R
World Stock 01/2002 TEGRX
-1.22% -5.16% 12.33% 15.29% 14.44% 11.54%(Inception) 1.30%

Allianz NFJ Small-Cap Value Fund - Class A
Small Value 01/1997 PCVAX
1.34% -3.75% 16.67% 18.23% 17.91% 11.88% 1.25%

SSgA Russell® 2000 Index Strategy Fund
N/A 10/1996 N/A
2.18% -6.36% 10.49% 13.36% 15.40% 6.59% 0.95%

Alger SmallCap Growth Institutional Fund - Class I
Small Growth 11/1993 ALSRX
2.59% -0.76% 23.00% 22.50% 19.41% 6.69% 1.31%
User avatar
Vig Oren
Posts: 818
Joined: Wed May 09, 2007 8:38 am
Location: NC (near Raleigh)

401(k) allocation

Post by Vig Oren »

Ron, my gut feeling’s choice would be:



40% SSgA S&P® 500 Index Fund

15% SSgA S&P® MidCap 400 Index Strategy Fund

20% PIMCO Total Return Fund - Class A

20% Janus Adviser International Growth Fund - Class S

5% SSgA Government Money Market Fund (for emergency too)

What’s left is to get the ticker symbols and enter into M* X-Ray to see if it is well spread over the market and also check stock intersection. Given your young age it would seem to be proper. Also, going by my experience with family members you will be replacing you job soon and hopefully will land with more friendly funds. :P
Topic Author
ronney
Posts: 134
Joined: Sun Sep 30, 2007 2:35 pm

401k

Post by ronney »

Thanks Vig for your information.

One thing i notice with the available funds couple of them
which starts with SSgA does not have ticker symbol. Does that mean that
ADP manages them by them selfs.

Right now my all the money is (100%) in
SSgA Life SolutionsSM Growth Fund this one.
If i go on internet and type this fund i get the ticker symbol (SSLGX)
is it the same of different because the cost of SSLGX is around 14$ and ADP asks for 30$
Jadzia
Posts: 65
Joined: Fri Mar 16, 2007 11:55 pm

Post by Jadzia »

Wow, I have this exact same 401k plan. :shock:

What I have done with it is use the S&P 500 and MidCap funds as those were the absolute cheapest (0.70% expense ratios). They are expensive for index funds but much cheaper than the rest of the funds in the plan.

We hold bonds in my husband's 401k (his plan also sucks but his bond fund is ok) and we use our Roths to hold International and small-cap funds.

It is not ideal, but it does the job. Are you eligible for a Roth? If so, I would open one up to use that for asset classes that you can not get cheaply in your 401k.
Last edited by Jadzia on Wed Oct 03, 2007 5:42 pm, edited 1 time in total.
grok87
Posts: 9276
Joined: Tue Feb 27, 2007 9:00 pm

Re: 401k

Post by grok87 »

ronney wrote:Thanks Vig for your information.

One thing i notice with the available funds couple of them
which starts with SSgA does not have ticker symbol. Does that mean that
ADP manages them by them selfs.

Right now my all the money is (100%) in
SSgA Life SolutionsSM Growth Fund this one.
If i go on internet and type this fund i get the ticker symbol (SSLGX)
is it the same of different because the cost of SSLGX is around 14$ and ADP asks for 30$
I think Vig's suggested portfolio is a good one. The funds in your 401k all have high expense ratios. THe bond fund expense ratios are particularly bad. You might consider opening up a Roth IRA and sticking your bond money there and stick to stock funds in your 401k.

cheers
grok
Jadzia
Posts: 65
Joined: Fri Mar 16, 2007 11:55 pm

Re: ADP

Post by Jadzia »

InvestingMom wrote:
Vig Oren wrote:Who is ADP?

It seems that your employer's 401(k) is full with hi expense ratios and commissions funds and ETFs. Do you know what are these expenses that effect you?
I assumed ADP is his/her employer. However ADP happens to be a payroll processor as well and so I wondered if he/she was refering to a statement from ADP that indicates his/her 401k choices.

I agree that many of these funds are high expense funds.
ADP is the 401k plan administrator. I work for a very small company and they administer our plan and we have the exact same funds.

My biggest beef with them is they take forever to post our withdrawals to our account. You would think since ADP also process our payroll it would be almost instantanously, but instead there is about a 3 week lag time. Mu husban's 401k is credited within 2 days of his pay date.

That and the fund choices suck. But at least we do have a couple of index funds. My husband's plan has none.
User avatar
Vig Oren
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Joined: Wed May 09, 2007 8:38 am
Location: NC (near Raleigh)

401(k) allocation

Post by Vig Oren »

Ron, you asked:

One thing i notice with the available funds couple of them
which starts with SSgA does not have ticker symbol. Does that mean that
ADP manages them by them selfs.

Right now my all the money is (100%) in
SSgA Life SolutionsSM Growth Fund this one.
If i go on internet and type this fund i get the ticker symbol (SSLGX)
is it the same of different because the cost of SSLGX is around 14$ and ADP asks for 30$



----------------------------------------------------------------------------
Replies and more:

The SS---is State Street Bank stuff. To get symbols I Googled the full description. The S&P 400 seems to be synthetic fund that ADP follows. But I picked a proxy as MDY.


Notice that I have changed the allocation somewhat b/c of the fact that PIMCO holds so much in cash.

I went to this Morningstar site:

http://www.morningstar.com/?pgid=hetabhome

And clicked on “Tools”. Next, I clicked “Instant X –Ray”. Here I changed the holding info to percent and entered the following Ticker Symbols and %:

SVSPX (this is the S&P 500) @ 40%
MDY ( this is proxy for the S&P 400) @ 20%
JIGRX ( the Janus International) @ 25%
PTTAX (the PIMCO Total Ret.) @ 10%
VBISX (this is a Vanguard proxy
For a Money Market Fund)...........@5%

And got the following results which I liked:

12% cash ( b/c this PIMCO holds 90% in cash)
06% bonds
62% US stocks
20 % Foreign stocks

The stock style box:

18 21 22
10 09 15
02 02 01

Portfolio expense ratio: 0.5%=> but this is NOT correct in your case b/c you got the administrator adding fees at will. That is how they make their money. The pension designer first obligation is to please the company owner(s), and key employees. Even if you had access to low costs Vanguard funds, I know of cases in which the 401(k) administrators are adding a full 1% to the Vanguard's ERs.

PE: 16.9
Yield: 1% (=growth)


Hoping that it’s helpful.

--------------------------------------------------------------



BTW, what is this on the Web that was translated from Chinese?

Article Source: liveinca on 2007-08-24 11:52:29

First, buy the first 401 (k), I do not know how to buy? You can tell us the advice.

Following the Fund, which one is better? Thanks for your advice! ! _ (G) _ (g) _ (f)
SSgA government Money Market Fund
PIMCO Total Return Fund - Class A
DWS High Income Plus Fund - Class S
SSgA Life SolutionsSM Income & Growth Fund
SSgA Life SolutionsSM Balanced Growth Fund
SSgA Life SolutionsSM Growth Fund
Calvert Social Investment Fund Equity Portfolio - Class A
Neuberger Berman Socially Responsive Fund - Trust Class
SSgA S & P 500 Index Fund ®
® Fidelity Advisor Equity Growth Fund - Class T
Oppenheimer Capital Appreciation Fund - Class A
Franklin Rising Dividends Fund - Class A
SSgA S & P MidCap 400 Index ® Strategy Fund
Alger MidCap Growth Institutional Fund - Class I
American Century International Growth Fund - Class Advisor
Templeton Growth Fund, Inc. -- Class R
Allianz NFJ Small-Cap Value Fund - Class A
SSgA Russell 2000 ® Index Strategy Fund
DWS Small Cap Growth Fund - Class A
____________________________________________ :roll:
Last edited by Vig Oren on Thu Oct 04, 2007 8:02 am, edited 1 time in total.
Topic Author
ronney
Posts: 134
Joined: Sun Sep 30, 2007 2:35 pm

Post by ronney »

Hi Vig,

Thanks for your help. I went to your route. Even went on morning star and used the X-Ray. I didn't know something like this already exist. Thanks for all your help guys and girls. The next phase is to understand all the different terms of the investment side.
User avatar
Vig Oren
Posts: 818
Joined: Wed May 09, 2007 8:38 am
Location: NC (near Raleigh)

Post by Vig Oren »

Read the books:

1) William Bernstein "The 4 Pillars of Investing"
2) Larry Swedroe "What Wall Street Does Not Tell You"
3) Rick Ferri "All About Asset Allocation"
4) The Morningstar Guide to Mutual Funds: 5-Star Strategies for Success (Paperback) ..... will tell you about the tools.

You're almost there! :sharebeer
Last edited by Vig Oren on Wed Oct 03, 2007 11:00 pm, edited 1 time in total.
Laura
Posts: 7975
Joined: Mon Feb 19, 2007 7:40 pm

One More Factor

Post by Laura »

ronney,

You are young so taking on a lot of risk can be a good idea. On the other hand, you work for a very small firm and already have lots of human capital risk due to your employment. Small companies simply fail at a much higher rate than large companies. To compensate, you probably should keep an extra large emergency fund on hand. The last thing you want is for your company to go out of business or reduce in size just as the market dives and your very risky portfolio goes down at the same time.

Here is a table offered by Larry Swedroe based on the 1970s bear market showing the amount of decline for various stock/bond allocations:

Max Equity - Exposure Max loss
20%...............5%
30%..............10%
40%..............15%
50%..............20%
60%..............25%
70%..............30%
80%..............35%
90%..............40%
100%.............50%

Pick something you can live with but make sure you can cover yourself if you are suddenly unemployed.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.
Topic Author
ronney
Posts: 134
Joined: Sun Sep 30, 2007 2:35 pm

Post by ronney »

Hi Laura,

Regarding Emergency funds, i have got to know that you have to have atleast 6 month expense fund available in saving account or in CD.
In my case its around 25K

In my case i have already secure that Part. I also went and learn about the Investment Pyramid.


CASH - > Bond - > Stocks -> Speculative

I would also recommend to others also.
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