New Job. Confused about 401K choices..Please help

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luckybamboo
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New Job. Confused about 401K choices..Please help

Post by luckybamboo » Mon Nov 13, 2017 3:19 pm

Hello,
DH is starting a new job. He plans to max out 401K with 4% match from employer. The Plan is with Vanguard but the options are limited. This is what I have shortlisted. Help me choose

1. Bond -
Goldman Sachs Bond Institutional (0.60%)
Vanguard Total Bond Mkt Index Adm(0.05%)
Wells Fargo Short Duration Govt Bd R6(0.40%)

2. Target Date
BlackRock LifePath Index 2035 Non-Lendable Fund; Class O(0.15%)
BlackRock LifePath Index 2040 Non-Lendable Fund; Class O(0.15%)
BlackRock LifePath Index 2045 Non-Lendable Fund; Class O(0.15%)

3. Domestic Stock (Only 4 options available as listed below)
Vanguard Extended Mkt Index Adm (0.08%)
Northern Trust S&P 500 Index DC Non-Lending Series Fund; Tier 1 (No Vanguard option available)(0.04%)
TRowePrice Blue Chip Growth (0.72%)
WTC-CIF II SMID Cap Research Equity (0.79%)

4. International Stock (only 2 options)
Vanguard Tot Intl Stock Ix Admiral (0.11%)
American Funds Europacific Growth R6(0.50%)

Please suggest which ones would be good to choose
1. Bond - Vanguard Total Bond.
2. Stock - Confused??
3. International - VTIAX

Are the Blackrock Target Date funds any good? Should I put some money in that for diversification?
Last edited by luckybamboo on Mon Nov 13, 2017 3:34 pm, edited 1 time in total.

JBTX
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Re: New Job. Confused about 401K choices..Please help

Post by JBTX » Mon Nov 13, 2017 3:24 pm

Usually the plan literature will list the expense ratios. Would be helpful to include those in your post.

I’m am guessing the vanguard bond index, the 2 index stocks funds and vanguard international index will be best bets.

Whether target date good mostly depends on its comparative expense ratio.
Last edited by JBTX on Mon Nov 13, 2017 3:26 pm, edited 1 time in total.

JBTX
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Re: New Job. Confused about 401K choices..Please help

Post by JBTX » Mon Nov 13, 2017 3:25 pm

Duplicate
Last edited by JBTX on Mon Nov 13, 2017 3:27 pm, edited 1 time in total.

b42
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Re: New Job. Confused about 401K choices..Please help

Post by b42 » Mon Nov 13, 2017 3:26 pm

Some initial questions:

1. Is your husband rolling over a previous 401k?
2. Do you currently have other retirement assets? It would be helpful to list them, as you may end up over-weighting one fund in the 401k, and balancing it out with another tax-advantaged account.
3. What is your current/desired asset allocation (such as 80% stock / 20% bond)?

As for good options, the Vanguard Total Bond Mkt Index Adm is a good choice, the Northern Trust S&P 500 Index appears to be a relatively good S&P 500 index option in absence of Vanguard (but I'd want to research that more as I'm not as knowledgeable on their company and any hidden fees/expenses), and the Vanguard Total Intl Stock Index Admiral is a good choice as well.

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Watty
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Re: New Job. Confused about 401K choices..Please help

Post by Watty » Mon Nov 13, 2017 3:28 pm

You need to add the expense ratios to your post to be able to get any good suggestions. You have to look the expense ratios up in the plan literature he got from the HR department or when he is signed into the 401k website. The ER that he is charged can be different than what you might see if you just look up the fund.

There is a box with a pencil in it near the top right of your post that will allow you to edit it.

Even then figuring out that is best depends on your overall situation and what other investments you have so it would be good to post more of the information that is in this suggested format.

viewtopic.php?f=1&t=6212

KSActuary
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Re: New Job. Confused about 401K choices..Please help

Post by KSActuary » Mon Nov 13, 2017 3:49 pm

I second the call for including other assets in evaluation. If only looking at this 401k, I would look at the T Rowe Price Blue Chip Growth fund for a small allocation if you want to overweight to growth as it has outperformed the S&P 500 fairly handily over most periods.

luckybamboo
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Re: New Job. Confused about 401K choices..Please help

Post by luckybamboo » Mon Nov 13, 2017 3:50 pm

JBTX wrote:
Mon Nov 13, 2017 3:24 pm
Usually the plan literature will list the expense ratios. Would be helpful to include those in your post.
Updated in the original post.
b42 wrote:
Mon Nov 13, 2017 3:26 pm
Some initial questions:

1. Is your husband rolling over a previous 401k?
No. His previous employer 401K has good options (all Vanguard index funds), so leaving it there.
But rolling over about $110K from a Rollover IRA from the first employer to free up space for Backdoor ROTH.
2. Do you currently have other retirement assets? It would be helpful to list them, as you may end up over-weighting one fund in the 401k, and balancing it out with another tax-advantaged account.
3. What is your current/desired asset allocation (such as 80% stock / 20% bond)?
Between him and I, we have ROTH and Rollover IRA with mainly index funds. Our preferred asset allocation is 70% stock - (50% domestic - 20% international) and 30% bonds
The previous employer 401K is about $560K which is allocated exactly 70%-30% with the mix above.
Rest of the accounts
1. Taxable - 64K (50K stock, 14K Municipal Bonds)
2. Her IRA (Rollover + Roth) - $170K Total - $103K - Domestic Stock, $32K international $35K Bonds
3. His ROTH - 33K - $14K International $14K Bonds
4. His Rollover - $110K will be rolled over to the new plan to create space for Backdoor ROTH.

80% of the investments are with Vanguard Index Funds/ETF, 15% Fidelity index funds/ETF and rest is individual stock

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oldcomputerguy
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Re: New Job. Confused about 401K choices..Please help

Post by oldcomputerguy » Mon Nov 13, 2017 3:57 pm

Do these:

Fixed-income: Vanguard Total Bond Mkt Index Adm

Domestic equity: Vanguard Extended Mkt Index Adm and Northern Trust S&P 500 Index (these two in a 20%/80% mix will approximate Total Stock Market)

International equity: Vanguard Tot Intl Stock Ix Admiral


That'll get you the equivalent of a Three-Fund Portfolio.
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cherijoh
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Re: New Job. Confused about 401K choices..Please help

Post by cherijoh » Mon Nov 13, 2017 4:09 pm

luckybamboo wrote:
Mon Nov 13, 2017 3:19 pm
Hello,
DH is starting a new job. He plans to max out 401K with 4% match from employer. The Plan is with Vanguard but the options are limited.
These are actually very good choices and good expense ratios - when you have good options you don't really need a lot to choose from! :wink:

oldcomputerguy wrote:
Mon Nov 13, 2017 3:57 pm
Do these:

Fixed-income: Vanguard Total Bond Mkt Index Adm

Domestic equity: Vanguard Extended Mkt Index Adm and Northern Trust S&P 500 Index (these two in a 20%/80% mix will approximate Total Stock Market)

International equity: Vanguard Tot Intl Stock Ix Admiral


That'll get you the equivalent of a Three-Fund Portfolio.
+1

OP - these are actually very good choices - when you have good ones you don't really need a lot to choose from! :wink:

Jack FFR1846
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Re: New Job. Confused about 401K choices..Please help

Post by Jack FFR1846 » Mon Nov 13, 2017 4:15 pm

I would put it all in the 500 fund at 0.04% because it's the lowest ER.....then do all other balance work to achieve AA in other accounts.

It's exactly what I currently do with my own 401k.
Bogle: Smart Beta is stupid

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Watty
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Re: New Job. Confused about 401K choices..Please help

Post by Watty » Mon Nov 13, 2017 4:33 pm

+1 on those being good choices.

You could do a three fund portfolio to save a bit on the expense ratio.

https://www.bogleheads.org/wiki/Three-fund_portfolio

The target date funds only have an ER of 0.15% which might be 0.1% higher than a three fund portfolio. In dollar terms if he has $25,000 in the 401k that is only $25 more. To me that would be worth the simplicity for now and in a few years when he has maybe $100,000 in the 401k and the extra expense get up to be $100 he could switch to a three fund portfolio if the extra $100 seemed worthwhile then.

JBTX
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Re: New Job. Confused about 401K choices..Please help

Post by JBTX » Mon Nov 13, 2017 5:40 pm

I would do what either oldcomputer guy suggests above or follow what watti suggests. The target date expense ratio is pretty comparable to a vanguard target date fund. I would think that the extra 0.05% to 0.1% is a pretty small price to pay to keep your portfolio balanced, assuming you are comfortable with the target fund allocations.

Having said all that ultimately you have to balance out your entire portfolio to your desired allocation. So it may be you choose to only use certain funds in this account or you choose to weight them differently. You’d really need to look at all of your funds in all of your accounts.

I agree you really have all the choices you need in this account and the expense ratios are very good.

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