401K: Should I manage this myself?

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mrrr0809
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401K: Should I manage this myself?

Post by mrrr0809 » Sat Jan 13, 2018 6:02 am

This was my first year being eligible for my employer’s 401k offering. I was very excited to start contributing, but it seems the returns have been sub par given the market performance overall this past year. Here’s what data I can provide at this point in time:

66.5% Equities, 28.5% Fixed Income, 5% Cash equivalents

Current holdings:
MFS Research Fund MRFIX Expense Ratio 0.57%
Americans Funds EuroPacific Growth Fund RERGX Expense Ratio 0.5%
Federated Short-term Income Fund FSILX Expense Ratio 0.55%
Federated Total Return Bond Fund FTRLX Expense Ratio 0.43%

Three options for investing: fully managed by management company (this is what I’m doing now), selection of percentages of misc. Vanguard accounts, or completely self directed (I submit the tickers I want, how much goes where, etc.)

ETA:
The second option of me picking from a chosen list of Fund (which of course must total 100%) are as follows:

Vanguard Lifestrategy Income Fund VASIX
Vanguard Lifestrategy Conservative Growth Fund VSCGX
Vaguard Lifestrategy Moderate Growth Fund VSMGX
Vanguard Lifestrategy Growth Fund VASGX
Univest Special Money Market Account UNMM

The third option would be to be independent and choose my own tickers completely which the company says they allow.

There is a stock trading expense of $.03 per for share for purchases of individual stocks or ETFs.

ETA 2: The management fee is 0.25% annually.
Last edited by mrrr0809 on Sun Jan 14, 2018 1:48 pm, edited 7 times in total.

Johm221122
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Re: 401K: Should I manage this myself?

Post by Johm221122 » Sat Jan 13, 2018 6:09 am

Welcome to forum,
Please give us all information
viewtopic.php?t=6212

Welcome to the Bogleheads Forum. There are many knowledgeable and helpful people who are part of this online community. Most of these posters are willing to share their time and expertise with new posters who are looking for help, but they can't or won't give advice in a vacuum. We need to know some important things about you, including all the investments you already have. Otherwise, we may be advising you to buy into a fund that overlaps your present holding(s), doesn't fit your asset allocation plan, or, worse, is too risky or too conservative for your investing temperament. To make sure you get the help you need, we would like to provide a few suggestions

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ruralavalon
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Re: 401K: Should I manage this myself?

Post by ruralavalon » Sat Jan 13, 2018 8:07 am

mrrr0809 wrote:
Sat Jan 13, 2018 6:02 am
This was my first year being eligible for my employer’s 401k offering. My employer adds 20% of my salary into my 401k on a quarterly basis. The advertised management fee on the account is 0.15% paid for by my employer and then “housekeeping and other administrative fees” paid from my account- I could not find paper work that said exactly how much. I was very excited to start contributing, but it seems the returns have been terrible given the market performance overall this past year. Other ratios: Age 28, planned to switch from 70/30 stocks/bond ratio to 80/20.
An asset allocation of either 70/30 or 80/20 is within the range of what is reasonable in my opinion for age 28.

mrrr0809 wrote:Here’s what data I can provide at this point in time:

66.5% Equities, 28.5% Fixed Income, 5% Cash equivalents

Current holdings:
MFS Research Fund MRFIX Expense Ratio 0.57%
Americans Funds EuroPacific Growth Fund RERGX Expense Ratio 0.5%
Federated Short-term Income Fund FSILX Expense Ratio 0.55%
Federated Total Return Bond Fund FTRLX Expense Ratio 0.43%

Three options for investing: fully managed by management company (this is what I’m doing now), selection of percentages of misc. Vanguard accounts, or completely self directed (I submit the tickers I want, how much goes where, etc.)

Thanks all. I’m lost when it comes to my 401k.
How much is the fee you are charged by the management company?

What are the other funds offered in your 401k? Please give fund names, tickers and expense ratios. Please simply add this to your original post using the edit button, it helps a lot if all of your information is in one place.

Please see this for information needed and format:
Asking portfolio questions.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

mrrr0809
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Re: 401K: Should I manage this myself?

Post by mrrr0809 » Sat Jan 13, 2018 8:16 am

Some info added. Working on additional info.

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Tamarind
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Re: 401K: Should I manage this myself?

Post by Tamarind » Sat Jan 13, 2018 8:29 am

The funds they have put you in are neither cheap not especially broadly diversified. However we can't advise you on what you should do without some more info, especially the list of available funds including expense ratio and details on the "percentage of vanguard funds" arrangement you mentioned.

It would help to have broad info about your financial situation, what other investments you have, and how long you've been investing (we can use this last one to make some guesses about your risk tolerance).

mrrr0809
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Re: 401K: Should I manage this myself?

Post by mrrr0809 » Sat Jan 13, 2018 8:44 am

Tamarind wrote:
Sat Jan 13, 2018 8:29 am
The funds they have put you in are neither cheap not especially broadly diversified. However we can't advise you on what you should do without some more info, especially the list of available funds including expense ratio and details on the "percentage of vanguard funds" arrangement you mentioned.

It would help to have broad info about your financial situation, what other investments you have, and how long you've been investing (we can use this last one to make some guesses about your risk tolerance).
Thanks for the input. This is a downfall of mine as I’m not well versed in financial matters or navigating through the information you’re asking. Could I find expense ratios by searching for the tickers online or are they specific to the company I’m working worth?

This is also my first year investing and aside from my house (with a mortgage), I have no other investments- if that is even considered one.

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ruralavalon
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Location: Illinois

Re: 401K: Should I manage this myself?

Post by ruralavalon » Sat Jan 13, 2018 9:05 am

mrrr0809 wrote:
Sat Jan 13, 2018 8:44 am
Tamarind wrote:
Sat Jan 13, 2018 8:29 am
The funds they have put you in are neither cheap not especially broadly diversified. However we can't advise you on what you should do without some more info, especially the list of available funds including expense ratio and details on the "percentage of vanguard funds" arrangement you mentioned.

It would help to have broad info about your financial situation, what other investments you have, and how long you've been investing (we can use this last one to make some guesses about your risk tolerance).
Thanks for the input. This is a downfall of mine as I’m not well versed in financial matters or navigating through the information you’re asking. Could I find expense ratios by searching for the tickers online or are they specific to the company I’m working worth?

This is also my first year investing and aside from my house (with a mortgage), I have no other investments- if that is even considered one.
Please give fund names, not just the ticker symbols.

Look in your 401k materials or the 401k website for the expense ratios. Sometimes funds in a 401k have different expense ratios than when the identical funds are offered to the general public.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

mrrr0809
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Joined: Wed Jan 10, 2018 10:17 am

Re: 401K: Should I manage this myself?

Post by mrrr0809 » Sat Jan 13, 2018 9:26 am

ruralavalon wrote:
Sat Jan 13, 2018 9:05 am
mrrr0809 wrote:
Sat Jan 13, 2018 8:44 am
Tamarind wrote:
Sat Jan 13, 2018 8:29 am
The funds they have put you in are neither cheap not especially broadly diversified. However we can't advise you on what you should do without some more info, especially the list of available funds including expense ratio and details on the "percentage of vanguard funds" arrangement you mentioned.

It would help to have broad info about your financial situation, what other investments you have, and how long you've been investing (we can use this last one to make some guesses about your risk tolerance).
Thanks for the input. This is a downfall of mine as I’m not well versed in financial matters or navigating through the information you’re asking. Could I find expense ratios by searching for the tickers online or are they specific to the company I’m working worth?

This is also my first year investing and aside from my house (with a mortgage), I have no other investments- if that is even considered one.
Please give fund names, not just the ticker symbols.

Look in your 401k materials or the 401k website for the expense ratios. Sometimes funds in a 401k have different expense ratios than when the identical funds are offered to the general public.
Fund names and management fees added in OP (0.25% annually). The info I was given by the plan representative just mentions the possibility of the Vanguard funds and only gives the tickers- no other info available. The website for my account only provides information on current holdings. I think there’s a reason as why they make it so difficult to stray away from their direction. When the plan representative introduced the plan to me, he highly suggested allowing his company to manage the funds and not try to manage yourself- I understand why he would say that but it was also a red flag for me.

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Toons
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Re: 401K: Should I manage this myself?

Post by Toons » Sat Jan 13, 2018 9:33 am

I suggest Vanguard LifeStrategy Moderate Growth.
60/40
Keep It Simple
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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ruralavalon
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Re: 401K: Should I manage this myself?

Post by ruralavalon » Sat Jan 13, 2018 9:41 am

In the second option, (Vanguard funds) the better choice at age 28 would probably be :
Vanguard LifeStrategy Growth Fund (VASGX), which has an asset allocation of 80% stocks and 20% bonds.

Can you list the funds available in the third option (completely self directed)?

Do you have an asset allocation (stock/bond mix; domestic/international stock mix) that you want to aim for?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

mrrr0809
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Re: 401K: Should I manage this myself?

Post by mrrr0809 » Sat Jan 13, 2018 9:56 am

ruralavalon wrote:
Sat Jan 13, 2018 9:41 am
In the second option, (Vanguard funds) the better choice at age 28 would probably be :
Vanguard LifeStrategy Growth Fund (VASGX), which has an asset allocation of 80% stocks and 20% bonds.

Can you list the funds available in the third option (completely self directed)?

Do you have an asset allocation (stock/bond mix; domestic/international stock mix) that you want to aim for?
For the third option, it seems like no mutual fund is off limits. There’s a form that must be filled out every time there’s a deposit made. It gives space for the mutual fund name, ticker, number of shares, option to reinvest dividends, etc. It’s designed for people who use outside advisors to invest their money. You can choose where you want it go, but it must go through the management company so they get their percentage fee.

I don’t have any set AA that I’m striving for right now. I think 25% foreign would be wise I suppose.

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ruralavalon
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Location: Illinois

Re: 401K: Should I manage this myself?

Post by ruralavalon » Sat Jan 13, 2018 10:20 am

mrrr0809 wrote:
Sat Jan 13, 2018 9:56 am
ruralavalon wrote:
Sat Jan 13, 2018 9:41 am
In the second option, (Vanguard funds) the better choice at age 28 would probably be :
Vanguard LifeStrategy Growth Fund (VASGX), which has an asset allocation of 80% stocks and 20% bonds.

Can you list the funds available in the third option (completely self directed)?

Do you have an asset allocation (stock/bond mix; domestic/international stock mix) that you want to aim for?
For the third option, it seems like no mutual fund is off limits. There’s a form that must be filled out every time there’s a deposit made. It gives space for the mutual fund name, ticker, number of shares, option to reinvest dividends, etc. It’s designed for people who use outside advisors to invest their money. You can choose where you want it go, but it must go through the management company so they get their percentage fee.

I don’t have any set AA that I’m striving for right now. I think 25% foreign would be wise I suppose.
From your description it sounds like the only way to avoid the 0.25% management fee is to use one of the Vanguard funds (option # 2).

Asset allocation is a very personal decision that you must make based on your own ability, willingness at need to take risk. Please see the wiki article "Asset Allocation" and part 3 of the wiki article "Boglehead's Investment Philosophy".

In my opinion at age 28 an asset allocation of 80/20 stock/bond is probably about right. If that appeals to you then use Vanguard LifeStrategy Growth Fund (VASGX).

But if you want to be more conservative then 60/40 stock/bond would be OK. If that is what appeals to you then use Vanguard LifeStrategy Moderate Growth (VSMGX) which Toons suggested.

If you have any questions just ask.

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

mrrr0809
Posts: 30
Joined: Wed Jan 10, 2018 10:17 am

Re: 401K: Should I manage this myself?

Post by mrrr0809 » Sun Jan 14, 2018 8:36 am

ruralavalon wrote:
Sat Jan 13, 2018 10:20 am
mrrr0809 wrote:
Sat Jan 13, 2018 9:56 am
ruralavalon wrote:
Sat Jan 13, 2018 9:41 am
In the second option, (Vanguard funds) the better choice at age 28 would probably be :
Vanguard LifeStrategy Growth Fund (VASGX), which has an asset allocation of 80% stocks and 20% bonds.

Can you list the funds available in the third option (completely self directed)?

Do you have an asset allocation (stock/bond mix; domestic/international stock mix) that you want to aim for?
For the third option, it seems like no mutual fund is off limits. There’s a form that must be filled out every time there’s a deposit made. It gives space for the mutual fund name, ticker, number of shares, option to reinvest dividends, etc. It’s designed for people who use outside advisors to invest their money. You can choose where you want it go, but it must go through the management company so they get their percentage fee.

I don’t have any set AA that I’m striving for right now. I think 25% foreign would be wise I suppose.
From your description it sounds like the only way to avoid the 0.25% management fee is to use one of the Vanguard funds (option # 2).

Asset allocation is a very personal decision that you must make based on your own ability, willingness at need to take risk. Please see the wiki article "Asset Allocation" and part 3 of the wiki article "Boglehead's Investment Philosophy".

In my opinion at age 28 an asset allocation of 80/20 stock/bond is probably about right. If that appeals to you then use Vanguard LifeStrategy Growth Fund (VASGX).

But if you want to be more conservative then 60/40 stock/bond would be OK. If that is what appeals to you then use Vanguard LifeStrategy Moderate Growth (VSMGX) which Toons suggested.

If you have any questions just ask.

I hope that this helps.
Thanks for suggestions. From the research I could do, Vanguard LifeStrategy Growth Fund seems to over exactly what I’m looking for.

At first I was comparing VASGX and MRFIX to one another and scratching my head until I realized that’s comparing apples to oranges. VASGX would be 100% of my 401k allotment which includes foreign investments and bonds, whereas MRFIX is only 56% of my 401k allotment now and is nearly all company stock, correct? So even though MRFIX has beat VASGX every year for the past 10 years, that would be far lower of a gain than if I had 100% of my money invested in VASGX which is a balanced fund? Just want to make sure I understand that right.

ETA: Do you believe VASGX is something I can hold for the next 10 years then switching to maybe a 50% VASGX/50% VSGMX?

mrrr0809
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Re: 401K: Should I manage this myself?

Post by mrrr0809 » Sun Jan 14, 2018 12:40 pm

Not to derail my own thread, but has anyone found a source that acts as a calculator for a 401K portfolio in ehich you can included say different 10 year averages on stock performances, expense ratio, management fee, annual contribution, etc? I’d be very interested in running some scenarios. Thank you.

PFInterest
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Re: 401K: Should I manage this myself?

Post by PFInterest » Sun Jan 14, 2018 12:42 pm

mrrr0809 wrote:
Sun Jan 14, 2018 12:40 pm
Not to derail my own thread, but has anyone found a source that acts as a calculator for a 401K portfolio in ehich you can included say different 10 year averages on stock performances, expense ratio, management fee, annual contribution, etc? I’d be very interested in running some scenarios. Thank you.
to what end? your money will be there more than 10 years. you also need to account for IRAs, taxable, etc.
i think you need costs to be above around 2% to not be worth it for a 401k, there are some threads here that discuss that.
otherwise shoot for 18.5K.

edit:
also to add, yes Vanguard LifeStrategy Growth Fund (VASGX) 100% and move on.

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ruralavalon
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Re: 401K: Should I manage this myself?

Post by ruralavalon » Sun Jan 14, 2018 12:52 pm

mrrr0809 wrote:
Sun Jan 14, 2018 8:36 am
ruralavalon wrote:
Sat Jan 13, 2018 10:20 am
mrrr0809 wrote:
Sat Jan 13, 2018 9:56 am
ruralavalon wrote:
Sat Jan 13, 2018 9:41 am
In the second option, (Vanguard funds) the better choice at age 28 would probably be :
Vanguard LifeStrategy Growth Fund (VASGX), which has an asset allocation of 80% stocks and 20% bonds.

Can you list the funds available in the third option (completely self directed)?

Do you have an asset allocation (stock/bond mix; domestic/international stock mix) that you want to aim for?
For the third option, it seems like no mutual fund is off limits. There’s a form that must be filled out every time there’s a deposit made. It gives space for the mutual fund name, ticker, number of shares, option to reinvest dividends, etc. It’s designed for people who use outside advisors to invest their money. You can choose where you want it go, but it must go through the management company so they get their percentage fee.

I don’t have any set AA that I’m striving for right now. I think 25% foreign would be wise I suppose.
From your description it sounds like the only way to avoid the 0.25% management fee is to use one of the Vanguard funds (option # 2).

Asset allocation is a very personal decision that you must make based on your own ability, willingness at need to take risk. Please see the wiki article "Asset Allocation" and part 3 of the wiki article "Boglehead's Investment Philosophy".

In my opinion at age 28 an asset allocation of 80/20 stock/bond is probably about right. If that appeals to you then use Vanguard LifeStrategy Growth Fund (VASGX).

But if you want to be more conservative then 60/40 stock/bond would be OK. If that is what appeals to you then use Vanguard LifeStrategy Moderate Growth (VSMGX) which Toons suggested.

If you have any questions just ask.

I hope that this helps.
Thanks for suggestions. From the research I could do, Vanguard LifeStrategy Growth Fund seems to over exactly what I’m looking for.

At first I was comparing VASGX and MRFIX to one another and scratching my head until I realized that’s comparing apples to oranges. VASGX would be 100% of my 401k allotment which includes foreign investments and bonds, whereas MRFIX is only 56% of my 401k allotment now and is nearly all company stock, correct? So even though MRFIX has beat VASGX every year for the past 10 years, that would be far lower of a gain than if I had 100% of my money invested in VASGX which is a balanced fund? Just want to make sure I understand that right.
You are correct, don't compare a balanced fund like Vanguard LifeStrategy Growth (VASGX) to a stock fund like MFS Research Class I (MRFIX). If you want to compare then compare the proposed portfolio which is entirety Vanguard LifeStrategy Growth to a portfolio that mixes both stock and bond funds in the same ratio as VASGX.

mrrr0809 wrote:ETA: Do you believe VASGX is something I can hold for the next 10 years then switching to maybe a 50% VASGX/50% VSGMX?
Yes. You could keep Vanguard LifeStrategy Growth (80/20 allocation) for 10 years (age 38) or so, then make a switch to the combination (70/30 allocation).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

mrrr0809
Posts: 30
Joined: Wed Jan 10, 2018 10:17 am

Re: 401K: Should I manage this myself?

Post by mrrr0809 » Sun Jan 14, 2018 1:02 pm

ruralavalon wrote:
Sun Jan 14, 2018 12:52 pm
mrrr0809 wrote:
Sun Jan 14, 2018 8:36 am
ruralavalon wrote:
Sat Jan 13, 2018 10:20 am
mrrr0809 wrote:
Sat Jan 13, 2018 9:56 am
ruralavalon wrote:
Sat Jan 13, 2018 9:41 am
In the second option, (Vanguard funds) the better choice at age 28 would probably be :
Vanguard LifeStrategy Growth Fund (VASGX), which has an asset allocation of 80% stocks and 20% bonds.

Can you list the funds available in the third option (completely self directed)?

Do you have an asset allocation (stock/bond mix; domestic/international stock mix) that you want to aim for?
For the third option, it seems like no mutual fund is off limits. There’s a form that must be filled out every time there’s a deposit made. It gives space for the mutual fund name, ticker, number of shares, option to reinvest dividends, etc. It’s designed for people who use outside advisors to invest their money. You can choose where you want it go, but it must go through the management company so they get their percentage fee.

I don’t have any set AA that I’m striving for right now. I think 25% foreign would be wise I suppose.
From your description it sounds like the only way to avoid the 0.25% management fee is to use one of the Vanguard funds (option # 2).

Asset allocation is a very personal decision that you must make based on your own ability, willingness at need to take risk. Please see the wiki article "Asset Allocation" and part 3 of the wiki article "Boglehead's Investment Philosophy".

In my opinion at age 28 an asset allocation of 80/20 stock/bond is probably about right. If that appeals to you then use Vanguard LifeStrategy Growth Fund (VASGX).

But if you want to be more conservative then 60/40 stock/bond would be OK. If that is what appeals to you then use Vanguard LifeStrategy Moderate Growth (VSMGX) which Toons suggested.

If you have any questions just ask.

I hope that this helps.
Thanks for suggestions. From the research I could do, Vanguard LifeStrategy Growth Fund seems to over exactly what I’m looking for.

At first I was comparing VASGX and MRFIX to one another and scratching my head until I realized that’s comparing apples to oranges. VASGX would be 100% of my 401k allotment which includes foreign investments and bonds, whereas MRFIX is only 56% of my 401k allotment now and is nearly all company stock, correct? So even though MRFIX has beat VASGX every year for the past 10 years, that would be far lower of a gain than if I had 100% of my money invested in VASGX which is a balanced fund? Just want to make sure I understand that right.
You are correct, don't compare a balanced fund like Vanguard LifeStrategy Growth (VASGX) to a stock fund like MFS Research Class I (MRFIX). If you want to compare then compare the proposed portfolio which is entirety Vanguard LifeStrategy Growth to a portfolio that mixes both stock and bond funds in the same ratio as VASGX.

mrrr0809 wrote:ETA: Do you believe VASGX is something I can hold for the next 10 years then switching to maybe a 50% VASGX/50% VSGMX?
Yes. You could keep Vanguard LifeStrategy Growth (80/20 allocation) for 10 years (age 38) or so, then make a switch to the combination (70/30 allocation).
Thank you for your input. You’ve really clarified things that I never understood up until now. I never envisioned playing an active role in decision making of allocations but that’s now changed!

Mors
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Re: 401K: Should I manage this myself?

Post by Mors » Sun Jan 14, 2018 3:38 pm

I also suggest using the VASGX for now. Use it in combination with VSMGX later when you wish to lower your stock allocation. When you will want to do it depends on your risk tolerance, but you may use the vanguard retirement fund glide paths as a guideline.

https://investor.vanguard.com/mutual-fu ... rview/0696

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