Help simplifying 401k

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cf_murph
Posts: 7
Joined: Sat Apr 07, 2018 7:10 pm

Help simplifying 401k

Post by cf_murph » Sun May 13, 2018 10:50 pm

*edited with spouse information*

Hello everyone. I am leaning towards a three fund portfolio in my 401k. Right now, I am invested across 12 different funds.

I have a number of funds available in my 401k, however they are all 'benchmark' funds. We used to have nice things, like DODGX, but those have all been replaced. Here's the breakdown.

So if I were to try to simplify this, where should I reallocate my current funds and direct my future funds to? Keeping in mind that any match goes directly into the Wells Fargo ESOP fund (I would have to manually move that each quarter).

Thanks!

Emergency funds: Roughly 3 months fixed expenses at Betterment in conservative investment
Debt: ~30k revolving debt (10%) and student loans (2.5%) being paid off aggressively right now. Paying 5-6k per month until debt free later this year (disregarding house)
Tax Filing Status: Married filing joint with 2 dependent children
Tax Rate: 33%
State of Residence: IA
Age: 36
Desired Asset allocation: 85% stocks / 15% bonds (or 80/20, I’m open to discussion, but lean towards being more aggressive given my longer timeframe)
Desired International allocation: 20% to 25% of stocks (or whatever is recommended)
Current retirement assets his 190k, hers 150k


Contributions

New annual Contributions
His 401k planned $18,500 + roughly 9,000 employer match
Her 401k planned $18,500 + roughly 12,000 employer match

No other investing at the moment. Will max Roth's next year hopefully and then look toward maxing HSA.

Code: Select all

His 401k - 6% match
Investment						Current Total 	Percent	ER	
EMERGING MARKETS EQUITY					 $21,982.17 	12.39%	0.89% 	
INTERNATIONAL EQUITY					 $8,069.97 	4.55%	0.54% 	
LARGE CAP GROWTH					 $1,655.88 	0.93%	0.38% 	
LARGE CAP VALUE						 $25,040.06 	14.12%	0.38% 	
SMALL CAP						 $8,453.88 	4.77%	0.58% 	
STATE STREET INTERNATIONAL INDEX			 $29,340.41 	16.54%	0.04%	
STATE STREET NASDAQ 100 INDEX				 $16,713.83 	9.42%	0.05%	
STATE STREET RUSSELL SMALL CAP INDEX			 $11,840.18 	6.67%	0.04%	
STATE STREET S&P 500 INDEX				 $24,168.88 	13.62%	0.01%	
STATE STREET S&P MIDCAP INDEX				 $1,604.89 	0.90%	??	
WELLS FARGO ESOPWFC					 $16,325.80 	9.20%	0.00%	
WELLS FARGO/STATE STREET TARGET TODAYCIT		$12,203.26 	6.88%	0.085
GLOBAL BOND						$- 		0.00%	0.62% 	
STATE STREET U.S. BOND INDEX				 $- 		0.00%	0.02%	
WELLS FARGO 100% TREASURY MONEY MARKET	 $- 			0.00%	0.20%	
WELLS FARGO Non-ESOPWFC				 	$- 		0.00%	0.00%	
WELLS FARGO STABLE VALUE				 $- 			0.00%	0.23%	
WELLS FARGO/STATE STREET TARGET 2010 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2015 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2020 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2025 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2030 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2035 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2040 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2045 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2050 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2055 CIT	 $- 			0.00%	0.085	
WELLS FARGO/STATE STREET TARGET 2060 CIT	 $- 			0.00%	0.085


Her 401k - 150% of your contributions between 1 and 4%, then 50% of your contributions up to 6%.
Fund								Current Total	Percent	ER
DFA Emerging Markets Core Equity Portfolio Institutional Class	$15,744.06 	10.05%	0.53%
Dodge & Cox Stock Fund						$15,437.59 	9.85%	0.52%
Fidelity Growth Company Commingled Pool				$26,569.73 	16.95%	0.43%
Principal Diversified Real Asset Tier 1				$13,191.10 	8.42%	0.74%
Target Retirement 2060 Trust Plus				$14,696.44 	9.38%	0.06%
Vanguard Institutional Total International Stock Market Index	$14,743.05 	9.41%	0.06%
Vanguard PRIMECAP Fund Admiral Shares				$32,825.81 	20.95%	0.32%
Vanguard Small-Cap Growth Index Fund Institutional Shares	$23,505.00 	15.00%	0.06%
Vanguard Federal Money Mkt Fund					$0.00  		0.00%	0.11%
Vanguard Institutional Total Bond Market Index Trust		$0.00  		0.00%	0.03%
Target Retire Income Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2015 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2020 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2025 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2030 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2035 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2040 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2045 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2050 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2055 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2060 Trust Plus					$0.00  		0.00%	0.06%
Target Retire 2065 Trust Plus					$0.00  		0.00%	0.06%
Vanguard Institutional 500 Index Trust				$0.00  		0.00%	0.01%
Vanguard Small-Cap Value Index Fund Institutional Shares	$0.00  		0.00%	0.06%
Last edited by cf_murph on Tue May 15, 2018 3:08 pm, edited 2 times in total.

deltaneutral83
Posts: 697
Joined: Tue Mar 07, 2017 4:25 pm

Re: Help simplifying 401k

Post by deltaneutral83 » Mon May 14, 2018 11:15 am

Those State Street index funds for the S&P/Intl/Bonds seems to be fine for a 3F. If you want to build out the Total US you can also use the State Street S&P 75%/Mid-15%/Russell 10% or something close to that by mixing and matching.

MotoTrojan
Posts: 1496
Joined: Wed Feb 01, 2017 8:39 pm

Re: Help simplifying 401k

Post by MotoTrojan » Mon May 14, 2018 11:21 am

deltaneutral83 wrote:
Mon May 14, 2018 11:15 am
Those State Street index funds for the S&P/Intl/Bonds seems to be fine for a 3F. If you want to build out the Total US you can also use the State Street S&P 75%/Mid-15%/Russell 10% or something close to that by mixing and matching.
OP; Do you have substantial assets elsewhere (Roth/IRA/Taxable) which should be factored in for most tax-efficient placement?

If you really want to replicate the Total US (I feel S&P 500 is more than sufficient), I'd simplify and ignore the mid-cap and just go 80/20 S&P500/Russell2K. This will be as close as you'd ever need to be, simpler, and the ER is VERY low (not sure what your MidCap is).

You should also consider a Target Retirement fund, which I assume is pretty similar to the 3F and has a reasonable ER. Would allow for truly hands-free investing. This would be an especially strong consideration if you don't manage substantial accounts outside the 401k.

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ruralavalon
Posts: 12961
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help simplifying 401k

Post by ruralavalon » Mon May 14, 2018 11:31 am

You have excellent low expense ratio funds offered in your 401k, you are fortunate.

I suggest these funds in your 401k:
State Street S&P 500 Index Fund, ER 0.01%
State Street International Index Fund, ER 0.04%
State Street U.S. Bond Index Fund, ER 0.02%

Do you have other accounts, like IRAs or taxable accounts? Does your spouse have any accounts? It's often better to coordinate investments among all accounts to take advantage of only the very best funds in each account, rather than invest each account individually.

cf_murph
Posts: 7
Joined: Sat Apr 07, 2018 7:10 pm

Re: Help simplifying 401k

Post by cf_murph » Mon May 14, 2018 4:00 pm

We don’t have any significant accounts other than our 401k’s currently. We plan on maxing Roth’s and the HSA starting in a few month (paying down some debt currently). My main focus is to simplify these 401ks and start minimizing our taxes. We did not plan this last year very well and come tax time we paid for it by way of unnecessary taxes.

Her 401k is at Vanguard. I will edit the original post to follow the typical format and include hers as well tonight when I get a chance to sit down for the night.

I appreciate it!

cf_murph
Posts: 7
Joined: Sat Apr 07, 2018 7:10 pm

Re: Help simplifying 401k

Post by cf_murph » Mon May 14, 2018 10:21 pm

Edited original post with more information, thanks!

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ruralavalon
Posts: 12961
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help simplifying 401k

Post by ruralavalon » Tue May 15, 2018 12:05 pm

cf_murph wrote:
Mon May 14, 2018 4:00 pm
We don’t have any significant accounts other than our 401k’s currently. We plan on maxing Roth’s and the HSA starting in a few month (paying down some debt currently). My main focus is to simplify these 401ks and start minimizing our taxes. We did not plan this last year very well and come tax time we paid for it by way of unnecessary taxes.

Her 401k is at Vanguard. I will edit the original post to follow the typical format and include hers as well tonight when I get a chance to sit down for the night.

I appreciate it!
cf_murph wrote:
Mon May 14, 2018 10:21 pm
Edited original post with more information, thanks!
What funds is she using in her 401k? What funds are offered in her 401k? Please give fund names, tickers and expense ratios.

What are the relative sizes of the two 401ks? In other words what percentage of the total portfolio is in each account?

You can simply add this to your original post using the edit button, it helps a lot if all of your information is in one place.

It's good to see that you are aggressively attacking the debts, and are making maximum contributions to your tax-advantaged accounts.


cf_murph wrote:
Sun May 13, 2018 10:50 pm
Tax Filing Status: Married filing joint with 2 dependent children
Tax Rate: Do not recall. 30-ish? (Combined income at or over 300k, depending on the year)
Here are calculators you can use to estimate your federal tax bracket. First estimate your "taxable income". money chimp, "Tax Calculator". Then use your "taxable income" estimate your "tax bracket". Moneychimp, "Federal Tax Brackets".


cf_murph wrote:
Sun May 13, 2018 10:50 pm
Age: 36
Desired Asset allocation: 85% stocks / 15% bonds (or 80/20, I’m open to discussion, but lean towards being more aggressive given my longer timeframe)
Desired International allocation: 20% to 25% of stocks (or whatever is recommended)
Your desired bond allocation is very nearly what I would suggest. At age 36 I suggest about 20 - 25% in bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

In my opinion your 20-25% of stocks in international stocks is within the range of what is reasonable. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

cf_murph
Posts: 7
Joined: Sat Apr 07, 2018 7:10 pm

Re: Help simplifying 401k

Post by cf_murph » Tue May 15, 2018 3:09 pm

Updated with accurate tax bracket and spouse 401k. All the requested info should be there now. Thanks!

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