ADP 401K Funds Recommendations

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glmtd
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Joined: Wed Jul 11, 2018 10:20 am

ADP 401K Funds Recommendations

Post by glmtd » Wed Jul 11, 2018 10:30 am

Hello, I am new to this forum. I would like to get some advice on how best to allocate my 401K investing, I've attached a link with available to me ADP funds and expense ratios. I am 31 and contributing 3% of my salary. My company match is 3%. Currently I have just over 12k allocated to State Street S&P 500 Index Securities Lending Series Fund - Class IX. Thanks in advance!

https://imgur.com/KpEVGWw

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ofcmetz
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Location: Louisiana

Re: ADP 401K Funds Recommendations

Post by ofcmetz » Wed Jul 11, 2018 12:04 pm

You need to determine what your preferred asset allocation is. That means how much you want in equity (stock) funds vs how much in fixed income. Also decide how much of your equity funds should be international if any. If you just picked the four funds I list below and put 25% in each, then you'd be doing better than most.

The four funds I'd use if it was me are the lowest cost S&P 500 fund (Large US equity), the small cap index (small cap equity), the international index (International equity), and the PIMCO Bond fund (fixed income).

As an aside, I would definitely shoot to increase your rate of contribution. 3% is nice because you get the full match, but you should try to get to 15 or 20% at some point by saving large parts of future raises or by any other means.
Never underestimate the power of the force of low cost index funds.

fz583
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Joined: Thu Jan 14, 2016 2:50 pm

Re: ADP 401K Funds Recommendations

Post by fz583 » Wed Jul 11, 2018 7:49 pm

It is what it is but those are some stiff expense ratio's, I also have ADP as my 401k provider unfortunately and mine are nowhere near those.

ExitStageLeft
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Joined: Sat Jan 20, 2018 4:02 pm

Re: ADP 401K Funds Recommendations

Post by ExitStageLeft » Wed Jul 11, 2018 7:50 pm

Welcome to the forum!

If you haven't yet explored the Boglehead wiki page, you can Start Here. One of the pages you should definitely review is the one on Proritizing Investments. You've got the first part down cold, contibuting to your 401k to get the full employer match available. The next step is to contribute to an individual retirement account (IRA). If you don't yet have one, you can set one up very easily with any bank or brokerage firm.

I recommend Vanguard, but Fidelity and Schwab are also very popular among forum participants because they provide excellent service and a reasonable collection of low-cost indexed funds. Hopefully you can open and contribute to an IRA this year. It will be an excellent way to complement your 401k with funds that have much lower expense ratios.

Once you have that IRA active, you can contribute and purchase mutual funds that, together with your 401k assets, form a portfolio that matches your need, willingness, and ability to invest in risker stock funds versus the lower risk (and lower reward) bond funds.

Grt2bOutdoors
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Location: New York

Re: ADP 401K Funds Recommendations

Post by Grt2bOutdoors » Wed Jul 11, 2018 7:53 pm

glmtd wrote:
Wed Jul 11, 2018 10:30 am
Hello, I am new to this forum. I would like to get some advice on how best to allocate my 401K investing, I've attached a link with available to me ADP funds and expense ratios. I am 31 and contributing 3% of my salary. My company match is 3%. Currently I have just over 12k allocated to State Street S&P 500 Index Securities Lending Series Fund - Class IX. Thanks in advance!

https://imgur.com/KpEVGWw
Use the Nationwide S&P 500 Index fund and save 0.11 in expenses, continue using the State Street Fund and you will pay 0.11 more.
Choose the lower expense ratio fund - they are both the same, except one costs 16% less.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

averagedude
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Re: ADP 401K Funds Recommendations

Post by averagedude » Wed Jul 11, 2018 8:10 pm

i am sorry but i am not going to give you any advice. I am going to instead complain on your part for such a sorry job that the trustees done on developing this 401k fund. Sometimes i wonder if the owner of this business is getting kickbacks on this plan. If so, something should be done about this. I thought that the trustees of 401k plans had a fiduciary duty to have the best interest of their employees when developing a plan. If i was a judge, and plaintiffs like you presented a case on the fiduciary duties of their employers to do the best thing for the interest of their employees, i would side with the employees. Surely an employer can at least offer an array of target date funds with expense ratios under 0.30%. Of course you have to take the free money, and get the match. If it was me, i would write a letter to the owner or CEO, and appreciate them for offering a 401K, but ask them if they could do a better job of offering better investment choices. I would even offer to become a trustee, free of charge. Hell, i would even offer to pay the transportation expenses for myself to become a trustee to help out current and future employees of this firm.

ExitStageLeft
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Joined: Sat Jan 20, 2018 4:02 pm

Re: ADP 401K Funds Recommendations

Post by ExitStageLeft » Wed Jul 11, 2018 8:32 pm

Grt2bOutdoors wrote:
Wed Jul 11, 2018 7:53 pm
Use the Nationwide S&P 500 Index fund and save 0.11 in expenses, continue using the State Street Fund and you will pay 0.11 more.
Choose the lower expense ratio fund - they are both the same, except one costs 16% less.
I'm not sure that is necessarily a given that the Nationwide fund is better. According to Morningstar GRMAX has a 5.75% front load. I assume that is skimmed off the top when shares are purchased.

https://www.morningstar.com/funds/xnas/grmax/quote.html

rgs92
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Re: ADP 401K Funds Recommendations

Post by rgs92 » Wed Jul 11, 2018 8:48 pm

Those are high expense ratios and it's pretty shameful for a large established company like ADP to be making money off the 401K in this way.
Your best bet is to put in just enough to get the match in the Nationwide S&P500 fund at the .59% ER.

Then put extra money on your own into Roth or Traditional IRAs on your own (or even taxable accounts) at Vanguard or Fidelity or Schwab with rock-bottom expenses.

Good luck to you.

Flyer24
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Re: ADP 401K Funds Recommendations

Post by Flyer24 » Wed Jul 11, 2018 11:28 pm

The more important part is how much you are saving. You need to put at least 15% of your salary.

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