Empower 401k Investments

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Topic Author
sean55
Posts: 5
Joined: Tue Aug 01, 2017 9:00 pm

Empower 401k Investments

Post by sean55 » Sat Sep 08, 2018 12:36 pm

I am 28 years old and have $16,483 in this account. I am on pace to contribute $13,843 this year to this 401k account. I also have 17,113.11 in a Vanguard Roth IRA maxing in 2018.I am considering splitting investments with Columbia small cap index A, Columbia mid cap index A, and Columbia large cap index A to cut down on fees and increase account performance. What do you think?

Here is my current allocation:

SWP(Employer Initials) Aggressive Model
29.00% American Funds EuroPacific Gr R3 International Funds RERCX 1.13
9.00% Oppenheimer Developing Markets A International Funds ODMAX 1.32
9.00% Columbia Small Cap Index A Small Cap Funds NMSAX .45
9.00% Columbia Mid Cap Index A Mid Cap Funds NTIAX .45
10.00% American Funds Growth Fund of Amer R3 Large Cap Funds RGACX .98
9.00% American Funds Washington Mutual R3 Large Cap Funds RWMCX .94
20.00% Columbia Large Cap Index A Large Cap Funds NEIAX .45
5.00% JHancock Income A Bond JHFIX .81

Other available investments:
Invesco Equity & Income AACEIX .8
American Funds Bond Fund of America R3 RBFCX .91

Potential investment:

6% Columbia small cap A NMSAX .45
11% Columbia mid cap A NTIAX .45
83% Columbia large cap A NEIAX .45

Sean
Last edited by sean55 on Sun Sep 09, 2018 7:26 am, edited 8 times in total.

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ruralavalon
Posts: 17406
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help with Empower 401k Investments

Post by ruralavalon » Sat Sep 08, 2018 1:10 pm

Welcome to the forum :) .

More information is necessary.

Please add the ticker symbol and expense ratio for each fund you are using or planning to use, and also please list all funds offered in your 401k giving fund names, tickers and expense ratios. How much are you contributing annually? What is "SWP"? What is your age? Do you have other accounts?

You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place. Please see this for format: "Asking Portfolio Questions".

. . . . .

Don't spend much time looking at past performance, and don't use that as a criteria for fund selection. Short-term past performance is not a good predictor of future performance. Wiki article, "Callan periodic table of investment returns".That table shows annual returns for nine fund types ranked best to worst over the years 1999-2018 (20 years). There is no pattern, it is random.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: Empower 401k Investments

Post by gostars » Sat Sep 08, 2018 10:53 pm

NEIAX tracks the S&P 500, NTIAX tracks the S&P MidCap 400, and NMSAX tracks the S&P SmallCap 600 Index. To approximate total stock market weight weights, it would be 83% NEIAX, 11% NTIAX, and 6% NMSAX. Your proposed allocation heavily overweights mid and small caps. Some people like to tilt their portfolios this way, but you should be aware of the implications of that if you're going to do it.

Topic Author
sean55
Posts: 5
Joined: Tue Aug 01, 2017 9:00 pm

Re: Empower 401k Investments

Post by sean55 » Sun Sep 09, 2018 7:30 am

gostars wrote:
Sat Sep 08, 2018 10:53 pm
NEIAX tracks the S&P 500, NTIAX tracks the S&P MidCap 400, and NMSAX tracks the S&P SmallCap 600 Index. To approximate total stock market weight weights, it would be 83% NEIAX, 11% NTIAX, and 6% NMSAX. Your proposed allocation heavily overweights mid and small caps. Some people like to tilt their portfolios this way, but you should be aware of the implications of that if you're going to do it.
Thank you. I have updated the weights to reflect the approximate weighting of a total stock market fund.

gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: Empower 401k Investments

Post by gostars » Sun Sep 09, 2018 5:26 pm

Seems pretty reasonable given the otherwise poor fund choices. If you haven't already done so, check to see if your plan offers a self-directed brokerage account. I know some Empower plans have one available at Schwab, which gives you access to all of Schwab's ETFs and mutual funds without transaction fees or commissions, and just about anything else if you're willing to pay for it. That's often a much better deal than what is included in the base plan.

Topic Author
sean55
Posts: 5
Joined: Tue Aug 01, 2017 9:00 pm

Re: Empower 401k Investments

Post by sean55 » Sun Sep 09, 2018 6:33 pm

Unfortunately I am not seeing anything about a separate brokerage account in the summary plan description. Should I expect any fees with changing from my current investments to the new ones? Where would I find this information?

gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: Empower 401k Investments

Post by gostars » Sun Sep 09, 2018 7:15 pm

With the employer plan I have at Empower, there's a "Brokerage" link in the Investments section on the left side where all the other links are, and that takes you to a page with either sign-in links or enrollment documents, as appropriate.

Probably no fees, but you'd have to review each fund document to be sure. Class A funds have an upfront sales charge, but this is usually waived for 401k plans. Some funds will restrict your ability to buy more of a fund for a certain period of time if you sell it, which would also be detailed in the documents. If your planned funds have a restriction, it might be best to just be a little overweight on small caps, and adjust your future contributions to get back in to balance with new money, rather than selling a couple percent now (i.e. change to 80/11/9 now, and make your new contributions be 89/11/0 until you end up at 83/11/6).

Topic Author
sean55
Posts: 5
Joined: Tue Aug 01, 2017 9:00 pm

Re: Empower 401k Investments

Post by sean55 » Sun Sep 09, 2018 8:52 pm

Thank you. I have adjusted my 401k to 80/11/9 and changed future allocation to 89/11/0. Then when it hits 83/11/6 I will change my future contributions to keep it in line.

mariezzz
Posts: 847
Joined: Mon Oct 02, 2017 11:02 pm

Re: Empower 401k Investments

Post by mariezzz » Sun Sep 09, 2018 11:42 pm

Could think about contacting your employer's retirement committee & ask them to provide lower fee options. They have an obligation to do that and not doing so exposes them to the risk of lawsuits, if such high fee options cannot be justified.

Are you likely to switch jobs in a year or two? If yes, you could just stay quiet, but the options you've been given are pretty weak.

I'd get rid of anything with an expense ratio over .5 and use your IRA to provide lower fee options in whatever category your 401k only has high fees.

Topic Author
sean55
Posts: 5
Joined: Tue Aug 01, 2017 9:00 pm

Re: Empower 401k Investments

Post by sean55 » Mon Sep 10, 2018 4:51 pm

I do know the plan administrator. I will mention it to him.
mariezzz wrote:
Sun Sep 09, 2018 11:42 pm
I'd get rid of anything with an expense ratio over .5
The plan will cut out all those high expense ratios. 83% NEIAX, 11% NTIAX, and 6% NMSAX. All .45 expense ratios.

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