Help with 401k fund choice please!

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anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Help with 401k fund choice please!

Post by anthonyphamy » Tue Oct 02, 2018 12:22 am

29yo looking for advice on 401k fund choice. Currently, my portfolio is below:

Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio

Roth IRA:
1. Vanguard LifeStrategy Growth Fund Investor Shares VASGX (ER 0.14%) 12.3% of portfolio
2. Vanguard Total Stock Market Index Fund Admiral Shares VTSAX (ER 0.04%) 13.3% of portfolio
3. Vanguard Federal Money Market Fund 7.4% of portfolio

401K:
1. KP Retirement Path 2055 Fund KPRIX (ER 0.45%) 60% of portfolio

I am thinking about switching from the KP 2055 fund in my 401k to a fund with a lower ER. Recommendations?

Balanced Funds:
Vanguard Wellington Fund Admiral Shares (ER 0.17%)

Bond Funds:
Vanguard Total Bond Market Index Fund Institutional Plus Shares (ER (0.03%)

Domestic Stock Funds:
Alger Capital Appreciation Fund Class Z
KP Small Cap Equity Fund Institutional Shares
Vanguard FTSE Social Index Fund Institutional Shares (0.12%)
Vanguard Institutional Total Stock Market Index Fund Institutional Plus Shares (0.02%)
Vanguard PRIMECAP Fund Admiral Shares (0.32%)
Vanguard Value Index Fund Institutional Shares (ER 0.04%)

International Stock Funds:
T. Rowe Price International Discovery Fund I Class (ER 1.19%)
Vanguard International Growth Fund Admiral Shares (ER 0.32%)

I would greatly appreciate any guidance and advice. I can provide more information/numbers if that is helpful!

Thank you very much in advance.
Last edited by anthonyphamy on Thu Oct 04, 2018 8:22 pm, edited 2 times in total.

billfromct
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Joined: Tue Dec 03, 2013 9:05 am

Re: Help with 401k fund choice please!

Post by billfromct » Tue Oct 02, 2018 4:17 am

You will get more responses if you include the mutual fund name & expense ratio (ER).

Not too many people on this site have memorized the thousands of mutual fund ticker symbols.

bill

ShowMeTheER
Posts: 374
Joined: Mon May 24, 2010 9:12 am

Re: Help with 401k fund choice please!

Post by ShowMeTheER » Tue Oct 02, 2018 5:12 am

VITPX plus VBMPX. 90/10 split.

JW-Retired
Posts: 6907
Joined: Sun Dec 16, 2007 12:25 pm

Re: Help with 401k fund choice please!

Post by JW-Retired » Tue Oct 02, 2018 8:07 am

anthonyphamy wrote:
Tue Oct 02, 2018 12:22 am
29yo looking for advice on 401k fund choice. Currently I have all my funds in KP Retirement Path 2055 Fund (ER 0.45%), but am thinking about moving them to a fund with a lower ER. My options are below:

Balanced Funds:
VWENX

Bond Funds:
VBMPX

Domestic Stock Funds:
ACAZX
KPSCX
VFTNX
VITPX
VPMAX
VIVIX

International Stock Funds:
TIDDX
VWILX
You need to tell us all the ERs in your 401k information. ERs we can get on the internet for individual investors are rarely the same and frequently much lower than in a 401k.
JW
Retired at Last

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Tue Oct 02, 2018 8:19 am

billfromct wrote:
Tue Oct 02, 2018 4:17 am
You will get more responses if you include the mutual fund name & expense ratio (ER).

Not too many people on this site have memorized the thousands of mutual fund ticker symbols.

bill
Thank you for the feedback. I updated original post!

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UpsetRaptor
Posts: 198
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Re: Help with 401k fund choice please!

Post by UpsetRaptor » Tue Oct 02, 2018 8:26 am

At 29, I'd go 100% VITPX and call it a day.

retiredjg
Posts: 33822
Joined: Thu Jan 10, 2008 12:56 pm

Re: Help with 401k fund choice please!

Post by retiredjg » Tue Oct 02, 2018 9:12 am

I'd hold 500 Index (institutional index) and the bond fund in the 401k and a total international Index in the Roth IRA. Your choices for international in the 401k are not as good as what you can hold in Roth IRA.

I like target funds, but you can get a pretty significant drop in cost by changing to the individual funds. It seems small, but over time that much of a cost difference will add up. If you are leaving this company in a year, it probably doesn't matter much - the target fund is probably OK.

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Tue Oct 02, 2018 11:29 pm

retiredjg wrote:
Tue Oct 02, 2018 9:12 am
I'd hold 500 Index (institutional index) and the bond fund in the 401k and a total international Index in the Roth IRA. Your choices for international in the 401k are not as good as what you can hold in Roth IRA.

I like target funds, but you can get a pretty significant drop in cost by changing to the individual funds. It seems small, but over time that much of a cost difference will add up. If you are leaving this company in a year, it probably doesn't matter much - the target fund is probably OK.
Thank you for the recommendation. I plan on staying with the company for at least 5 years, so I am open to switching from the target fund. How much split would you recommend? 1/3 domestic stock, 1/3 international stock, and 1/3 bond as many recommend?

HEDGEFUNDIE
Posts: 847
Joined: Sun Oct 22, 2017 2:06 pm

Re: Help with 401k fund choice please!

Post by HEDGEFUNDIE » Tue Oct 02, 2018 11:33 pm

anthonyphamy wrote:
Tue Oct 02, 2018 11:29 pm
retiredjg wrote:
Tue Oct 02, 2018 9:12 am
I'd hold 500 Index (institutional index) and the bond fund in the 401k and a total international Index in the Roth IRA. Your choices for international in the 401k are not as good as what you can hold in Roth IRA.

I like target funds, but you can get a pretty significant drop in cost by changing to the individual funds. It seems small, but over time that much of a cost difference will add up. If you are leaving this company in a year, it probably doesn't matter much - the target fund is probably OK.
Thank you for the recommendation. I plan on staying with the company for at least 5 years, so I am open to switching from the target fund. How much split would you recommend? 1/3 domestic stock, 1/3 international stock, and 1/3 bond as many recommend?
Who recommends splitting AA into thirds like this?

You are 29, 33% bonds is too conservative. I would recommend 60% US stock, 30% international stock, 10% bonds.

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Wed Oct 03, 2018 12:32 am

HEDGEFUNDIE wrote:
Tue Oct 02, 2018 11:33 pm
anthonyphamy wrote:
Tue Oct 02, 2018 11:29 pm
retiredjg wrote:
Tue Oct 02, 2018 9:12 am
I'd hold 500 Index (institutional index) and the bond fund in the 401k and a total international Index in the Roth IRA. Your choices for international in the 401k are not as good as what you can hold in Roth IRA.

I like target funds, but you can get a pretty significant drop in cost by changing to the individual funds. It seems small, but over time that much of a cost difference will add up. If you are leaving this company in a year, it probably doesn't matter much - the target fund is probably OK.
Thank you for the recommendation. I plan on staying with the company for at least 5 years, so I am open to switching from the target fund. How much split would you recommend? 1/3 domestic stock, 1/3 international stock, and 1/3 bond as many recommend?
Who recommends splitting AA into thirds like this?

You are 29, 33% bonds is too conservative. I would recommend 60% US stock, 30% international stock, 10% bonds.
Thank you very much for clarifying!

retiredjg
Posts: 33822
Joined: Thu Jan 10, 2008 12:56 pm

Re: Help with 401k fund choice please!

Post by retiredjg » Wed Oct 03, 2018 6:26 am

HEDGEFUNDIE wrote:
Tue Oct 02, 2018 11:33 pm
You are 29, 33% bonds is too conservative. I would recommend 60% US stock, 30% international stock, 10% bonds.
The target 2055 fund you are currently using is probably close to this allocation mentioned by HEDGEFUNDIE.

I like a little more in bonds, even for young people. I'd suggest something like 55 US, 25 International, and 20% bonds.

As you can see, there are a lot of good choices.

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Wed Oct 03, 2018 8:56 am

retiredjg wrote:
Wed Oct 03, 2018 6:26 am
HEDGEFUNDIE wrote:
Tue Oct 02, 2018 11:33 pm
You are 29, 33% bonds is too conservative. I would recommend 60% US stock, 30% international stock, 10% bonds.
The target 2055 fund you are currently using is probably close to this allocation mentioned by HEDGEFUNDIE.

I like a little more in bonds, even for young people. I'd suggest something like 55 US, 25 International, and 20% bonds.

As you can see, there are a lot of good choices.
Sounds good, thank you for clarifying. From what I've read here, I'm still pretty unclear the best place to put bonds. Can you please clarify?

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ruralavalon
Posts: 13931
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help with 401k fund choice please!

Post by ruralavalon » Wed Oct 03, 2018 9:08 am

You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
Posts: 33822
Joined: Thu Jan 10, 2008 12:56 pm

Re: Help with 401k fund choice please!

Post by retiredjg » Wed Oct 03, 2018 9:35 am

anthonyphamy wrote:
Wed Oct 03, 2018 8:56 am
retiredjg wrote:
Wed Oct 03, 2018 6:26 am
HEDGEFUNDIE wrote:
Tue Oct 02, 2018 11:33 pm
You are 29, 33% bonds is too conservative. I would recommend 60% US stock, 30% international stock, 10% bonds.
The target 2055 fund you are currently using is probably close to this allocation mentioned by HEDGEFUNDIE.

I like a little more in bonds, even for young people. I'd suggest something like 55 US, 25 International, and 20% bonds.

As you can see, there are a lot of good choices.
Sounds good, thank you for clarifying. From what I've read here, I'm still pretty unclear the best place to put bonds. Can you please clarify?
A 401k is always a good place to put bonds.

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Wed Oct 03, 2018 11:06 pm

ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Wed Oct 03, 2018 11:07 pm

retiredjg wrote:
Wed Oct 03, 2018 9:35 am
anthonyphamy wrote:
Wed Oct 03, 2018 8:56 am
retiredjg wrote:
Wed Oct 03, 2018 6:26 am
HEDGEFUNDIE wrote:
Tue Oct 02, 2018 11:33 pm
You are 29, 33% bonds is too conservative. I would recommend 60% US stock, 30% international stock, 10% bonds.
The target 2055 fund you are currently using is probably close to this allocation mentioned by HEDGEFUNDIE.

I like a little more in bonds, even for young people. I'd suggest something like 55 US, 25 International, and 20% bonds.

As you can see, there are a lot of good choices.
Sounds good, thank you for clarifying. From what I've read here, I'm still pretty unclear the best place to put bonds. Can you please clarify?
A 401k is always a good place to put bonds.
Thank you for clarifying.

HEDGEFUNDIE
Posts: 847
Joined: Sun Oct 22, 2017 2:06 pm

Re: Help with 401k fund choice please!

Post by HEDGEFUNDIE » Wed Oct 03, 2018 11:20 pm

anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
As you probably already know the BH philosophy is to invest in passively managed index funds. VPMAX is an actively managed fund, PRIMECAP actively picks the stocks that they think will outperform. So far, for the past 17 years, they have succeeded tremendously.

Whether you think this track record will continue is up to you. Personally I would be excited to have the option to invest in this fund, but unfortunately it’s not available in any of my 401ks.

One thing to note about VPMAX is that it’s only large stocks. You may want to add a small cap fund in your IRA or taxable account to more closely track the Total Market.

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Thu Oct 04, 2018 1:12 am

HEDGEFUNDIE wrote:
Wed Oct 03, 2018 11:20 pm
anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
As you probably already know the BH philosophy is to invest in passively managed index funds. VPMAX is an actively managed fund, PRIMECAP actively picks the stocks that they think will outperform. So far, for the past 17 years, they have succeeded tremendously.

Whether you think this track record will continue is up to you. Personally I would be excited to have the option to invest in this fund, but unfortunately it’s not available in any of my 401ks.

One thing to note about VPMAX is that it’s only large stocks. You may want to add a small cap fund in your IRA or taxable account to more closely track the Total Market.
Would it be appropriate to have both VPMAX and VITPX?

HEDGEFUNDIE
Posts: 847
Joined: Sun Oct 22, 2017 2:06 pm

Re: Help with 401k fund choice please!

Post by HEDGEFUNDIE » Thu Oct 04, 2018 1:18 am

anthonyphamy wrote:
Thu Oct 04, 2018 1:12 am
HEDGEFUNDIE wrote:
Wed Oct 03, 2018 11:20 pm
anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
As you probably already know the BH philosophy is to invest in passively managed index funds. VPMAX is an actively managed fund, PRIMECAP actively picks the stocks that they think will outperform. So far, for the past 17 years, they have succeeded tremendously.

Whether you think this track record will continue is up to you. Personally I would be excited to have the option to invest in this fund, but unfortunately it’s not available in any of my 401ks.

One thing to note about VPMAX is that it’s only large stocks. You may want to add a small cap fund in your IRA or taxable account to more closely track the Total Market.
Would it be appropriate to have both VPMAX and VITPX?
There will be overlap in holdings but as long as the two funds combined don’t exceed 60% (or whatever proportion you choose your US large cap stocks to be as part of your portfolio), I don’t see anything wrong with that.

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ruralavalon
Posts: 13931
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help with 401k fund choice please!

Post by ruralavalon » Thu Oct 04, 2018 9:00 am

anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
You could use Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%. It is a good actively managed, large-cap U.S. stock fund with a fairly low expense ratio.

My preference is for a good index fund over a good actively managed fund, also Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% is more diversified with stocks of mid-cap and small-cap companies in addition to stocks of large-cap companies.

And, yes you could use both for parts of that 60% for U.S. stocks.

How much are you contributing annually to your 401k? How much do you contribute annually to your Roth IRA? Do you have any other investing/retirement accounts like a taxable brokerage account, and how much do you contribute annually to other accounts?

At age 29 keeping a high contribution rate is more important than just about anything else you can do in investing.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Thu Oct 04, 2018 9:23 am

HEDGEFUNDIE wrote:
Thu Oct 04, 2018 1:18 am
anthonyphamy wrote:
Thu Oct 04, 2018 1:12 am
HEDGEFUNDIE wrote:
Wed Oct 03, 2018 11:20 pm
anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
As you probably already know the BH philosophy is to invest in passively managed index funds. VPMAX is an actively managed fund, PRIMECAP actively picks the stocks that they think will outperform. So far, for the past 17 years, they have succeeded tremendously.

Whether you think this track record will continue is up to you. Personally I would be excited to have the option to invest in this fund, but unfortunately it’s not available in any of my 401ks.

One thing to note about VPMAX is that it’s only large stocks. You may want to add a small cap fund in your IRA or taxable account to more closely track the Total Market.
Would it be appropriate to have both VPMAX and VITPX?
There will be overlap in holdings but as long as the two funds combined don’t exceed 60% (or whatever proportion you choose your US large cap stocks to be as part of your portfolio), I don’t see anything wrong with that.
Thanks!

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Thu Oct 04, 2018 9:25 am

ruralavalon wrote:
Thu Oct 04, 2018 9:00 am
anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
You could use Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%. It is a good actively managed, large-cap U.S. stock fund with a fairly low expense ratio.

My preference is for a good index fund over a good actively managed fund, also Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% is more diversified with stocks of mid-cap and small-cap companies in addition to stocks of large-cap companies.

And, yes you could use both for parts of that 60% for U.S. stocks.

How much are you contributing annually to your 401k? How much do you contribute annually to your Roth IRA? Do you have any other investing/retirement accounts like a taxable brokerage account, and how much do you contribute annually to other accounts?

At age 29 keeping a high contribution rate is more important than just about anything else you can do in investing.
I am maxing 401k contribution and maxing backdoor Roth IRA. Currently I have $5,000 in taxable brokerage account in bond ETF, but I plan on saving that for a down payment for a condo in the next year or two. I Don't have any other accounts that I contribute annually. Any recommendations?

User avatar
ruralavalon
Posts: 13931
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help with 401k fund choice please!

Post by ruralavalon » Thu Oct 04, 2018 9:40 am

anthonyphamy wrote:
Thu Oct 04, 2018 9:25 am
ruralavalon wrote:
Thu Oct 04, 2018 9:00 am
anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
You could use Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%. It is a good actively managed, large-cap U.S. stock fund with a fairly low expense ratio.

My preference is for a good index fund over a good actively managed fund, also Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% is more diversified with stocks of mid-cap and small-cap companies in addition to stocks of large-cap companies.

And, yes you could use both for parts of that 60% for U.S. stocks.

How much are you contributing annually to your 401k? How much do you contribute annually to your Roth IRA? Do you have any other investing/retirement accounts like a taxable brokerage account, and how much do you contribute annually to other accounts?

At age 29 keeping a high contribution rate is more important than just about anything else you can do in investing.
I am maxing 401k contribution and maxing backdoor Roth IRA. Currently I have $5,000 in taxable brokerage account in bond ETF, but I plan on saving that for a down payment for a condo in the next year or two. I Don't have any other accounts that I contribute annually. Any recommendations?
What are the relative sizes of your two retirement accounts, in other words what percentage of the total is in each account? What fund firm or brokerage is your Roth IRA with? What investments do you have in your Roth IRA? Please give fund names, tickers and expense ratios.

It's often better to coordinate investments among all retirement accounts treating all accounts together as a single unified portfolio, rather than view each account separately.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Thu Oct 04, 2018 8:21 pm

ruralavalon wrote:
Thu Oct 04, 2018 9:40 am
anthonyphamy wrote:
Thu Oct 04, 2018 9:25 am
ruralavalon wrote:
Thu Oct 04, 2018 9:00 am
anthonyphamy wrote:
Wed Oct 03, 2018 11:06 pm
ruralavalon wrote:
Wed Oct 03, 2018 9:08 am
You have excellent funds offered in your 401k, you are fortunate :) .

At age 29 I suggest:
1) 60%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%;
2) 20%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
3) 20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%
Thank you for the breakdown. I've noticed that VPMAX has outperformed the total stock market in previous years. Although higher ER, what are your thoughts on including VPMAX?
You could use Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%. It is a good actively managed, large-cap U.S. stock fund with a fairly low expense ratio.

My preference is for a good index fund over a good actively managed fund, also Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% is more diversified with stocks of mid-cap and small-cap companies in addition to stocks of large-cap companies.

And, yes you could use both for parts of that 60% for U.S. stocks.

How much are you contributing annually to your 401k? How much do you contribute annually to your Roth IRA? Do you have any other investing/retirement accounts like a taxable brokerage account, and how much do you contribute annually to other accounts?

At age 29 keeping a high contribution rate is more important than just about anything else you can do in investing.
I am maxing 401k contribution and maxing backdoor Roth IRA. Currently I have $5,000 in taxable brokerage account in bond ETF, but I plan on saving that for a down payment for a condo in the next year or two. I Don't have any other accounts that I contribute annually. Any recommendations?
What are the relative sizes of your two retirement accounts, in other words what percentage of the total is in each account? What fund firm or brokerage is your Roth IRA with? What investments do you have in your Roth IRA? Please give fund names, tickers and expense ratios.

It's often better to coordinate investments among all retirement accounts treating all accounts together as a single unified portfolio, rather than view each account separately.
Thank you for the insight! All my savings are with Vanguard as below. I'm not quite sure which fund to put my monies in the money market into yet.

Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio

Roth IRA:
1. Vanguard LifeStrategy Growth Fund Investor Shares VASGX (ER 0.14%) 12.3% of portfolio
2. Vanguard Total Stock Market Index Fund Admiral Shares VTSAX (ER 0.04%) 13.3% of portfolio
3. Vanguard Federal Money Market Fund 7.4% of portfolio

401K:
1. KP Retirement Path 2055 Fund KPRIX (ER 0.45%) 60% of portfolio

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ruralavalon
Posts: 13931
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help with 401k fund choice please!

Post by ruralavalon » Fri Oct 05, 2018 10:56 am

anthonyphamy wrote:
Tue Oct 02, 2018 12:22 am
29yo looking for advice on 401k fund choice. Currently, my portfolio is below:

Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio

Roth IRA:
1. Vanguard LifeStrategy Growth Fund Investor Shares VASGX (ER 0.14%) 12.3% of portfolio
2. Vanguard Total Stock Market Index Fund Admiral Shares VTSAX (ER 0.04%) 13.3% of portfolio
3. Vanguard Federal Money Market Fund 7.4% of portfolio

401K:
1. KP Retirement Path 2055 Fund KPRIX (ER 0.45%) 60% of portfolio

I am thinking about switching from the KP 2055 fund in my 401k to a fund with a lower ER. Recommendations?

Balanced Funds:
Vanguard Wellington Fund Admiral Shares (ER 0.17%)

Bond Funds:
Vanguard Total Bond Market Index Fund Institutional Plus Shares (ER (0.03%)

Domestic Stock Funds:
Alger Capital Appreciation Fund Class Z
KP Small Cap Equity Fund Institutional Shares
Vanguard FTSE Social Index Fund Institutional Shares (0.12%)
Vanguard Institutional Total Stock Market Index Fund Institutional Plus Shares (0.02%)
Vanguard PRIMECAP Fund Admiral Shares (0.32%)
Vanguard Value Index Fund Institutional Shares (ER 0.04%)

International Stock Funds:
T. Rowe Price International Discovery Fund I Class (ER 1.19%)
Vanguard International Growth Fund Admiral Shares (ER 0.32%)

I would greatly appreciate any guidance and advice. I can provide more information/numbers if that is helpful!

Thank you very much in advance.

Taxable account and saving for condo.
anthonyphamy wrote:
Tue Oct 02, 2018 12:22 am
Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio
anthonyphamy wrote:
Thu Oct 04, 2018 9:25 am
Currently I have $5,000 in taxable brokerage account in bond ETF, but I plan on saving that for a down payment for a condo in the next year or two. I Don't have any other accounts that I contribute annually. Any recommendations?
What is your tax bracket, both federal and state? What is your tax filing status? To what State do you pay any State income tax?

About how long until your expected condo purchase?

There may be better bond fund choices depending on your tax situation. Also a short-term bond fund may be a better idea for saving for a condo purchase. Another possibility is short-term CDs, for rates see www.bankrate.com.

Don't include your short-term savings, condo money, as part of the asset allocation for long-term/retirement investing.


Asset allocation for long-term/retirement investing.
At age 29 (for long-term/retirement investing) I suggest about 20% in bonds. This is expected to substantially reduce portfolio volatility (risk), with only a relatively slight decrease in portfolio 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".

I suggest around 20 - 30% of stocks in international stocks. 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). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).

That works out to about 20% bonds, 20% international stocks, and 60% domestic stocks for long-term retirement investing. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.


Fund selection for long-term/retirement investing.
In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

It is often better coordinate investments across all accounts, in other words treat all accounts together as a single unified portfolio, rather than view each account separately.

Start fund selection in the 401k, which has limited investment choices. Pick just 1-2 of the best funds offered in the 401k, and complete the asset allocation using the nearly unlimited choices available in your IRA. This lets you avoid having to use some of the less desirable funds offered in your 401k, such as the international stock funds offered in your 401k.


Domestic stocks.
In your 401k I suggest using Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% for domestic stocks.

Since you asked -- yes you could use Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%. It is a good actively managed, large-cap U.S. stock fund with a fairly low expense ratio. My preference is for a good index fund over a good actively managed fund, also Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% is more diversified with stocks of mid-cap and small-cap companies in addition to stocks of large-cap companies. You could use both for parts of that 60% for U.S. stocks.


International stocks.
In your Roth IRA I suggest using Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11% for international stocks. Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32% offered in your 401k is a good actively managed international stock fund, but is less diversified and has a higher expense ratio.


Bonds.
In your 401k I suggest using Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%. A bond fund is not very tax-efficient and is better placed in a tax-deferred account, preferably a tax-deferred account like your 401k.

In general In a Roth IRA prefer to use stock funds rather than bond funds. Withdrawals from a Roth IRA are tax free so you want the Roth IRA to grow as large as practical. Stock funds are expected to have a higher growth rarte than bonds.


To make portfolio management and rebalancing easy it is often better to have at least one large tax-advantaged account which contains all three basic asset types (bonds, international stocks, and domestic stocks). Don’t try to put all components of the asset allocation in every account.


Example portfolio for long-term/retirement investing.
Here is an example portfolio that you could consider. This is a three-fund type portfolio, modified as necessary to accommodate the fund offerings in your 401k. Current portfolio size = $71k. New annual contributions = about $24k + employer match??? The asset allocation is: 20% bonds; 20% international stocks; and 60% domestic stocks. The percentages given are percentages of the total portfolio, not of a given account. The suggestion is to switch both the existing balances and the new contributions to the funds indicated. All percentages and dollar amounts are rounded off, so may not add up exactly. Sometimes I state 00% to indicate funds you might want to add in the future.

401k (64% of portfolio; about $45k; add a $18.5k/year + employer match??? = about 77% of new annual contributions)
44%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%
(and/or Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%)
00%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%


Roth IRA (36% of portfolio; about $25k; adds $5.5k/year = about 23% of new annual contributions)
16%, Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%
20%, Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%.


Rebalancing.
Because the funds will grow at different and unpredictable rates, it may be necessary every few years to rebalance in order to maintain the desired asset allocation. Wiki article, "Rebalancing". You can easily adjust the asset allocation by exchanging between funds inside your 401k.

. . . . .

I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.

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

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Sun Oct 07, 2018 5:02 pm

ruralavalon wrote:
Fri Oct 05, 2018 10:56 am
anthonyphamy wrote:
Tue Oct 02, 2018 12:22 am
29yo looking for advice on 401k fund choice. Currently, my portfolio is below:

Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio

Roth IRA:
1. Vanguard LifeStrategy Growth Fund Investor Shares VASGX (ER 0.14%) 12.3% of portfolio
2. Vanguard Total Stock Market Index Fund Admiral Shares VTSAX (ER 0.04%) 13.3% of portfolio
3. Vanguard Federal Money Market Fund 7.4% of portfolio

401K:
1. KP Retirement Path 2055 Fund KPRIX (ER 0.45%) 60% of portfolio

I am thinking about switching from the KP 2055 fund in my 401k to a fund with a lower ER. Recommendations?

Balanced Funds:
Vanguard Wellington Fund Admiral Shares (ER 0.17%)

Bond Funds:
Vanguard Total Bond Market Index Fund Institutional Plus Shares (ER (0.03%)

Domestic Stock Funds:
Alger Capital Appreciation Fund Class Z
KP Small Cap Equity Fund Institutional Shares
Vanguard FTSE Social Index Fund Institutional Shares (0.12%)
Vanguard Institutional Total Stock Market Index Fund Institutional Plus Shares (0.02%)
Vanguard PRIMECAP Fund Admiral Shares (0.32%)
Vanguard Value Index Fund Institutional Shares (ER 0.04%)

International Stock Funds:
T. Rowe Price International Discovery Fund I Class (ER 1.19%)
Vanguard International Growth Fund Admiral Shares (ER 0.32%)

I would greatly appreciate any guidance and advice. I can provide more information/numbers if that is helpful!

Thank you very much in advance.

Taxable account and saving for condo.
anthonyphamy wrote:
Tue Oct 02, 2018 12:22 am
Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio
anthonyphamy wrote:
Thu Oct 04, 2018 9:25 am
Currently I have $5,000 in taxable brokerage account in bond ETF, but I plan on saving that for a down payment for a condo in the next year or two. I Don't have any other accounts that I contribute annually. Any recommendations?
What is your tax bracket, both federal and state? What is your tax filing status? To what State do you pay any State income tax?

About how long until your expected condo purchase?

There may be better bond fund choices depending on your tax situation. Also a short-term bond fund may be a better idea for saving for a condo purchase. Another possibility is short-term CDs, for rates see www.bankrate.com.

Don't include your short-term savings, condo money, as part of the asset allocation for long-term/retirement investing.


Asset allocation for long-term/retirement investing.
At age 29 (for long-term/retirement investing) I suggest about 20% in bonds. This is expected to substantially reduce portfolio volatility (risk), with only a relatively slight decrease in portfolio 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".

I suggest around 20 - 30% of stocks in international stocks. 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). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).

That works out to about 20% bonds, 20% international stocks, and 60% domestic stocks for long-term retirement investing. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.


Fund selection for long-term/retirement investing.
In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

It is often better coordinate investments across all accounts, in other words treat all accounts together as a single unified portfolio, rather than view each account separately.

Start fund selection in the 401k, which has limited investment choices. Pick just 1-2 of the best funds offered in the 401k, and complete the asset allocation using the nearly unlimited choices available in your IRA. This lets you avoid having to use some of the less desirable funds offered in your 401k, such as the international stock funds offered in your 401k.


Domestic stocks.
In your 401k I suggest using Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% for domestic stocks.

Since you asked -- yes you could use Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%. It is a good actively managed, large-cap U.S. stock fund with a fairly low expense ratio. My preference is for a good index fund over a good actively managed fund, also Vanguard Institutional Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02% is more diversified with stocks of mid-cap and small-cap companies in addition to stocks of large-cap companies. You could use both for parts of that 60% for U.S. stocks.


International stocks.
In your Roth IRA I suggest using Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11% for international stocks. Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32% offered in your 401k is a good actively managed international stock fund, but is less diversified and has a higher expense ratio.


Bonds.
In your 401k I suggest using Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%. A bond fund is not very tax-efficient and is better placed in a tax-deferred account, preferably a tax-deferred account like your 401k.

In general In a Roth IRA prefer to use stock funds rather than bond funds. Withdrawals from a Roth IRA are tax free so you want the Roth IRA to grow as large as practical. Stock funds are expected to have a higher growth rarte than bonds.


To make portfolio management and rebalancing easy it is often better to have at least one large tax-advantaged account which contains all three basic asset types (bonds, international stocks, and domestic stocks). Don’t try to put all components of the asset allocation in every account.


Example portfolio for long-term/retirement investing.
Here is an example portfolio that you could consider. This is a three-fund type portfolio, modified as necessary to accommodate the fund offerings in your 401k. Current portfolio size = $71k. New annual contributions = about $24k + employer match??? The asset allocation is: 20% bonds; 20% international stocks; and 60% domestic stocks. The percentages given are percentages of the total portfolio, not of a given account. The suggestion is to switch both the existing balances and the new contributions to the funds indicated. All percentages and dollar amounts are rounded off, so may not add up exactly. Sometimes I state 00% to indicate funds you might want to add in the future.

401k (64% of portfolio; about $45k; add a $18.5k/year + employer match??? = about 77% of new annual contributions)
44%, Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%
(and/or Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32%)
00%, Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32%; and
20%, Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%


Roth IRA (36% of portfolio; about $25k; adds $5.5k/year = about 23% of new annual contributions)
16%, Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%
20%, Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%.


Rebalancing.
Because the funds will grow at different and unpredictable rates, it may be necessary every few years to rebalance in order to maintain the desired asset allocation. Wiki article, "Rebalancing". You can easily adjust the asset allocation by exchanging between funds inside your 401k.

. . . . .

I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.

If you have any questions just ask.

I hope that this helps.
ruralavalon,

Thank you so very much for your very detailed, thoughtful, easy to follow analysis. I truly, greatly appreciate it! The detail very pleasantly surprised me and I am touched you put so much time and effort into it.

I'm not quite sure how to respond using quotes as aesthetically pleasing as you did, so I apologize I will do it as one chunk. To answer your questions:

1. Federal tax bracket for 2018 is 32%
2. State tax bracket is 9.3%
3. Tax filing status is single
4. I pay only California state income tax
5. I hope to purchase condo in the next 1-2 years

I actually sold the bond ETFs and put them into a high yield savings account with marcus by goldman sachs (1.9% currently), and plan to save for my down in that account. Thank you for the link to bankrate, I will refer to that website in the future I'm sure.

I really appreciate all the different snips of wisdom and advice. It will help me look at my retirement funds in a better more accurate light. I have previously read through those guides when I first found bogleheads, but re-reading it after following this forum for some time makes a lot more sense now. Thank you for the reminder. I agree and believe that a 20% bond allocation seems reasonable, as well as a 20% international and 60% domestic stocks. I would very much like to simplify my portfolio and follow your advice and tips. Thank you also for clarifying that bonds should be in tax-deferred and stocks in Roth. That was one of my questions, and you cleared it up. After playing with my portfolio a bit, I think I will have domestic stocks and bonds in my 401k account, and domestic stocks and international stocks in my IRA. If I add VWILX to the 401k, then my 401k will have all 3 basic asset types as you recommend.

Thank you for the example portfolio, that is very helpful, coincidentally very similar to how much I have saved monetary-wise which kind of spooked me.

6. My employer matches 7.25-8.25% depending on the company's performance.

I do note that you put 00% for VWILX. If you were to recommend putting some of my allocation into VWILX, I imagine it would come from the total 20% of international stock allocation, and if so how much of the 20% would you recommend to be put into VWILX. What benefits would there be to having a combination of VWILX and VTIAX?

Pending your response to the question above, and reading about benefits to passive indexes (albeit maybe biased by BH forum), I feel comfortable with the allocation below:

401k:
42% Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%
2% Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32% (I chose this amount, because I consider it to be fun money, which I remember reading somewhere that 5% of portfolio can be used for fun investments)
00% Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32% (to total no more than 20% of portfolio in addition to VTIAX)
20% Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%

Roth IRA:
16% Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%
20% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11% (to total no more than 20% of portfolio in addition to VWILX)

I will be cognizant of rebalancing as well as look into the book and morningstar recommendations you provided. Thank you so very much. Any book recommendations to start with?

A final question I'd like to ask is about mega backdoor roth potential. I recently found out that my company allows for in-service conversations, so I am thinking about contributing to that (approximately 16k annually). That would be converted to my roth IRA which I could put into VTSAX or VTIAX. Although this would mean less money towards saving for a down payment for a condo, I am considering it, as this would mean more money in roth IRA account. Thoughts?

Again, thank you so very much for all your time and efforts. I truly appreciate it.

User avatar
ruralavalon
Posts: 13931
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help with 401k fund choice please!

Post by ruralavalon » Mon Oct 08, 2018 2:33 pm

anthonyphamy wrote:
Tue Oct 02, 2018 12:22 am
Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio
anthonyphamy wrote:
Thu Oct 04, 2018 9:25 am
Currently I have $5,000 in taxable brokerage account in bond ETF, but I plan on saving that for a down payment for a condo in the next year or two. I Don't have any other accounts that I contribute annually. Any recommendations?
anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
I'm not quite sure how to respond using quotes as aesthetically pleasing as you did, so I apologize I will do it as one chunk. To answer your questions:

1. Federal tax bracket for 2018 is 32%
2. State tax bracket is 9.3%
3. Tax filing status is single
4. I pay only California state income tax
5. I hope to purchase condo in the next 1-2 years

I actually sold the bond ETFs and put them into a high yield savings account with marcus by goldman sachs (1.9% currently), and plan to save for my down in that account. Thank you for the link to bankrate, I will refer to that website in the future I'm sure.
I had been thinking in terms of possibly using tax-exempt funds, examples include:
Vanguard Limited-Term Tax-Exempt Fund Investor Shares (VMLTX) or Admiral Shares (VMLUX);
Vanguard Short-Term Tax-Exempt Fund Investor Shares (VWSTX) or Admiral Shares (VWSUX); and
Vanguard California Municipal Money Market Fund (VCTXX), current SEC Yield = 1.35%.

But the high yield savings account is reasonable in my opinion.


anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
I do note that you put 00% for VWILX. If you were to recommend putting some of my allocation into VWILX, I imagine it would come from the total 20% of international stock allocation, and if so how much of the 20% would you recommend to be put into VWILX. What benefits would there be to having a combination of VWILX and VTIAX?
I would not use any Vanguard International Growth Fund Admiral Shares (VWILX) at this time. It is less diversified than Vanguard Total International Stock Index Fund Admiral Shares (VTIAX), and has a higher expense ratio. With the level of contributions to your accounts, and the possible need for rebalancing purposes, it may be that in the future you will need to add some international stock fund to your 401k. I listed Vanguard International Growth Fund Admiral Shares (VWILX) as the best choice available in your 401k
.
anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
Pending your response to the question above, and reading about benefits to passive indexes (albeit maybe biased by BH forum), I feel comfortable with the allocation below:

401k:
42% Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%
2% Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32% (I chose this amount, because I consider it to be fun money, which I remember reading somewhere that 5% of portfolio can be used for fun investments)
00% Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32% (to total no more than 20% of portfolio in addition to VTIAX)
20% Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%

Roth IRA:
16% Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%
20% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11% (to total no more than 20% of portfolio in addition to VWILX)
In my opinion that is a reasonable portfolio for you.

2% Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32% is reasonable for "fun money".


anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
I will be cognizant of rebalancing as well as look into the book and morningstar recommendations you provided. Thank you so very much. Any book recommendations to start with?
My favorites include:
https://www.amazon.com/Bogleheads-Guide ... adswiki-20
https://www.amazon.com/All-About-Asset- ... adswiki-20
https://www.amazon.com/gp/product/00717 ... adswiki-20

anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
A final question I'd like to ask is about mega backdoor roth potential. I recently found out that my company allows for in-service conversations, so I am thinking about contributing to that (approximately 16k annually). That would be converted to my roth IRA which I could put into VTSAX or VTIAX. Although this would mean less money towards saving for a down payment for a condo, I am considering it, as this would mean more money in roth IRA account. Thoughts?
I know little about Mega Backdoor Roth IRAs, never used that procedure, and so I can't help you with that.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
Posts: 33822
Joined: Thu Jan 10, 2008 12:56 pm

Re: Help with 401k fund choice please!

Post by retiredjg » Mon Oct 08, 2018 3:09 pm

anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
A final question I'd like to ask is about mega backdoor roth potential. I recently found out that my company allows for in-service conversations, so I am thinking about contributing to that (approximately 16k annually). That would be converted to my roth IRA which I could put into VTSAX or VTIAX. Although this would mean less money towards saving for a down payment for a condo, I am considering it, as this would mean more money in roth IRA account. Thoughts?
Which do you want to do most? If you don't know, put $8k into each until the lightbulb goes off.

It is possible to use the mega back door roth money for the condo downpayment if you come up short. More discussion would be needed about how to make that happen correctly.

Roth withdrawals are complex. Keep up with how every penny gets into your Roth IRA. That probably means you need to go back and document all the money put in there so far.

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Thu Oct 11, 2018 9:22 am

ruralavalon wrote:
Mon Oct 08, 2018 2:33 pm
anthonyphamy wrote:
Tue Oct 02, 2018 12:22 am
Brokerage:
1. VANGUARD TOTAL BOND MARKET ETF BND (ER 0.05%) 3.3% of portfolio
2. VANGUARD TOTAL INTL BOND INDEX ETF BNDX (ER 0.11%) 3.3% of portfolio
anthonyphamy wrote:
Thu Oct 04, 2018 9:25 am
Currently I have $5,000 in taxable brokerage account in bond ETF, but I plan on saving that for a down payment for a condo in the next year or two. I Don't have any other accounts that I contribute annually. Any recommendations?
anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
I'm not quite sure how to respond using quotes as aesthetically pleasing as you did, so I apologize I will do it as one chunk. To answer your questions:

1. Federal tax bracket for 2018 is 32%
2. State tax bracket is 9.3%
3. Tax filing status is single
4. I pay only California state income tax
5. I hope to purchase condo in the next 1-2 years

I actually sold the bond ETFs and put them into a high yield savings account with marcus by goldman sachs (1.9% currently), and plan to save for my down in that account. Thank you for the link to bankrate, I will refer to that website in the future I'm sure.
I had been thinking in terms of possibly using tax-exempt funds, examples include:
Vanguard Limited-Term Tax-Exempt Fund Investor Shares (VMLTX) or Admiral Shares (VMLUX);
Vanguard Short-Term Tax-Exempt Fund Investor Shares (VWSTX) or Admiral Shares (VWSUX); and
Vanguard California Municipal Money Market Fund (VCTXX), current SEC Yield = 1.35%.

But the high yield savings account is reasonable in my opinion.


anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
I do note that you put 00% for VWILX. If you were to recommend putting some of my allocation into VWILX, I imagine it would come from the total 20% of international stock allocation, and if so how much of the 20% would you recommend to be put into VWILX. What benefits would there be to having a combination of VWILX and VTIAX?
I would not use any Vanguard International Growth Fund Admiral Shares (VWILX) at this time. It is less diversified than Vanguard Total International Stock Index Fund Admiral Shares (VTIAX), and has a higher expense ratio. With the level of contributions to your accounts, and the possible need for rebalancing purposes, it may be that in the future you will need to add some international stock fund to your 401k. I listed Vanguard International Growth Fund Admiral Shares (VWILX) as the best choice available in your 401k
.
anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
Pending your response to the question above, and reading about benefits to passive indexes (albeit maybe biased by BH forum), I feel comfortable with the allocation below:

401k:
42% Institutional Vanguard Total Stock Market Index Fund Institutional Plus (VITPX) ER 0.02%
2% Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32% (I chose this amount, because I consider it to be fun money, which I remember reading somewhere that 5% of portfolio can be used for fun investments)
00% Vanguard International Growth Fund Admiral Shares (VWILX) ER 0.32% (to total no more than 20% of portfolio in addition to VTIAX)
20% Vanguard Total Bond Market Index Fund Institutional (VBTIX) ER 0.03%

Roth IRA:
16% Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%
20% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11% (to total no more than 20% of portfolio in addition to VWILX)
In my opinion that is a reasonable portfolio for you.

2% Vanguard PRIMECAP Admiral Shares (VPMAX) ER 0.32% is reasonable for "fun money".


anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
I will be cognizant of rebalancing as well as look into the book and morningstar recommendations you provided. Thank you so very much. Any book recommendations to start with?
My favorites include:
https://www.amazon.com/Bogleheads-Guide ... adswiki-20
https://www.amazon.com/All-About-Asset- ... adswiki-20
https://www.amazon.com/gp/product/00717 ... adswiki-20

anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
A final question I'd like to ask is about mega backdoor roth potential. I recently found out that my company allows for in-service conversations, so I am thinking about contributing to that (approximately 16k annually). That would be converted to my roth IRA which I could put into VTSAX or VTIAX. Although this would mean less money towards saving for a down payment for a condo, I am considering it, as this would mean more money in roth IRA account. Thoughts?
I know little about Mega Backdoor Roth IRAs, never used that procedure, and so I can't help you with that.
Thank you very much for all your help and thoughts! IF you don't mind another question, what are the benefits of using a tax-exempt fund vs a high yield savings account?

anthonyphamy
Posts: 20
Joined: Sun Aug 05, 2018 8:59 pm

Re: Help with 401k fund choice please!

Post by anthonyphamy » Thu Oct 11, 2018 9:23 am

retiredjg wrote:
Mon Oct 08, 2018 3:09 pm
anthonyphamy wrote:
Sun Oct 07, 2018 5:02 pm
A final question I'd like to ask is about mega backdoor roth potential. I recently found out that my company allows for in-service conversations, so I am thinking about contributing to that (approximately 16k annually). That would be converted to my roth IRA which I could put into VTSAX or VTIAX. Although this would mean less money towards saving for a down payment for a condo, I am considering it, as this would mean more money in roth IRA account. Thoughts?
Which do you want to do most? If you don't know, put $8k into each until the lightbulb goes off.

It is possible to use the mega back door roth money for the condo downpayment if you come up short. More discussion would be needed about how to make that happen correctly.

Roth withdrawals are complex. Keep up with how every penny gets into your Roth IRA. That probably means you need to go back and document all the money put in there so far.
Thank you for the idea! Sounds like the mega-back door roth is pretty complicated.

retiredjg
Posts: 33822
Joined: Thu Jan 10, 2008 12:56 pm

Re: Help with 401k fund choice please!

Post by retiredjg » Thu Oct 11, 2018 9:46 am

The mega back door Roth maneuver is not very complicated. Roth withdrawals are complicated though. If you don't have good records of how money got into Roth, it is hard to figure out what you can take out before age 59.5 if you should want to.

All in all, it is a great way to get a lot of money into Roth IRA though.

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