Transitioning to Schwab 401(k): Three-Fund Portfolio

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Joe_[Investor]
Posts: 4
Joined: Wed Dec 05, 2018 2:10 pm

Transitioning to Schwab 401(k): Three-Fund Portfolio

Post by Joe_[Investor] » Wed Dec 05, 2018 2:38 pm

Hi All,

First Post (go easy). 32 year-old Boglehead here who will be transitioning from a Transamerica 401(k) to Schwab early 2019. Currently entire 401(k) is in a Vanguard Target Retirement Fund (VFIFX 2050) due to simplicity and scarce indexed options with the TransAmerica plan. Based off the funds available in the Schwab plan, I've come up with the following three-fund portfolio which has an allocation comparable to the current allocation in the Vanguard target date fund.

10% Vanguard Total Bond Market Index Fund (VBTIX) ER=0.04%
55% Schwab S&P 500 Index Fund (SWPPX) ER=0.03%*
35% Vanguard Total International Stock Index Fund (VTSNX) ER=0.09%

*(No Total/Broad Market US equity option available)

Weighted ER is 0.052% which seems pretty reasonable.

Anything simpler given my options would be a T. Rowe target fund with a ER of 0.72% (no thank you).

Thanks for the help!

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alec
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Re: Transitioning to Schwab 401(k): Three-Fund Portfolio

Post by alec » Wed Dec 05, 2018 6:30 pm

Looks good to me. Any good small cap index fund in the plan?
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair

Joe_[Investor]
Posts: 4
Joined: Wed Dec 05, 2018 2:10 pm

Re: Transitioning to Schwab 401(k): Three-Fund Portfolio

Post by Joe_[Investor] » Wed Dec 05, 2018 7:59 pm

Hi Alec,

Thanks for the feedback!

The small cap index option = Vanguard Small-Cap Index Fund (VSCIX), ER=0.04%. I've been wondering if adding a fourth fund (small cap) to better mimic a Total/Broad Market fund would be worth it. When I compared SWPPX against VTSAX, the 3-,5-, & 10-year returns were all <1%. I usually always like to lean towards the simplest possible option, but I'm also very interested in hearing everyone else's perspective.

Thanks.

typical.investor
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Joined: Mon Jun 11, 2018 3:17 am

Re: Transitioning to Schwab 401(k): Three-Fund Portfolio

Post by typical.investor » Thu Dec 06, 2018 9:44 am

Joe_[Investor] wrote:
Wed Dec 05, 2018 2:38 pm
10% Vanguard Total Bond Market Index Fund (VBTIX) ER=0.04%
55% Schwab S&P 500 Index Fund (SWPPX) ER=0.03%*
35% Vanguard Total International Stock Index Fund (VTSNX) ER=0.09%
Looks like a great plan.

Just to confirm, these are available in your 401k plan so you aren't paying transactions fees for VTSNX and VBTIX.

As for small cap stocks, either way is really fine. I'd lean to towards market exposure and would want to include them, but go with the way you are most likely to stick to.

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