My 457b - Seeking Boglehead Approval!

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Topic Author
ericwol
Posts: 11
Joined: Thu Dec 27, 2018 4:14 pm

My 457b - Seeking Boglehead Approval!

Post by ericwol »

I'm a municipal employee and have the opportunity to invest through a 457b Plan sponsored by Nationwide.

Prior to reading and learning from this forum and recommending books I moderately invested in the plan and had what I thought to be awful allocation. Now I'm maxing my contributions and directed my contributions to what I believe to be Boglehead approved funds.

So I firstly want to thank you for helping me out with saving for the future. And secondly I want to seek advice to see if I can do better with my 457b account. I'm thinking there is some overlap and maybe pair the portfolio to 3 or 4 funds.

I have roughly $160k in the account and will max out my $19,500 contributions this year.
Here is where my contributions are currently directed to:

20% - Vanguard LifeStrategy ® Growth Fund (VASGX) - (0.14%)
20% - Vanguard Small Cap Index Fund – Institutional Plus Shares (VSCPX) - (0.03%)
20% - Vanguard Mid-Cap Index Fund – Institutional Shares (VMCIX) - (0.04%)
20% - Vanguard Institutional Index Fund – Institutional Plus Shares (VIIIX) - (0.02%)
20% - Dogde & Cox Income Fund (DODIX) -(0.42%)

And here are the available funds (I left off the Target Date funds):

Asset Allocation Funds:

Vanguard(R) LifeStrategy(R) Conservative Growth Fund (VSCGX)- 0.12 %
Vanguard LifeStrategy ® Growth Fund (VASGX) - 0.14%
Vanguard(R) LifeStrategy(R) Moderate Growth Fund (VSMGX) ) - 0.13%

International Stocks

American Funds Capital World Growth & Income - Class R6 (RWIGX) - 0.42%
EuroPacific Growth Fund(R) - Class R6 (RERGX) - 0.46%

Small Cap Stocks

Invesco Small Cap Value Fund - Class Y (VSMIX) - 0.87%
Lord Abbett Developing Growth Fund Class R6 (LADVX) - 0.59%
Vanguard Small Cap Index Fund – Institutional Plus Shares (VSCPX) - 0.03%

Mid Cap Stocks

Ariel Appreciation Fund - Institutional Class (CAAIX) - 0.84%
Baird MidCap Fund: Institutional Class (BMDIX) - 0.82%
JPMorgan Mid Cap Value Fund - Class L (FLMVX) - 0.84%
Vanguard Mid-Cap Index Fund – Institutional Shares (VMCIX) - 0.04%
Wells Fargo C&B Mid Cap Value Fund - Institutional Class (CBMSX) - 0.94%

Large Cap Stocks

Dodge & Cox Stock Fund (DODGX) - 0.52%
Fidelity Contrafund K6 (FLCNX) - 0.45%
T. Rowe Price Dividend Growth Fund - I Class (PDGIX) - 0.50%
T. Rowe Price Growth Stock Fund I Class (PRUFX) - 0.52%
The Growth Fund of America(R) - Class R6 (RGAGX) - 0.30%
Vanguard Total Stock Market Index Fund - Institutional Plus Shares (VSMPX) - 0.02%
Vanguard(R) Institutional Index Fund - Institutional Plus Shares (VIIIX) - 0.02

Balanced

T. Rowe Price Retirement Balanced I - I Class (TRPTX) - 0.34%

Bonds

Dogde & Cox Income Fund (DODIX) - 0.42%

Thank you for your time & help!
mtn biker
Posts: 46
Joined: Wed Jul 26, 2017 12:55 pm

Re: My 457b - Seeking Boglehead Approval!

Post by mtn biker »

What is your rational for that asset allocation?

Why not just all in Vanguard Institutional Index Fund – Institutional Plus Shares (VIIIX) - (0.02%)?

I'm not saying you are wrong, but I'm not sure what advice to give without your goals and reasons for what you selected.
tashnewbie
Posts: 2262
Joined: Thu Apr 23, 2020 12:44 pm

Re: My 457b - Seeking Boglehead Approval!

Post by tashnewbie »

What's your desired asset allocation (percentage of portfolio to stocks, including international stocks if desired, and bonds)?

If you want some international stocks, depending on your desired asset allocation, Vanguard LifeStrategy ® Growth Fund (VASGX) - 0.14% would be a great one-fund option. It maintains a fixed asset allocation of approximately 80% stocks (including 40% of those in international stocks) and 20% bonds (also includes some international bonds).

Otherwise, if you want to use separate funds, I think you have a great option for US stocks in Vanguard Total Stock Market Index Fund - Institutional Plus Shares (VSMPX) - 0.02%. While not a great option (because of the relatively higher expense ratio and active management as opposed to a passive index fund), you could use EuroPacific Growth Fund(R) - Class R6 (RERGX) - 0.46% for international stocks. You could use Dogde & Cox Income Fund (DODIX) - 0.42% for bonds.

I would probably just use the Vanguard LifeStrategy Growth Fund (VASGX), and if I wanted to reduce the international exposure, I'd add VSMPX.
magicman
Posts: 38
Joined: Thu Jan 21, 2016 1:44 am

Re: My 457b - Seeking Boglehead Approval!

Post by magicman »

I'd simplify and just use the Vanguard Total Stock Market fund or the Vanguard Institutional Index fund. My 457b is 100% in the Vanguard Institutional Index fund and I sleep well at night.
Charon
Posts: 378
Joined: Thu May 03, 2018 12:08 pm

Re: My 457b - Seeking Boglehead Approval!

Post by Charon »

tashnewbie wrote: Tue Nov 23, 2021 4:22 pm If you want some international stocks, depending on your desired asset allocation, Vanguard LifeStrategy ® Growth Fund (VASGX) - 0.14% would be a great one-fund option.
+1

OP, you're currently very close to 80/20 with an overall expense ratio of 0.13. Which is essentially LifeStrategy Growth, but more complicated and requiring rebalancing. Simplify. (Also, I'm envious of your 457(b) choices :))
retiredjg
Posts: 46068
Joined: Thu Jan 10, 2008 12:56 pm

Re: My 457b - Seeking Boglehead Approval!

Post by retiredjg »

ericwol wrote: Tue Nov 23, 2021 2:53 pm Here is where my contributions are currently directed to:

20% - Vanguard LifeStrategy ® Growth Fund (VASGX) - (0.14%)
20% - Vanguard Small Cap Index Fund – Institutional Plus Shares (VSCPX) - (0.03%)
20% - Vanguard Mid-Cap Index Fund – Institutional Shares (VMCIX) - (0.04%)
20% - Vanguard Institutional Index Fund – Institutional Plus Shares (VIIIX) - (0.02%)
20% - Dogde & Cox Income Fund (DODIX) -(0.42%)
You say this is how your contributions are currently directed. Does this also reflect the ratios that are currently held in the total plan? If not, what does the portfolio actually hold?

You are headed in a good direction with some small bumps in the road.
  • 1. Yes, there is overlap between the LifeStrategy fund and all the other funds you have. You should use one or the other unless there is a particular plan behind this lineup.

    2. Holding equal portions of 500 index - mid-cap - small-cap is a huge overweight to the mids and smalls. It should be a much different ratio if you want something that is similar to total stock market. What do you want?

    3. Do you want to hold international stocks or not? If so, what portion of your stock allocation do you want to be in foreign stocks?

There are literally dozens of good simple portfolios you can make from those building blocks once you decide what you want your portfolio to hold.
Topic Author
ericwol
Posts: 11
Joined: Thu Dec 27, 2018 4:14 pm

Re: My 457b - Seeking Boglehead Approval!

Post by ericwol »

retiredjg wrote: Wed Nov 24, 2021 9:03 am
ericwol wrote: Tue Nov 23, 2021 2:53 pm Here is where my contributions are currently directed to:

20% - Vanguard LifeStrategy ® Growth Fund (VASGX) - (0.14%)
20% - Vanguard Small Cap Index Fund – Institutional Plus Shares (VSCPX) - (0.03%)
20% - Vanguard Mid-Cap Index Fund – Institutional Shares (VMCIX) - (0.04%)
20% - Vanguard Institutional Index Fund – Institutional Plus Shares (VIIIX) - (0.02%)
20% - Dogde & Cox Income Fund (DODIX) -(0.42%)
You say this is how your contributions are currently directed. Does this also reflect the ratios that are currently held in the total plan? If not, what does the portfolio actually hold?

You are headed in a good direction with some small bumps in the road.
  • 1. Yes, there is overlap between the LifeStrategy fund and all the other funds you have. You should use one or the other unless there is a particular plan behind this lineup.

    2. Holding equal portions of 500 index - mid-cap - small-cap is a huge overweight to the mids and smalls. It should be a much different ratio if you want something that is similar to total stock market. What do you want?

    3. Do you want to hold international stocks or not? If so, what portion of your stock allocation do you want to be in foreign stocks?

There are literally dozens of good simple portfolios you can make from those building blocks once you decide what you want your portfolio to hold.
Thanks so much for all the replies and you've given me more to think about & more to learn about!

I'm going to take some time and figure out my desired allocation and goals.

But I have to admit I don't know how to retiredjg's following questions: Does this also reflect the ratios that are currently held in the total plan? If not, what does the portfolio actually hold?

Would love to learn more, thanks!!!
retiredjg
Posts: 46068
Joined: Thu Jan 10, 2008 12:56 pm

Re: My 457b - Seeking Boglehead Approval!

Post by retiredjg »

ericwol wrote: Wed Nov 24, 2021 2:55 pm But I have to admit I don't know how to retiredjg's following questions: Does this also reflect the ratios that are currently held in the total plan? If not, what does the portfolio actually hold?
You were investing in one way and then switched your contributions to a new way. You didn't say you had also switched what was already invested to the new ratios. So you might have a portfolio that does not look like the 20-20-20-20-20 plan you told us about.

So I was asking, do your new contributions look like that or does the entire portfolio look like that. :D
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