401K Portfolio Allocation Critique

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
outlierZ
Posts: 47
Joined: Sun Jan 19, 2020 7:56 am

401K Portfolio Allocation Critique

Post by outlierZ »

Hi,
I am 36 and planning to rebalance my 401k account. I was hoping if you please share your thoughts on my proposed allocation? I have copied image of the available funds within my 401k account.


https://imgur.com/a/6wQGUKi


TIA!!
Boglehead1967
Posts: 34
Joined: Sun Feb 07, 2021 9:20 am

Re: 401K Portfolio Allocation Critique

Post by Boglehead1967 »

I have a similar set of options. I chose Fidelity S&P500 Index fund for 100% of my 401k investments.
I also invest into VTSAX weekly in my taxable.
You might want to add Small Cap and International with best track record and lowest expense ratio.
But that’s a personal choice of course. I decided to stay away from international based on everything I read about US energy, share of export economy and the size of internal market.
User avatar
arcticpineapplecorp.
Posts: 12036
Joined: Tue Mar 06, 2012 8:22 pm

Re: 401K Portfolio Allocation Critique

Post by arcticpineapplecorp. »

you don't need the large cap growth index (because you have that in the S&P500) or the Vanguard International Growth (because you have fidelity international index).

finally why do you have a blend 2050 fund AND also the standalone funds like the S&P500 and the Fidelity international index?

Most would either just have the blend (target date) fund OR the standalone funds like S&P500, fidelity international index and possibly a bond or stable value fund or some other cash/fixed income component (like a money market) but not both. Though I don't see any fixed income funds. Are you sure this is a complete list of funds available?

If you choose the standalone funds rather than the blend 2050, you could (or could not) have the S&P500 and a mid cap and small cap (the cheapest of course) to round out the total market. If you want to keep it simple you could just hold the S&P500 though without the mid and small cap too, along with the total international fund.

But simpler is the blended fund, though it is more expensive (.23%) than the standalone funds.

If you have the blend fund it's all there, domestic, international, stock, bond, etc. If you have the standalone funds, even just s&p500 and total international you have to decide what percentage to allocate to each (and when/how to add bonds/fixed income to the portfolio as you get closer to retirement for instance). And you have to rebalance with the standalone funds (the blend fund does that automatically).

does that help?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
User avatar
RetirementClass2021
Posts: 90
Joined: Sun Feb 06, 2022 6:34 pm

Re: 401K Portfolio Allocation Critique

Post by RetirementClass2021 »

For a diversified low-cost "Total Stock Market" equity portfolio I would chose:

Fid 500 Index 68%
Fid Mid Cap Idx 8%
Fid SM Cap Idx 4%
Fid Intl Index 20%

I noticed you do not have bond options. Something to re-visit when you reach your 50s (within 10-15 years of retirement)

Good luck.
VTI 30% VXUS 12% SCHD 18% BND 12% BNDX 8% SCHP 20% | Low-cost diversified portfolio | “Forget the needle, buy the haystack.” - John C. Bogle
ClassOf2021
Posts: 111
Joined: Sat Dec 19, 2020 9:11 am
Location: New Jersey

Re: 401K Portfolio Allocation Critique

Post by ClassOf2021 »

Your choices for your 401k are a part of your overall investment portfolio and plan which you have not provided. Low cost index funds as noted above are generally good choices of the options you provided in this 401k.
tashnewbie
Posts: 3450
Joined: Thu Apr 23, 2020 12:44 pm

Re: 401K Portfolio Allocation Critique

Post by tashnewbie »

Assuming you have other investment accounts such as Roth IRA, I agree that you need to incorporate this 401k into your overall portfolio and coordinate the asset allocation across all your accounts.

You didn't state what your desired/target asset allocation is. That's critical for deciding what funds to use in each account.

In this account, I would use FXAIX (S&P 500) and the Fidelity international index fund. I would also look for a low-cost bond fund.

As another user said, there's no need to have the growth funds when you have the S&P 500 and the other international fund, because the growth stocks are included in the other funds.
User avatar
ruralavalon
Posts: 24413
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: 401K Portfolio Allocation Critique

Post by ruralavalon »

outlierZ wrote: Sun Jan 22, 2023 8:03 pm Hi,
I am 36 and planning to rebalance my 401k account. I was hoping if you please share your thoughts on my proposed allocation? I have copied image of the available funds within my 401k account.


https://imgur.com/a/6wQGUKi


TIA!!
I suggest using:
1) Fidelity® 500 Index Fund (80% of the U.S.stock market) (FXAIX) ER 0.015%; and
2) Fidelity® International Index Fund (developed markets only) (FSPSX) ER 0.035%.

Are there any bond funds offered? Please give fund names, tickers and expense ratios. Is there a Stable Value Fund or Guaranteed Income Fund offered, if so what interest rate is currently being paid and what rate if any is guaranteed?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
student
Posts: 8457
Joined: Fri Apr 03, 2015 6:58 am

Re: 401K Portfolio Allocation Critique

Post by student »

I agree with posters who said that you don't need FSPGX and VMILX as you have 500 Index and International Index.
Topic Author
outlierZ
Posts: 47
Joined: Sun Jan 19, 2020 7:56 am

Re: 401K Portfolio Allocation Critique

Post by outlierZ »

arcticpineapplecorp. wrote: Sun Jan 22, 2023 8:20 pm you don't need the large cap growth index (because you have that in the S&P500) or the Vanguard International Growth (because you have fidelity international index).

finally why do you have a blend 2050 fund AND also the standalone funds like the S&P500 and the Fidelity international index?

Most would either just have the blend (target date) fund OR the standalone funds like S&P500, fidelity international index and possibly a bond or stable value fund or some other cash/fixed income component (like a money market) but not both. Though I don't see any fixed income funds. Are you sure this is a complete list of funds available?

If you choose the standalone funds rather than the blend 2050, you could (or could not) have the S&P500 and a mid cap and small cap (the cheapest of course) to round out the total market. If you want to keep it simple you could just hold the S&P500 though without the mid and small cap too, along with the total international fund.

But simpler is the blended fund, though it is more expensive (.23%) than the standalone funds.

If you have the blend fund it's all there, domestic, international, stock, bond, etc. If you have the standalone funds, even just s&p500 and total international you have to decide what percentage to allocate to each (and when/how to add bonds/fixed income to the portfolio as you get closer to retirement for instance). And you have to rebalance with the standalone funds (the blend fund does that automatically).

does that help?
Thank you! Yes, it does makes sense. The funds that I listed in the image are the ones that are offered.
Topic Author
outlierZ
Posts: 47
Joined: Sun Jan 19, 2020 7:56 am

Re: 401K Portfolio Allocation Critique

Post by outlierZ »

RetirementClass2021 wrote: Sun Jan 22, 2023 8:47 pm For a diversified low-cost "Total Stock Market" equity portfolio I would chose:

Fid 500 Index 68%
Fid Mid Cap Idx 8%
Fid SM Cap Idx 4%
Fid Intl Index 20%

I noticed you do not have bond options. Something to re-visit when you reach your 50s (within 10-15 years of retirement)

Good luck.
Thank you! What's the rationale of putting 8% to Mid and 4% to Small cap fund - to gain less volatility in the portfolio?
Topic Author
outlierZ
Posts: 47
Joined: Sun Jan 19, 2020 7:56 am

Re: 401K Portfolio Allocation Critique

Post by outlierZ »

ClassOf2021 wrote: Mon Jan 23, 2023 7:19 am Your choices for your 401k are a part of your overall investment portfolio and plan which you have not provided. Low cost index funds as noted above are generally good choices of the options you provided in this 401k.
Thank you! As such, I do not have a preferred portfolio allocation as I have most focused on a three fund portfolio approach for my 401k, Roth and Brokerage account.
Topic Author
outlierZ
Posts: 47
Joined: Sun Jan 19, 2020 7:56 am

Re: 401K Portfolio Allocation Critique

Post by outlierZ »

tashnewbie wrote: Mon Jan 23, 2023 7:42 am Assuming you have other investment accounts such as Roth IRA, I agree that you need to incorporate this 401k into your overall portfolio and coordinate the asset allocation across all your accounts.

You didn't state what your desired/target asset allocation is. That's critical for deciding what funds to use in each account.

In this account, I would use FXAIX (S&P 500) and the Fidelity international index fund. I would also look for a low-cost bond fund.

As another user said, there's no need to have the growth funds when you have the S&P 500 and the other international fund, because the growth stocks are included in the other funds.
Thank you for the advise! Currently, my vanguard fund is down about 30%. Is it still a good idea to rebalance or should I wait to recover some before rebalancing?
Topic Author
outlierZ
Posts: 47
Joined: Sun Jan 19, 2020 7:56 am

Re: 401K Portfolio Allocation Critique

Post by outlierZ »

ruralavalon wrote: Mon Jan 23, 2023 9:36 am
outlierZ wrote: Sun Jan 22, 2023 8:03 pm Hi,
I am 36 and planning to rebalance my 401k account. I was hoping if you please share your thoughts on my proposed allocation? I have copied image of the available funds within my 401k account.


https://imgur.com/a/6wQGUKi


TIA!!
I suggest using:
1) Fidelity® 500 Index Fund (80% of the U.S.stock market) (FXAIX) ER 0.015%; and
2) Fidelity® International Index Fund (developed markets only) (FSPSX) ER 0.035%.

Are there any bond funds offered? Please give fund names, tickers and expense ratios. Is there a Stable Value Fund or Guaranteed Income Fund offered, if so what interest rate is currently being paid and what rate if any is guaranteed?
Thank you!

Below are the three bond fund available:
Fidelity® U.S. Bond Index Fund (FXNAX) (0.025%)
Baird Core Plus Bond Fund Class Institutional BCOIX (ER - 0.3%)
Managed Income Portfolio Class 2 (ER - 0.5%)
Topic Author
outlierZ
Posts: 47
Joined: Sun Jan 19, 2020 7:56 am

Re: 401K Portfolio Allocation Critique

Post by outlierZ »

student wrote: Mon Jan 23, 2023 9:40 am I agree with posters who said that you don't need FSPGX and VMILX as you have 500 Index and International Index.
Thanks! I have down ~30% on VMILX. Should I take the loss and rebalance or wait until I recover some losses?
student
Posts: 8457
Joined: Fri Apr 03, 2015 6:58 am

Re: 401K Portfolio Allocation Critique

Post by student »

outlierZ wrote: Mon Jan 23, 2023 7:49 pm
student wrote: Mon Jan 23, 2023 9:40 am I agree with posters who said that you don't need FSPGX and VMILX as you have 500 Index and International Index.
Thanks! I have down ~30% on VMILX. Should I take the loss and rebalance or wait until I recover some losses?
Difficult to say. I will probably do it over a period of time.
tashnewbie
Posts: 3450
Joined: Thu Apr 23, 2020 12:44 pm

Re: 401K Portfolio Allocation Critique

Post by tashnewbie »

outlierZ wrote: Mon Jan 23, 2023 7:48 pm Below are the three bond fund available:
Fidelity® U.S. Bond Index Fund (FXNAX) (0.025%)
This is the bond fund I would use in this 401k. I would put all my desired bond allocation in this, and then any remaining space I would fill with FXAIX and FSPSX.

I would rebalance, i.e. change funds in the 401k, at one time. I wouldn't bother waiting until funds go back up (to where?). More than likely, the growth fund and FSPSX are down roughly the same percentage, so you'd be selling low and buying low.
User avatar
RetirementClass2021
Posts: 90
Joined: Sun Feb 06, 2022 6:34 pm

Re: 401K Portfolio Allocation Critique

Post by RetirementClass2021 »

outlierZ wrote: Mon Jan 23, 2023 7:37 pm
RetirementClass2021 wrote: Sun Jan 22, 2023 8:47 pm For a diversified low-cost "Total Stock Market" equity portfolio I would chose:

Fid 500 Index 68%
Fid Mid Cap Idx 8%
Fid SM Cap Idx 4%
Fid Intl Index 20%

I noticed you do not have bond options. Something to re-visit when you reach your 50s (within 10-15 years of retirement)

Good luck.
Thank you! What's the rationale of putting 8% to Mid and 4% to Small cap fund - to gain less volatility in the portfolio?
Adding the the Fid Mid Cap and Fid Small Cap funds to the Fid 500 fund creates a "U.S. Total Market All-Cap" exposure. Your 100% (80% U.S./20% Intl) equity portfolio breaks down as follows:

80% U.S.
68% (85% Large Cap)
8% (10% Mid Cap)
4% (5% Small Cap)

20% Intl
20% (100% All Cap)
VTI 30% VXUS 12% SCHD 18% BND 12% BNDX 8% SCHP 20% | Low-cost diversified portfolio | “Forget the needle, buy the haystack.” - John C. Bogle
wetgear
Posts: 791
Joined: Thu Apr 06, 2017 10:14 am

Re: 401K Portfolio Allocation Critique

Post by wetgear »

outlierZ wrote: Mon Jan 23, 2023 7:49 pm
student wrote: Mon Jan 23, 2023 9:40 am I agree with posters who said that you don't need FSPGX and VMILX as you have 500 Index and International Index.
Thanks! I have down ~30% on VMILX. Should I take the loss and rebalance or wait until I recover some losses?
There’s no loss as this is in a 401k
User avatar
ruralavalon
Posts: 24413
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: 401K Portfolio Allocation Critique

Post by ruralavalon »

outlierZ wrote: Mon Jan 23, 2023 7:48 pm
ruralavalon wrote: Mon Jan 23, 2023 9:36 am
outlierZ wrote: Sun Jan 22, 2023 8:03 pm Hi,
I am 36 and planning to rebalance my 401k account. I was hoping if you please share your thoughts on my proposed allocation? I have copied image of the available funds within my 401k account.


https://imgur.com/a/6wQGUKi


TIA!!
I suggest using:
1) Fidelity® 500 Index Fund (80% of the U.S.stock market) (FXAIX) ER 0.015%; and
2) Fidelity® International Index Fund (developed markets only) (FSPSX) ER 0.035%.

Are there any bond funds offered? Please give fund names, tickers and expense ratios. Is there a Stable Value Fund or Guaranteed Income Fund offered, if so what interest rate is currently being paid and what rate if any is guaranteed?
Thank you!

Below are the three bond fund available:
Fidelity® U.S. Bond Index Fund (FXNAX) (0.025%)
Baird Core Plus Bond Fund Class Institutional BCOIX (ER - 0.3%)
Managed Income Portfolio Class 2 (ER - 0.5%)
Fidelity® U.S. Bond Index Fund (FXNAX) (0.025%) would be an excellent bond fund to use, it's very diversified with a very low expense ratio.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Post Reply