401k Asset Allocation help (bond, Etrade, IRA, value fund)

[darrell2525]

Can anyone offer suggestions on allocating my current 401k. Current balance is about $7200.00 and 100% contributed to Goldman Sachs Small Cap Value Fund Institutional Symbol: GSSIX (1.06% + 0.98% management fee). Yes, I already know the fees are high, so I am looking to change this. I also, have $26k sitting in my Etrade IRA account to allocate as well.

My Income: 97K per year
Tax Filing Status: (Married Filing Jointly)
Tax Rate: 25% Bracket
State of Residence: Texas
My age 34
Desired retirement in 26 years
contributing 6% now and company half of that 6% (thinking off contributing more)


So far, I am considering the following AA for the 401k account:

Contribute 70% = American Beacon S&P 500 Index Fund Institutional Class Symbol: AASPX (0.16% + 0.045% management fee) or Fidelity Advisor® Freedom 2040 Fund® - Institutional Class Symbol: FIFFX (0.77% expense ratio + 0% management fee )

Contribute 30% = BlackRock High Yield Bond Portfolio Institutional Shares Symbol: BHYIX (0.67% + 0.44% management fee) or Dreyfus Bond Market Index Fund Basic Class Symbol: DBIRX (0.15% + 0.15% management fee)

I would like to go with the AASPX and BHYIX as my decision.

I did a search for all funds with Expense Ratio: <=.50% and listed below. I can add more if needed for <=1%

Fidelity Advisor® Freedom 2040 Fund® - Institutional Class Symbol: FIFFX (0.77% expense ratio), I added this just in case
American Beacon S&P 500 Index Fund Institutional Class Symbol: AASPX (0.16% + 0.045% management fee)
American Beacon International Equity Index Fund Class Institutional Symbol: AIIIX (0.24% + 0.01% management fee)
Dreyfus Bond Market Index Fund Basic Class Symbol: DBIRX (0.15% + 0.15% management fee)
Dreyfus Inflation Adjusted Securities Fund Institutional Shares Symbol: DIASX (0.4% + 0.3% management fee)
Fidelity Advisor® Freedom Income Fund® - Institutional Class Symbol: FIAFX (0.47% + 0% management fee)
Fidelity® Money Market Trust Retirement Money Market Portfolio Symbol: FRTXX (0.42% + 0.42% management fee)
Lord Abbett Short Duration Income Fund Class I Symbol: LLDYX (0.39% + 0.26% management)
Putnam Stable Value Fund 50 (0.5%)

I really appreciate any comments.

[mathjak107]

that really is a hodge podge of stuff, as much as i dislike target date funds i would say run with it until you have alot more money then you will have options to do other things .

anytime you own anything else other than the target fund your really un-doing everything your target fund is trying to do by matching allocation to time frame.

a 401k a bad place to invest in equities because you lose favored capital gain status, the ability to write off loses and the ability to pass to heirs with a step up in basis and no manadory wihdrawals for them like a roth has..

unless you had such a nice choice of funds that you could really put a nice portfolio together that blends well i would say you have to look at alternative structurs.

you should only hold investments that get taxed at regular income rates regardless in tax deferred plans.

things like bonds and reits.

by holding the equities in a taxable account and the income bearing stuff in your deferred account you can see as much as a 20% greater bottom line.

other wise dont contribute as much to the 401k and divert some money outside the 401k to your equities.

you lose to much advantage with equities in tax deferred accounts.