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Age: 28
State: Pa
Debt: 165k
Interest Rate on House: 3.25%
Employer pays 50% of the first 8% I put in my 401k Which fund do you suggest?
Fund Name
LIFECYCLE FUNDS
Lifecycle Retirement Fund
Lifecycle 2015 Fund
Lifecycle 2020 Fund
Lifecycle 2025 Fund
Lifecycle 2030 Fund
Lifecycle 2035 Fund
Lifecycle 2040 Fund
Lifecycle 2045 Fund Lifecycle 2050 Fund
INDEXED FUNDS
Bond Market Index Fund
Balanced Index Fund
S&P 500 Index Fund
International Index Fund
Russell 2000 Index Fund
ACTIVELY MANAGED FUNDS
VIP Stable Value Fund
Global Bond Fund
Diversified Real Asset Fund
U.S. Large Companies Fund
Global Equity Fund
International Companies Fund
U.S. Small/Mid Companies Fund
Science and Technology Fund
COMPANY STOCK
Boeing Stock Fund
Whoa ... hopefully you have some plan to pay down that bad boy
Anyway, if you have no interest in following financial markets, stick with the lifecycle fund.
If you like this stuff, and given the fact that you're still young, I'd go with the cheap index funds: 34% in the S&P 500 Index Fund, 33% in the Russell 2000 Index Fund, and 33% in the International Index Fund...
Anyways, I narrowed my 401k search and included more info...
401k advice needed, any suggestions would help!
Age: 28
State: Pa
Debt: 185k
Interest Rate on House: 3.25%
Employer pays 50% of the first 8% I put in my 401k Which fund do you suggest?
Fund Name
LIFECYCLE FUNDS
Bond Market Index Fund Total Annual Operating Expense 0.06%, Investment Management Fee 0.01%, Other 0.05%, Total Expense per $1000 $0.60
Lifecycle 2045 Fund Total Annual Operating Expense 0.46%, Investment Management Fee 0.33%, Other 0.13%, Total Expense per $1000 $4.60
Lifecycle 2050 Fund Total Annual Operating Expense 0.43%, Investment Management Fee 0.34%, Other 0.09%, Total Expense per $1000 $4.30
INDEXED FUNDS
Balanced Index Fund Total Annual Operating Expense 0.08%, Investment Management Fee 0.02%, Other 0.06%, Total Expense per $1000 $0.80
International Index Fund Total Annual Operating Expense 0.14%, Investment Management Fee 0.05%, Other 0.09%, Total Expense per $1000 $1.40
S&P 500 Index Fund Total Annual Operating Expense 0.05%, Investment Management Fee 0.01%, Other 0.04%, Total Expense per $1000 $0.50
Russell 2000 Index Fund Total Annual Operating Expense 0.07%, Investment Management Fee 0.02%, Other 0.05%, Total Expense per $1000 $0.70
COMPANY STOCK
Boeing Stock Fund Total Annual Operating Expense 0.05%, Investment Management Fee 0.02%, Other 0.03%, Total Expense per $1000 $0.50
Right now I have it in the LifeCycle 2050
I also have about 10k already....where should I reallocate this to?
Thanks
Last edited by fieldsy1024; 02-26-2013 at 12:28 PM..
Age: 28
State: Pa
Debt: 165k
Interest Rate on House: 3.25%
Employer pays 50% of the first 8% I put in my 401k Which fund do you suggest?
Fund Name
LIFECYCLE FUNDS
Lifecycle Retirement Fund
Lifecycle 2015 Fund
Lifecycle 2020 Fund
Lifecycle 2025 Fund
Lifecycle 2030 Fund
Lifecycle 2035 Fund
Lifecycle 2040 Fund
Lifecycle 2045 Fund Lifecycle 2050 Fund
INDEXED FUNDS
Bond Market Index Fund
Balanced Index Fund
S&P 500 Index Fund
International Index Fund
Russell 2000 Index Fund
ACTIVELY MANAGED FUNDS
VIP Stable Value Fund
Global Bond Fund
Diversified Real Asset Fund
U.S. Large Companies Fund
Global Equity Fund
International Companies Fund
U.S. Small/Mid Companies Fund
Science and Technology Fund
COMPANY STOCK
Boeing Stock Fund
Right now I have it in the LifeCycle 2050...
Not enough information. What is the name of the mutual fund company/companies offering these funds?
E.G....there are lots of mutual fund companies that offer a "global bond fund", a "science & technology" fund, etc....These are totally generic names.
I have a similar 401(k) - many of the funds are plan-specific, i.e., no indication of which "real" fund they are based on or are a fund class within.
The Lifecycle funds are a decent way to make sure you're adequately diversified with minimal effort and upkeep. You do pay for that, though. Very likely (you probably can check this within the plan materials) the Lifecycle funds are simply specific allocations of the index funds, in different proportions for each Lifecycle fund. You could make your own decision about what asset allocation you want, based on your time horizon, and then just invest in the index funds that proportion. However, you'll need to take care to monitor it, to make sure the proportions don't get more than (say) 5% out of whack, over time (due to how different index funds do well versus not well).
I'm a strong believer in there being relatively little benefit to be derived from going with actively managed funds, especially such no-name actively managed funds, as you've presented them here. If you can dig out real ticker symbols, then we can look at those funds more closely, but barring that, you're just giving your money a way to someone who isn't likely to do any better for you than a monkey (i.e., index fund) could.
Individual company stock is always a bad idea, when you're dealing with such little money - the antithesis of diversification. And investing in your own employer, unless it is significantly discounted, is wildly silly. Talk about putting all your eggs in one basket.
For my 401k, how often should I fix the funds and how can I tell if one fund is out growing the other funds?
The advice I follow says to monitor asset allocation periodically (Quicken makes it easy to check as often as you'd like) and take action whenever any of the percentages varies more than 5% from your plan. Remember, what you're looking at are the relative market values of each investment, not the future contribution allocation. When a change is warranted, you would want to change the allocation of current investments. (You should also check the distribution of future contributions, but they should already be set as per your plan.)
Quote:
Originally Posted by fieldsy1024
Right now I have it at 75% S&P, 15% Rus2000, 10%Bond Market Index
I have a feeling that what you're relaying here is your future contributions allocation, not the current state of your holdings. Over time, if stocks do better than bonds, your allocation will get out of whack, and you'll need to adjust what you are invested in, already, not just where you direct future investments.
Quote:
Originally Posted by fieldsy1024
@tyger, I did update the information on the post above yours.
As I alluded to above, you may not have the information tyger was asking for. That post has descriptive titles for each fund, not sufficient detail to identify which specific fund it is, by fund family and manager.
Incidentally, there is another approach that might twist things around a bit (though I doubt you're at the point where you would need to worry about this): You can choose to achieve your diversification across all investment accounts, rather than within each account. For example: You should be investing a bit in international equities, i.e., in that International Index fund. The Life Cycle funds surely include an international equities component. However, typically, international equities funds pay foreign taxes for you, taxes that you would be able to deduct if you itemize your deductions, but you cannot deduct those taxes if the holding is within a retirement account. So instead you would over-weight domestic equities and bonds in your retirement account, and cover your international equities allocation in your taxable investment account (assuming you had taxable money to invest), so you can deduct those taxes. Similarly, bond funds and certain equities and equity funds throw a lot of dividends. If you really wanted to perfect your asset allocation for tax efficiency, you'd avoid such investments in your taxable investment account, perhaps throwing them into a Roth IRA. If you did put those into a Roth IRA, that would mean you'd have to adjust your 401(k) away from holding such investments, etc. It gets quite intricate...
Oh wow my head is spinning after reading that lol. I do appreciate you explaining all of this to me. (after reading the last paragraph you wrote)
Also, can you explain a little more when you said this..."Remember, what you're looking at are the relative market values of each investment, not the future contribution allocation."
For my Roth, I believe I will stick to the TR 2045
For my 401k, I am leaning towards lifecycle to make it simple, but might choose the 75%, 15%, 10% I listed about to see how that works. This would be for future investments.
I have an account with Mint.com. Can I see my funds in there to see if one is outgrowing the others?
Where should I reallocate my 10k? If I choose LC 2045 for my future, should I just stick it in there?
Sorry if this doesn't make much sense. I really appreciate your help with this.
Incidentally, there is another approach that might twist things around a bit (though I doubt you're at the point where you would need to worry about this): You can choose to achieve your diversification across all investment accounts, rather than within each account. For example: You should be investing a bit in international equities, i.e., in that International Index fund. The Life Cycle funds surely include an international equities component. However, typically, international equities funds pay foreign taxes for you, taxes that you would be able to deduct if you itemize your deductions, but you cannot deduct those taxes if the holding is within a retirement account. So instead you would over-weight domestic equities and bonds in your retirement account, and cover your international equities allocation in your taxable investment account (assuming you had taxable money to invest), so you can deduct those taxes. Similarly, bond funds and certain equities and equity funds throw a lot of dividends. If you really wanted to perfect your asset allocation for tax efficiency, you'd avoid such investments in your taxable investment account, perhaps throwing them into a Roth IRA. If you did put those into a Roth IRA, that would mean you'd have to adjust your 401(k) away from holding such investments, etc. It gets quite intricate...
Also, can you explain a little more when you said this..."Remember, what you're looking at are the relative market values of each investment, not the future contribution allocation."
When I log into my 401(k), I can see my holdings, and I can see how my future contributions are divided up. The holdings are expressed as number of units/shares, share prices, and most importantly, total dollar amounts. It is the proportion of these total dollar amounts that you want to be looking at. The future contributions page shows me how new money contributed to the 401(k) will be used, but setting that right is not good enough: You also need to periodically adjust your holdings - selling some of the stuff that did earned high return rates and buying some of the stuff that didn't, because otherwise your holdings will vary too much with a reasonable asset allocation plan.
Here's an example (all numbers made-up, and I'm leaving out the fact that you contribute every pay period, because that just complicates the example without helping you understand the point). Let's say you're young and so your planned asset allocation is 80% equities and 20% bonds. You contribute $1000 and the plan buys for you 80 units of a stock fund at $10 per unit ($800), and 10 units of a bond fund at $20 per unit ($200). A year goes by and the stock fund has gone up to $12 per unit (now valued at $960), and it has been a bad year for bonds, so your bond fund is only worth $15 per unit (now valued at $150). You started with the "correct" asset allocation: 80%/20%. Now your asset allocation is 86%/14% - you are investing too much of your money in equities, incurring far more risk than your investment plan called for. So you reallocate: You sell 5.58 units of the stock fund (about $67) and use that to buy more of the bond fund (4.46 units). This reallocation means you have, going forward, 80% equities and 20% bonds, just like you planned to have.
Quote:
Originally Posted by fieldsy1024
For my Roth, I believe I will stick to the TR 2045. For my 401k, I am leaning towards lifecycle to make it simple ...
As I indicated earlier, it isn't unreasonable to aim for your target asset allocation in every account, individually. It's just not the best thing from a tax efficiency standpoint. (You'll pay more in taxes, overall, this way.) However, that's something you can learn about a few years down the line, after the rest of this is more clear-cut.
Quote:
Originally Posted by fieldsy1024
I have an account with Mint.com. Can I see my funds in there to see if one is outgrowing the others?
Mint.com just aggregates data. I don't know of any financial institutions that work with Mint.com that don't have their own website that you can get credentials for and log into to see what you're asking for. So the short answer is that you might be able to use Mint.com, but in reality you should have a way to log directly into your 401(k) account itself. If you don't, then you'll have to deal with paper statements (and I suppose paper forms to change allocations).
That example really helps out a lot, thanks for that
I will try that 75%, 15%, 10% and look at it in 6months/year to see if it moved much. If any of the percents move over 5% then its time to adjust?
Where should I reallocate my 10k?
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