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403b account asset alocation

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  • 403b account asset alocation



    Hi all


    I am 40 years old in a high-paying subspeciality. Attending since late 2018.


    I have a 403 b with TIAA which have a target retirement fund with an expense ratio of 0.17percent. I contributed to this fund from 2018-dec 2020.

    I started contributing to the Schwab S&P500 index fund in my 403b with an expense ratio of 0.02%.


    My question is - should I change my allocation by moving the money invested in the target funds to all the money to S&P 500?

    2. Is this a taxable event if I do that change in allocation?

    3. I am happy to take the risk of investing all in stocks/equities at this phase in my life. I can always change to bonds maybe 5-10 years down the line.


    Any input will be greatly appreciated.


    Thanks

  • #2
    1. Yes
    2. No
    3. Agreed

    Comment


    • #3
      Originally posted by sandy View Post

      Hi all


      I am 40 years old in a high-paying subspeciality. Attending since late 2018.


      I have a 403 b with TIAA which have a target retirement fund with an expense ratio of 0.17percent. I contributed to this fund from 2018-dec 2020.

      I started contributing to the Schwab S&P500 index fund in my 403b with an expense ratio of 0.02%.


      My question is - should I change my allocation by moving the money invested in the target funds to all the money to S&P 500?

      2. Is this a taxable event if I do that change in allocation?

      3. I am happy to take the risk of investing all in stocks/equities at this phase in my life. I can always change to bonds maybe 5-10 years down the line.


      Any input will be greatly appreciated.


      Thanks
      What does your financial plan says? what is the allocation based on financial plan? If you have a financial plan with stock/bond allocation matched with the target fund, then why do you want to add complexities by doing another s&P500 in your 403B.
      But if the stocks/bobs ratio in your target fund doesn't match your financial plan, then I would say either your plan is not right or you might have picked the wrong target fund. If you plan to retire in 2040( considering you are early in your carrier) , then the target fund should have more stocks to bond ratio.

      Comment


      • #4
        If you’re comfortable with all equities then 100% in the S&P 500 will be hard to beat.

        Comment


        • #5
          not a taxable event and yes make it all into the equity fund if you are confident you can tolerate the swings. An ER of .17 vs .02 isn't that great. For a target retirement fund, an ER of .17 is pretty good. So I would stay in that if you think you might panic and sell. The biggest/costliest mistake you can make is doing that, and it'll cost you far more than the lifetime difference of a .17 vs .02 ER

          Comment


          • #6
            Are sure about your risk tolerance being 100% equities? Many think that way till they go through a bear market when the portfolio loses 30-40% value in a week and go to panic sale mode. That is one of the financial catastrophe one can make.
            For that reason a bond allocation in portfolio has been advised by many. It can be as little as 10-20% at your age and then slowly can build to what ever you feel comfortable at later age

            Comment

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