my first 401k portfolio advice please!

[nishant144]

Hello everyone,

I'm new to the forum and have been a lurker for the past few months. I have really enjoyed learning from you all.  I was wondering if I could get some portfolio advice for a 401k that I am opening up in terms of which funds to buy and what allocation. I am 31, and this is my first 401k that I'm opening. It is through Empower and seems to have pretty crappy investment options with high fees, but at least they have a 4% employer match rate. Not sure the best way to post the info, but here goes:

Great West: MXLWX, MXDLX, MXJLX, MXPLX, MXVLX, MXCPX, MXDPX, MXMPX, MXBPX, MXAPX

Aberdeen emerging markets: GEGAX

American funds: RGICX, RNPCX

Oppenheimer Int growth: OIGAX

Great West Real Estate: MXREX

PIMCO comm: PCRAX

American Beacon small: ABSAX

Hartford small: HSLSX

Dreyfus Mid: DBMAX

Ridgeworth mid: SMVTX

Great West S&P500 index: MXVIX

Hartford equity: HQISX

MFS Gr Stk: MIGHX

Franklin: FHAAIX

Great West Bond Index: MXBIX

Legg Mason global opps: GOBAX

Loomis Sayles Bond: NEFRX

PIMCO real return: PRTNX

Key Guaranteed portfolio Fund

Thank you!

[jfoxcpacfp]

Your options are, shall we say, challenging. The good news is that you have the tools to build a well-balanced portfolio. The bad news is that you have many A-loaded funds to choose from and expenses are higher than what readers of this site prefer. I'm not bothered as much by the 1% fees as I am by the loaded funds. Sometimes, the advisor waives the load, so check to see if that is the case.

Best choice is to build a portfolio, rebalance annually, and clamor for a change of 401k provider. Or change jobs. I'd stay away from bonds at your age especially but be prepared to sit on your hands during market volatility, bear markets, corrections, etc. As a newbie, Simple Wealth, Inevitable Wealth will be helpful and informative. Just ignore references to 1% AUM fees.

I'd choose:

• MXREX - REIT (real estate), no load 15%


• OIGAX - Intl (loaded) 15%


• MXVIX - S&P 500, no load 70%

I am by no means saying that this is a hard-and-fast recommendation and others will surely chime in with suggestions.

 

[RegenDoc]

I would like to piggyback on this post, as I'm in a similar position early in the 401k process (current value $21K, 100% match first 3%, then 50% match next 2%). This is my wife's 401k (I don't have one with my employer currently, but working on it). She is 33, I'm 36, no kids, plenty of med school and pharmacy loans (both refinanced with variable rates under 3.77% currently).

 

Her investment options are:

Target date Retirement trusts 2005-2055 (I initially put her in 2050) (ER 0.45%)

Stable value fund (ER 0.35%)

Fixed income fund (ER 0.38%)

Vanguard total bond market (VBTIX) (ER 0.04%)

Small cap fund (ER 1.18%)

Mid cap fund (ER 0.70%)

Large cap growth (ER 0.53%)

Large cap value (ER 0.45%)

Vanguard FTSE All-world index fun (VFWSX) (ER 0.10%)

Vanguard extended market index (VEIEX) (ER 0.06%)

Vanguard institutional index fund (VIIIX) (ER 0.02%)

International equity fund (ER 1.15%)

 

I moved her to this mix almost a year ago:

25% Small Cap, 10% Mid Cap, 15% Large Growth, 20% Large Value, 20% FTSE All World, 10% International Equity.

 

Then recently, after some additional reading here and similar places, I switched to:

Vanguard extended market index (VEIEX) (ER 0.06%) 28%

Vanguard FTSE All-world index fun (VFWSX) (ER 0.10%) 30%

Vanguard institutional index fund (VIIIX) (ER 0.02%) 42%

 

I want to leave this alone going forward, but want to make sure I'm using the best investment options available to her. I appreciate any comments.

thanks,

Steve

 

 

[jfoxcpacfp]

RegenDoc - I liked your first portfolio. The second (current) one is overweight international, imo. The All-World Index is "ex-US" making your portfolio 58% international, which is a bit too much, imo. We'll see what others have to say.

[DMFA]

jfoxcpacfp wrote:

RegenDoc – I liked your first portfolio. The second (current) one is overweight international, imo. The All-World Index is “ex-US” making your portfolio 58% international, which is a bit too much, imo. We’ll see what others have to say.

Click to expand...

He means VIEIX, not VEIEX, I bet you.  Extended market, not emerging markets.

[RegenDoc]

Thanks for the correction DMFA. You're right. VIEIX.

[Lithium]

nishant144 wrote:

Hello everyone,

I’m new to the forum and have been a lurker for the past few months. I have really enjoyed learning from you all.  I was wondering if I could get some portfolio advice for a 401k that I am opening up in terms of which funds to buy and what allocation. I am 31, and this is my first 401k that I’m opening. It is through Empower and seems to have pretty crappy investment options with high fees, but at least they have a 4% employer match rate. Not sure the best way to post the info, but here goes:

Great West: MXLWX, MXDLX, MXJLX, MXPLX, MXVLX, MXCPX, MXDPX, MXMPX, MXBPX, MXAPX

Aberdeen emerging markets: GEGAX

American funds: RGICX, RNPCX

Oppenheimer Int growth: OIGAX

Great West Real Estate: MXREX

PIMCO comm: PCRAX

American Beacon small: ABSAX

Hartford small: HSLSX

Dreyfus Mid: DBMAX

Ridgeworth mid: SMVTX

Great West S&P500 index: MXVIX

Hartford equity: HQISX

MFS Gr Stk: MIGHX

Franklin: FHAAIX

Great West Bond Index: MXBIX

Legg Mason global opps: GOBAX

Loomis Sayles Bond: NEFRX

PIMCO real return: PRTNX

Key Guaranteed portfolio Fund

Thank you!

Click to expand...

It helps if you can post the ER's of all the funds.

if you have a really crappy 401k the standard advice is to just buy the least bad thing they offer and buy other things you need in other places with more/better choices, if possible.

[Lithium]

RegenDoc wrote:

I would like to piggyback on this post, as I’m in a similar position early in the 401k process (current value $21K, 100% match first 3%, then 50% match next 2%). This is my wife’s 401k (I don’t have one with my employer currently, but working on it). She is 33, I’m 36, no kids, plenty of med school and pharmacy loans (both refinanced with variable rates under 3.77% currently).

 

Her investment options are:

Target date Retirement trusts 2005-2055 (I initially put her in 2050) (ER 0.45%)

Stable value fund (ER 0.35%)

Fixed income fund (ER 0.38%)

Vanguard total bond market (VBTIX) (ER 0.04%)

Small cap fund (ER 1.18%)

Mid cap fund (ER 0.70%)

Large cap growth (ER 0.53%)

Large cap value (ER 0.45%)

Vanguard FTSE All-world index fun (VFWSX) (ER 0.10%)

Vanguard extended market index (VEIEX) (ER 0.06%)

Vanguard institutional index fund (VIIIX) (ER 0.02%)

International equity fund (ER 1.15%)

 

I moved her to this mix almost a year ago:

25% Small Cap, 10% Mid Cap, 15% Large Growth, 20% Large Value, 20% FTSE All World, 10% International Equity.

 

Then recently, after some additional reading here and similar places, I switched to:

Vanguard extended market index (VEIEX) (ER 0.06%) 28%

Vanguard FTSE All-world index fun (VFWSX) (ER 0.10%) 30%

Vanguard institutional index fund (VIIIX) (ER 0.02%) 42%

 

I want to leave this alone going forward, but want to make sure I’m using the best investment options available to her. I appreciate any comments.

thanks,

Steve

 

 

Click to expand...

Pretty risk heavy portfolio, since it's not only 100% equities but tilted small.  If you can handle that, it's fine.  I'm about your age and carry age - 20 in bonds.

[jfoxcpacfp]

DMFA wrote:

jfoxcpacfp wrote:

RegenDoc – I liked your first portfolio. The second (current) one is overweight international, imo. The All-World Index is “ex-US” making your portfolio 58% international, which is a bit too much, imo. We’ll see what others have to say.

Click to expand…

He means VIEIX, not VEIEX, I bet you.  Extended market, not emerging markets.

Click to expand...

Thanks for the correction. I was strictly looking up tickers in my MSO app to compare fees and didn't catch it.

[Hank]

Wow nishant144, those are some unfortunate choices in your 401(k). I'd talk with HR and management about getting some low cost, no-load index options in your 401(k). Right now it looks like your employer is offering investment options that are bad enough that they may fail to fulfill their fiduciary duty and open them up to a lawsuit.

Assuming management has the same investment options, they're getting screwed too with these expensive mutual funds too. Who on earth set this up?

[DMFA]

Do you know if those usually-loaded funds are load-waived within your 401(k)? Many plans and brokerages do waive the loads. Fidelity, for example, has deals with many other fund families (Oppenheimer and Morgan-Stanley are a couple examples) where you can buy their funds load-waived with no trade fee. I'm not saying that makes them a good buy, but if the choice is between whichever funds are "less bad," then that could be an important decision-making criterion.

[nishant144]

Thanks for the advice, everyone. I'm thinking of possibly just putting close to 100% into the least crappy fund (S&P 500 index) and putting a small amount into the next load-fund if they are able to waive the load fee. Will talk to them and find out if that can be done (but doubt it).

I am an associate in a single specialty surgical practice. As far as why we have such a crappy 401k? The partners don't use this fund. So I'm assuming they just don't care and/or its cheap for them.  :roll: