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Help with rebalancing my 401k investments

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  • Help with rebalancing my 401k investments

    I'm in the process of trying to redistribute my 401k dollars to more reflect my overall investing plan. When I started investing in my 401k 3 years ago, I hadn't yet done the reading and learning necessary to know what funds to select, so I put everything into the State Street Target Retirement Date 2050 fund. It has done fine, but now I'm having more difficulty trying to hit the targets I've set for asset allocation with this fund as the entirety of my 401k.

    Currently I am 36 years old, and my 401k has roughly $190,000 in it, again all in the target date fund. My taxable brokerage account has about $100,000 at the moment, and I'm putting $10,000 a month in to this account while maxing out the 401k with employer match every year as well. In my brokerage account, I'm targeting about 45% in VTSAX (Total stock market admiral shares), 28% in VSIAX (small cap value), 18% in VFWAX (international) and 9% in Vanguard total bond market.

    In my John Hancock 401k, I don't have access to the Vanguard Total Stock Market Fund. I do have access to the other parts of my portfolio. The closest funds I can find to VTSAX are the DFA Large Company Fund (seems to track S&P500, expense ratio 0.08%) or the TIAA-CREF Equity Index Fund (seems to track Russell 3000, expense ratio 0.05%). I'm leaning towards moving the money out of my target date fund and into the same proportional allocation as my taxable account, with one of these two funds replacing VTSAX, as that seems more straightforward than trying to put all my taxable account in to VTSAX and use the 401k for just my international/small cap/bond investing. Does this seem reasonable? Am I missing something? Would the TIAA-CREF fund make sense as my broad US equities exposure in my 401k?
    Thanks in advance!

  • #2
    It will become more and more difficult to mirror all your asset allocations between your different investment accounts. Easier to have one asset allocation across all accounts. Then you place specific assets into each account based on what your investment options are and what is best tax efficiency wise.


    • #3
      Physician on FIRE has a great excel sheet you can get that helps you figure out your AA across all accounts. Those funds you listed are solid to use. Your AA might be 80 stocks 20 bonds but that doesn't meant your 401k should be 80/20. There's tax-efficient placement too. This might sound complicated at first but if you push through this will soon make sense and seem much easier. See the pictures: