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please help with 401k allocation

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  • please help with 401k allocation

    Dear WCI Community,


    I want to pick your brains and I am open to suggestions regarding my retirement allocation.

    Short story about me: 3 years post graduation, no debt except Mortgage, House 1.3x my gross salary, saving about ~20-25% of gross/year (in 401, backdoor, HSA, etc, 2 kids – 529 for each).


    The options I have for my retirement (401 + match = 53k/year) are:

    expense ratio

    0.52%    Dodge & Cox Stock

    0.56%    T. Rowe Price Instl Large Cap Growth

    0.04%    Vanguard Institutional Index I

    0.82%    American Beacon Small Cp Val Inst

    0.07%    Vanguard Extended Market Idx I

    1.25%    William Blair Small Cap Growth I

    0.64%    Dodge & Cox International Stock

    0.1%      Vanguard Total Intl Stock Index I

    0.41%    JPMorgan Core Bond R6

    0.05%    Vanguard Total Bond Market Index I


    (none of the above have 12b fees)


    The questions, is what kind of distribution would you recommend me?

    Should I stick only with low cost vanguard?

    For instance

    37% on Vanguard Institutional Index I

    12% on Vanguard Extended Market Idx I

    36% Vanguard Total Intl Stock Index I

    15% Vanguard Total Bond Market Index I


    Or mix it up? Including non vanguard funds?


    Thanks for your help


  • #2
    Very limited choices, sorry about that. Assuming you have a long-term investing horizon:

    20% DODGX (LC Value)

    20% TRLGX (LC Growth)

    20% VTSNX (Int'l)

    40% VIEIX (SC/MC Growth)


    40% VINIX

    20% VTSNX

    40% VIEIX


    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Personally, I would stick with Vanguard only for the low fees.

      I recommend balancing your asset allocation across all accounts, rather than within each account. It makes life easier. You have Roth, perhaps a taxable account. Consider creating a simple IPS if you don't already have one, and consider all of your (and perhaps spouse's) retirement and brokerage accounts when deciding what to hold in your 401(k).

      Note: The 529 and perhaps HSA accounts should be treated separately, as they are not part of your retirement nest egg.




      • #4
        thanks for your advises:

        - yes, I am looking for long term investment (long term horizon). so not planning to take this money anytime soon.

        - Ideally, I would like to balance my allocation in all my different accounts, although so far I have not done it. my/my wife's Backdoor distribution is basically the "age target fund" while I learn more about investment and I feel more comfortable managing my own portafolio.

        - I have a very insignificant taxable account. (I just finished building up my emergency fund)

        - Good idea to treat HSA and 529 different.



        • #5
          In that list, I would use vanguard funds exclusively.  Forget about all the rest.  My recommendation:  figure out which vanguard target retirement that you fit (as in 2045), go to google finance and look up that fund and just use those funds.  VTIVX:

          Vanguard Total Stock Mkt Idx Inv 54.04%
          Vanguard Total Intl Stock Index Inv 35.93%
          Vanguard Total Bond Market II Idx Inv 6.91%
          Vanguard Total Intl Bd Idx Investor 3.08%

          (For you, just combine the two bond funds. On the day of Brexit--when the markets were sharply down--if you wish you had more money to invest, then you can consider Johanna's recommendation to eschew all bonds.)  Rebalance once a year.  Update your allocations to match the target once a year.  You get a target fund even cheaper than VTIVX!  Plus you can fine tune it if you want to be more aggressive (a Target 2047) or less (a Target 2042).