please help with 401k allocation

[Carlos]

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

 

[jfoxcpacfp]

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)

OR

40% VINIX

20% VTSNX

40% VIEIX

 

 

[PhysicianOnFIRE]

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.

Best,

-PoF

[Carlos]

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.

thanks

[G]

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).