Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Can You Help Me To Reduce My Investment Portfolio's Expense Ratio
Old 01-29-2014, 10:16 PM   #1
Recycles dryer sheets
 
Join Date: Feb 2010
Posts: 396
Can You Help Me To Reduce My Investment Portfolio's Expense Ratio

I was playing around with FIRECalc and I made an interesting discovery. I can increase my early retirement chance of success by reducing my expense ratio from where it currently is, about .6 percent, to about .2 percent. I have a asset allocation goal as follows:

stock
large cap 44%
mid/small cap 12%
international 23%

bonds
investment grade 14%
hi yield 2%
international 4%

Now, a good portion of my investment portfolio are in two 401k accounts from employers, so my ability to reduce the expense ratio on those accounts is limited to the choices within the plan.

A five percent increase in the chance of success in my early retirement is pretty significant, from my point of view. As such, can you recommend a set of low cost high quality mutual that would replicate my current asset allocation goal.

Also, in my taxable accounts, if I traded out of the mutual funds I have and into lower cost mutual funds, will I get hit with a big tax in the year that these transactions take place?

Thanks.
__________________

__________________
nico08 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-29-2014, 10:28 PM   #2
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
Tracking your expenses is the first step to optimizing them so you are on the right path. Since I started tracking (only a few years ago) my expense ratio has dropped from 0.28% to 0.184%.

Quote:
Originally Posted by nico08 View Post
Now, a good portion of my investment portfolio are in two 401k accounts from employers, so my ability to reduce the expense ratio on those accounts is limited to the choices within the plan.
If you don't have good options in your 401k, you can always rollover your account to an IRA to get better options.

Quote:
A five percent increase in the chance of success in my early retirement is pretty significant, from my point of view. As such, can you recommend a set of low cost high quality mutual that would replicate my current asset allocation goal.
Pretty much any vanguard index or etf. Fidelity spartan is another good choice. is hares has some reasonable options too.



Quote:
Also, in my taxable accounts, if I traded out of the mutual funds I have and into lower cost mutual funds, will I get hit with a big tax in the year that these transactions take place?
You'll have to pay taxes on any capital gains you have.
__________________

__________________
photoguy is offline   Reply With Quote
Old 01-30-2014, 10:04 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Sounds like Vanguard S&P 500 (VOO ETF 0.05% ER), Extended Stock Market (VXF ETF 0.14%), and All-World Ex-US (VEU ETF 0.15% ER) fit the equity side. But the exact choices depend on which broker you are using or want to move to.
__________________
Animorph is offline   Reply With Quote
Old 01-30-2014, 11:42 AM   #4
Recycles dryer sheets
 
Join Date: Feb 2010
Posts: 396
Thanks. I do have an account with Vanguard so these funds should be good. What do you think about law expense ration bond funds?

Quote:
Originally Posted by Animorph View Post
Sounds like Vanguard S&P 500 (VOO ETF 0.05% ER), Extended Stock Market (VXF ETF 0.14%), and All-World Ex-US (VEU ETF 0.15% ER) fit the equity side. But the exact choices depend on which broker you are using or want to move to.
__________________
nico08 is offline   Reply With Quote
Old 01-30-2014, 12:27 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Quote:
Originally Posted by nico08 View Post
Thanks. I do have an account with Vanguard so these funds should be good. What do you think about law expense ration bond funds?
BND is the total bond market ETF. ER is 0.10%. I don't use bonds much, so that's about all I know.
__________________
Animorph is offline   Reply With Quote
Old 01-30-2014, 12:36 PM   #6
Recycles dryer sheets
ducky911's Avatar
 
Join Date: May 2010
Posts: 397
while I was working I was good at putting money into my accounts. Now that I am retired I have learned to patch the holes in the dam.

I have been very happy with the expenses on Schwab etfs, just check out schb (.04) for example. Pretty cool way to make money is to not spend it.

My current over all average is just under .18....there are some things I could do to get it down a bit, but that's where I am now. Still adds up to a lot of money as a total per year.
__________________
You've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?
I hate (despise) loads and fees
Retired July '11 investments 55/45 in very low cost index and mutual funds, balance once a year at best.
ducky911 is offline   Reply With Quote
Old 01-30-2014, 06:06 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,627
Quote:
Originally Posted by nico08 View Post
Now, a good portion of my investment portfolio are in two 401k accounts from employers, so my ability to reduce the expense ratio on those accounts is limited to the choices within the plan.
Two plans? Are you still working for both employers?

If not, one can rollover asset in an old 401(k) to a place with lower expense ratios.

With any 401(k) plan (or both!) one can probably figure out how to select the fund or funds with the lowest expense ratio and work out total asset allocation with funds in other accounts. For example, a 401(k) plan may have a low expense ratio S&P500 index fund, but the rest are high fees, so one would try to have all US large cap in the 401(k) as the S&P500 index fund.
__________________
LOL! is offline   Reply With Quote
Old 01-31-2014, 09:11 AM   #8
Full time employment: Posting here.
sailor's Avatar
 
Join Date: May 2005
Location: Atlanta suburbs
Posts: 881
Nico,
one (or two more things) to simplify: how important for you is your high yield bond position?
At 2% of your portfolio, the diversification benefits are negligible.
Also - check your 401k plans, some plans with Schwab or Fidelity allow full brokerage access, where you can use cheap ETFs.
__________________

__________________
sailor is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
401k (high expense ratio) vs. Non-Tax deferred account (low expense ratio) Mike54 FIRE and Money 15 11-11-2012 11:31 PM
Expense ratio smooch FIRE and Money 4 12-28-2005 09:14 PM
Expense Ratio Reporting TromboneAl FIRE and Money 8 12-01-2005 11:04 AM

 

 
All times are GMT -6. The time now is 12:05 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.