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Should I change my 401k investments?
Old 12-27-2013, 12:47 PM   #1
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Should I change my 401k investments?

Hello,

Seeking some advice/tips/critiques on my current 401k investments.. I'm 24, make around 55k a year, put at least 6k a year into my 401k (4k of mine, plus a 2k max. employer match). Current 401k balance is around 20k.

I'm currently investing 75% in SPTN 500 INDEX ADV (FUSVX) and 25% in VANG TOT BD MKT INV (VBMFX). All my 401k options are listed below... Thoughts? Opinions? Critiques? Thanks!

BLKRK EQUITY DIV A (MDDVX)
FID CAPITAL APPREC (FDCAX)
SPTN 500 INDEX ADV (FUSVX)
TRP GROWTH STOCK (PRGFX)
FID LOW PRICED STK (FLPSX)
PRU/J MID CAP GR A (PEEAX)
RDGWTH MID CAP VAL I (SMVTX)
FID SMALL CAP VALUE (FCPVX)
FID STK SEL SM CAP (FDSCX)
ARTISAN EMRG MKT ADV (ARTZX)
BLKRK INTL OPP A (BREAX)
FID INTL DISCOVERY (FIGRX)
SPTN INTL INDEX ADV (FSIVX)
FID BALANCED (FBALX)
FID FREEDOM 2010 (FFFCX)
FID FREEDOM 2020 (FFFDX)
FID FREEDOM 2030 (FFFEX)
FID FREEDOM 2035 (FFTHX)
FID FREEDOM 2040 (FFFFX)
FID FREEDOM 2045 (FFFGX)
FID FREEDOM 2050 (FFFHX)
FID FREEDOM 2055 (FDEEX)
FID FREEDOM INCOME (FFFAX)
FID CAPITAL & INCOME (FAGIX)
PIMCO TOTAL RETURN R (PTRRX)
VANG TOT BD MKT INV (VBMFX)
FID RETIRE MMKT (FRTXX)
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Old 12-27-2013, 12:58 PM   #2
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I think Fidelity has a total stock index fund with low fees, probably around 5 (.05%) basis points. If they don't they should. If they do I'd transfer my stock purchase to that fund.

My company added (Fidelity was NOT happy) vanguard small cap and mid cap index funds, expenses really low.......around 10 to 15 basis points. Over the past 10 years small and mid cap along with total stock has slightly outperformed the S&P 500 index funds.

Some will suggest a portion of your money go to an international fund. I have a Vanguard international index fund outside of my 401k, I just hate any high expense fund choices.

Good luck to you, glad to hear you're saving at a young age. And let me add, Fidelity is a great company to hold your 401k, I do like Vanguard better because, overall, their expenses are lower.
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Old 12-27-2013, 01:10 PM   #3
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Firstly well done on saving for retirement at such a young age, that's the most important thing. Next you should try to increase your savings.

I don't see much wrong with your 2 fund AA, maybe add some (say 20%) SPTN INTL INDEX ADV (FSIVX) and a bit of small and mid cap......but honestly I'd keep it simple and do a "couch potato" 3 fund portfolio of maybe 55% S&P, 20% international, 25% bonds.
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Old 12-27-2013, 01:17 PM   #4
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At age 24 I would go 100% equities: 70% domestic and 30% international.

One option would be 70/30 500 Index and International Index.

If the ERs on the small and mid cap funds are not too high (say, ~ 0.50%) then I would add some of them in and reduce the 500 Index.

I would get out of bonds for two reasons - your young age and interest rate risk.
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Old 12-27-2013, 01:33 PM   #5
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Quote:
Originally Posted by pb4uski View Post
At age 24 I would go 100% equities: 70% domestic and 30% international.

One option would be 70/30 500 Index and International Index.

If the ERs on the small and mid cap funds are not too high (say, ~ 0.50%) then I would add some of them in and reduce the 500 Index.

I would get out of bonds for two reasons - your young age and interest rate risk.
+1 for the most part. Less bonds, add some international. I'd still like to add some small caps (FCPVX I guess) to the S&P 500.
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Old 12-27-2013, 03:47 PM   #6
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Thanks for all the great replies...

I never thought of being in 100% equities. It's definitely an interesting option, although I'm trying to build up my risk tolerance...

Although, to pb4uski's point, I have been concerned about the interest rate risk on the bonds... How much of a swing could I see with the bond fund?
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Old 12-27-2013, 04:13 PM   #7
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Quote:
Originally Posted by 62caster View Post
Thanks for all the great replies...

I never thought of being in 100% equities. It's definitely an interesting option, although I'm trying to build up my risk tolerance...

Although, to pb4uski's point, I have been concerned about the interest rate risk on the bonds... How much of a swing could I see with the bond fund?
You can look up the duration of a bond fund. Total Bond is about 5.5 so if interest rates increase 1% then Total Bond would decrease about 5.5%; if interest rates increase 2% then Total Bond would decrease 11%, and so on and so forth. As bonds mature and get reinvested at higher rates the value of Total Bond would recover, but it might take some time.
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Old 12-30-2013, 02:42 PM   #8
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Thanks for the help everybody.. Pretty sure I'm going to be doing some reallocating in the new year.
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