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02-15-2013, 02:19 PM
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#2
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Recycles dryer sheets
Join Date: Jan 2010
Posts: 91
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I'm not much help here, but why not just go for a target fund? Vanguard 2055 is a 90/10 allocation.
IDK, it isn't a priority for me to dig too deep into this stuff with little ones around. So I just do a target fund for my 401K. Set it and forget it.
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02-15-2013, 02:25 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by catccc
I'm not much help here, but why not just go for a target fund? Vanguard 2055 is a 90/10 allocation.
IDK, it isn't a priority for me to dig too deep into this stuff with little ones around. So I just do a target fund for my 401K. Set it and forget it.
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I didn't see any target funds listed as options in this 401K plan.
Still, you can get a very low cost 90/10 allocation pretty easily with just the Vanguard index funds listed here, something like this (specific percentages can be tweaked, obviously):
50% VINIX (large cap US)
20% VIEIX (small cap/mid cap US)
20% VFWSX (international equity)
10% VBTIX (bonds)
Keep this target allocation as long as it's appropriate and rebalance periodically, and you're golden. Apart from any other hidden 401K fees which may be out there, this has a blended expense ratio of around 0.07% which is very good.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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02-15-2013, 06:28 PM
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#4
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Recycles dryer sheets
Join Date: Jan 2010
Posts: 91
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Oh, I didn't realize that those were all the choices. Yeah, what ziggy said, if that is the case!
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02-16-2013, 07:11 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,682
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If less than 100K in the 401, I'd go with all stock funds. First I'd download the TREVH backtest spreadsheet, and enter something like the following:
25% Vanguard Institutional Index Fund Institutional Shares
Symbol: VINIX
25% Vanguard Extended Market Index Fund Institutional Shares
Symbol: VIEIX
25% Vanguard FTSE All-World ex-US Index Fund Institutional Shares
Symbol: VFWSX
25% Aberdeen Emerging Markets Fund Institutional Class
Symbol: ABEMX
Then I'd explore changing the allocations. Then would look at expenses, performance, and so on.
What is great about a 401(k) is that you can start with an idea and make changes as you determine going forward.
If you really want bonds, consider PTTRX in the desired percentage, and take this from the other funds in your weekly contribution allocation. Maybe 20-20-20-20-20.
You can over-analyze this, so I recommend to you same as I do to my own. Set it, then watch and learn about the asset classes and see what each contributes to your "pile." In time you'll make adjustments to the formula as you discover more about yourself as an investor.
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02-16-2013, 07:29 AM
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#6
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Confused about dryer sheets
Join Date: Feb 2013
Posts: 7
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Pyramis small company fund looks like the rewards outweigh the expense? I like it anyways. Also the Pimco bond trust looks leeps and bounds better than vbtix? I am not liking the foreign stock area. Vfwsx and dodfx seem similar so vfwsx would be the cheaper route. Morningstar seems to be very high on abemx, and to me looks pretty good too but expensive.
50-20-20-10 Is also what I was thinking. Again don't like international much so latest calc I did said 53-25-15-7.. like the looks of that a little better.
As I was writing this, target2019 replied as well. I am definitely going to play with the TREVH spreadsheet. I'm curious about going 100% equity, as I've also read to do this until you're forty. Do many recommend this? Or atleast until you reach 100k?
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02-16-2013, 12:15 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,682
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Quote:
Originally Posted by helm2013
Pyramis small company fund looks like the rewards outweigh the expense? I like it anyways. Also the Pimco bond trust looks leeps and bounds better than vbtix? I am not liking the foreign stock area. Vfwsx and dodfx seem similar so vfwsx would be the cheaper route. Morningstar seems to be very high on abemx, and to me looks pretty good too but expensive.
50-20-20-10 Is also what I was thinking. Again don't like international much so latest calc I did said 53-25-15-7.. like the looks of that a little better.
As I was writing this, target2019 replied as well. I am definitely going to play with the TREVH spreadsheet. I'm curious about going 100% equity, as I've also read to do this until you're forty. Do many recommend this? Or atleast until you reach 100k?
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The VG extended markets fund will provide you plenty of small company exposure. The VG funds for S&P500 and extended markets are the total us market, or thereabouts. By splitting equally between them, you get more small/mid than in a total US market fund.
I looked at the non-VG foreign funds, and I would take the emerging market ABEMX to tilt the VFWSX more to emerging markets. But that is just me.
Your calcs have as much validity as anyone else's. Come to think of it, my crystal ball is a little smudgy.
Maybe add a little PIMCO flavoring to that mix to see how it zigs when the other funds zag! Or maybe it is in your four funds.
Since you are learning much while still young, you will be fine. Build the portfolio on sound models, but don't be afraid to try a bit of contrarian advice now and then. That might fit your personality, since you mentioned not risk-adverse.
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02-16-2013, 12:28 PM
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#8
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Full time employment: Posting here.
Join Date: Nov 2010
Posts: 628
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Quote:
Originally Posted by ziggy29
I didn't see any target funds listed as options in this 401K plan.
Still, you can get a very low cost 90/10 allocation pretty easily with just the Vanguard index funds listed here, something like this (specific percentages can be tweaked, obviously):
50% VINIX (large cap US)
20% VIEIX (small cap/mid cap US)
20% VFWSX (international equity)
10% VBTIX (bonds)
Keep this target allocation as long as it's appropriate and rebalance periodically, and you're golden. Apart from any other hidden 401K fees which may be out there, this has a blended expense ratio of around 0.07% which is very good.
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I moved all international equities OUT of 401Ks and IRAs. Since these are taxed by other countries and write-offs aren't available to offset, tax wise, this is less efficient. YMMV.
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02-16-2013, 01:59 PM
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#9
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Confused about dryer sheets
Join Date: Feb 2013
Posts: 7
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Quote:
Originally Posted by target2019
The VG extended markets fund will provide you plenty of small company exposure. The VG funds for S&P500 and extended markets are the total us market, or thereabouts. By splitting equally between them, you get more small/mid than in a total US market fund.
I looked at the non-VG foreign funds, and I would take the emerging market ABEMX to tilt the VFWSX more to emerging markets. But that is just me.
Your calcs have as much validity as anyone else's. Come to think of it, my crystal ball is a little smudgy.
Maybe add a little PIMCO flavoring to that mix to see how it zigs when the other funds zag! Or maybe it is in your four funds.
Since you are learning much while still young, you will be fine. Build the portfolio on sound models, but don't be afraid to try a bit of contrarian advice now and then. That might fit your personality, since you mentioned not risk-adverse.
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Just want to make sure I'm understanding what you're saying with the domestic equites. If I'm alloting 78% of my portfolio to this allocation, you would put 39% into vinix and the other 39% into vieix?
I'm leaning towards adding abemx into my international allocation along with vfwsx as well. Morningstar says vfwsx consists of 25% emerging markets already though. So, I'm also wondering if adding abemx is even beneficial with it's seemingly high expense ratio. These risk indicators definitely have me leaning towards still involving abemx in some degree.
Alpha Beta RSquared Std. Dev.
ABEMX Aberdeen:Em Mkt;I 0.05 1.02 0.64 5.50
DODFX Dodge & Cox Intl Stock -0.75 1.28 0.84 5.97
VFWSX Vanguard FTSE xUS;Inst -0.73 1.21 0.83 5.68
Yes, I'm an overthinker but until I've satisfied myself there will be no piece of mind!
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02-16-2013, 03:11 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,682
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I'm an over-thinker too. But there are no guarantees whether I think this through a day or a week.
You mentioned ok with risk, so I believe you would want more risk in two areas: small/mid US and EM.
In total US, consider the style boxes as laid out on this page. I am pointing out that if you take on more risk and increase numbers in the small and mid style boxes, you will be rewarded over the long run. If you went with a pure index, then it would contain 80% VINIX and 20% VIEIX.
Yes, I am suggesting that at 28 I would go with a 50/50 split in US until I reached a milestone like 100K. But you may be more risk adverse than me, and that is fine. Some of this is about finding how much of a drop you can stomach.
I'm applying similar concept to international. First I stake out half of my int'l in the rest of the world. Then I tilt to EM, as I would be accepting more risk in the belief that the emerging world will create a larger middle class, and the managers of ABEMX are smart enough to invest accordingly.
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02-16-2013, 04:02 PM
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#11
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Confused about dryer sheets
Join Date: Feb 2013
Posts: 7
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Quote:
Originally Posted by devans0
I moved all international equities OUT of 401Ks and IRAs. Since these are taxed by other countries and write-offs aren't available to offset, tax wise, this is less efficient. YMMV.
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Didn't want to overlook this but at this point in time(not much money in my 401k.. too much ), I feel it'd be best if I focus on my 401k being diversified than trying to allocate between multiple accounts.
I appreciate your advice, target2019. It sure is rough being an over thinker and somewhat impatient! I tend to study everything until my head hurts haha. Starting to get a more clear picture of how I want to shape my 401k portfolio though. I like the idea of putting more risk into it until reaching a 100k goal. I already have a 'reach 200k by age 40' goal, so another goal would be good to look forward to.
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02-16-2013, 05:18 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,682
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Quote:
Originally Posted by helm2013
I appreciate your advice, target2019. It sure is rough being an over thinker and somewhat impatient! I tend to study everything until my head hurts haha. Starting to get a more clear picture of how I want to shape my 401k portfolio though. I like the idea of putting more risk into it until reaching a 100k goal. I already have a 'reach 200k by age 40' goal, so another goal would be good to look forward to.
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The result is driven by your contributions first. So get started in some way.
Also look at your total portfolio and develop an understanding of the different investing spaces, and what fits best where. This backs up what was said about int'l better suited in taxable.
Securities in approximate order of tax-efficiency.
15 Hi-Yield bonds [least tax-efficient]
14 TIPS
13 Taxable bonds
12 REIT stocks
11 Stock trading accounts
10 Balanced funds
9 Small-Value stocks
8 Small-Cap stocks
7 Large Value stocks
6 International stocks
5 Large Growth stocks
4 Most stock index funds
3 Tax-Managed funds
2 EE and I-Bonds
1 Tax-Exempt bonds [most tax-efficient]
So the investments towards the top of list are better suited for 401(k). But don't try to keep everything perfect. You really do have a good mix, and can change things easily within the 401(k) if you really want to change strategy.
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02-16-2013, 05:53 PM
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#13
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Confused about dryer sheets
Join Date: Feb 2013
Posts: 7
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Could you point me in the direction of some good investment tax efficiency readings? I'll admit it's one topic I haven't really studied much. I do my own taxes as well so I should get knowledgable in the area.
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02-17-2013, 05:51 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,682
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Quote:
Originally Posted by helm2013
Could you point me in the direction of some good investment tax efficiency readings? I'll admit it's one topic I haven't really studied much. I do my own taxes as well so I should get knowledgable in the area.
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I would start at this wiki.
The Tax Considerations page covers the topic very well.
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02-17-2013, 09:49 AM
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#15
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Confused about dryer sheets
Join Date: Feb 2013
Posts: 7
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I've tried to join the bogleheads forum twice in the past and it always tells me I'm a known spammer, which is new to me! I do still read a lot over there though, so much good stuff to learn. Thanks for the links.
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02-17-2013, 10:24 AM
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#16
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Full time employment: Posting here.
Join Date: Nov 2010
Posts: 628
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Quote:
Originally Posted by helm2013
Could you point me in the direction of some good investment tax efficiency readings? I'll admit it's one topic I haven't really studied much. I do my own taxes as well so I should get knowledgable in the area.
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Principles of Tax-Efficient Fund Placement - Bogleheads
This succinctly gives a good overview. It's in a wiki. You won't have to be a member to access it.
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02-17-2013, 11:20 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by helm2013
I've tried to join the bogleheads forum twice in the past and it always tells me I'm a known spammer, which is new to me! I do still read a lot over there though, so much good stuff to learn. Thanks for the links.
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Some message boards automatically flag someone a spammer if they join a forum and their first post contains a lot of links.
Bogleheads in particular is one of the most strictly moderated forums out there, so it wouldn't surprise me if someone joined and immediately started making posts with a lot of links would be flagged that way, even if it wasn't intended as spam.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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02-17-2013, 11:57 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,682
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Quote:
Originally Posted by helm2013
I've tried to join the bogleheads forum twice in the past and it always tells me I'm a known spammer, which is new to me! I do still read a lot over there though, so much good stuff to learn. Thanks for the links.
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Sorry I can't help you with that. You can still read there.
It's possible your email address is associated with a domain that is flagged. Maybe you have a domain, and it is on a shared server that is flagged on blacklist sites.
Could also be the username you are using. Next up would be your ISP and/or modem IP. I guess you could really be a spammer, too!
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02-17-2013, 03:32 PM
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#19
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Confused about dryer sheets
Join Date: Feb 2013
Posts: 7
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Well I've been happy with the help I've received on here so everythings good.
I've been reading into tax efficiency with those links and I think it'd be easier to have my international fund in a taxable now so I can get the proper percentage of allocation into it.
So what fund does anyone recommend? I'd like to start it with Vanguard, only have 1k for it though. So maybe an ETF would work better?
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02-18-2013, 12:23 AM
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#20
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Dryer sheet aficionado
Join Date: Feb 2013
Posts: 39
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Quote:
Originally Posted by catccc
I'm not much help here, but why not just go for a target fund? Vanguard 2055 is a 90/10 allocation.
IDK, it isn't a priority for me to dig too deep into this stuff with little ones around. So I just do a target fund for my 401K. Set it and forget it.
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Target funds?
I'll pass on those. Those funds are supposed to gradually ease into bonds when you get older. What if when you're close to your target date and interest rates are going up? Those bond funds are going to get slaughtered.
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