401K Investment Options

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bdelgaudio

Dryer sheet wannabe
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Aug 3, 2013
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I am trying to figure out what to invest in for my 401k. The advisor just told me to invest in a T Rose Price Target date fund and a reit. I am just not sure if i should keep that or pick some other funds and build a portfolio.


Any advice would be appreicated.


The options are below:



Income

Invesco Stable Asset Fund

PIMCO Total Return Fund - Class A

PIMCO Investment Grade Credit Bond Fund - Class A

DWS Global High Income Fund - Class S


Growth & Income

T. Rowe Price Retirement 2005 Fund - Class R

T. Rowe Price Retirement 2010 Fund - Class R

T. Rowe Price Retirement 2015 Fund - Class R

T. Rowe Price Retirement 2020 Fund - Class R

T. Rowe Price Retirement 2025 Fund - Class R

T. Rowe Price Retirement 2030 Fund - Class R

T. Rowe Price Retirement 2035 Fund - Class R

T. Rowe Price Retirement 2040 Fund - Class R

T. Rowe Price Retirement 2045 Fund - Class R

T. Rowe Price Retirement 2050 Fund - Class R

T. Rowe Price Retirement 2055 Fund - Class R

T. Rowe Price Retirement 2060 Fund - Class R

State Street Aggressive Strategic Balanced Securities Lending Series Fund - Class VII

State Street Conservative Strategic Balanced Securities Lending Series Fund - Class VII

State Street Moderate Strategic Balanced Securities Lending Series Fund - Class VII


Growth

AB Relative Value Fund - Class A

Neuberger Berman Large Cap Value Fund - Advisor Class

Franklin Rising Dividends Fund - Class A

State Street S&P 500 Index Securities Lending Series Fund - Class IX

T. Rowe Price Blue Chip Growth Fund - Class R

State Street S&P MidCap Index Non-Lending Series Fund - Class J

Neuberger Berman Mid Cap Growth Fund - Advisor Class


Aggressive Growth

AllianzGI NFJ Small-Cap Value Fund - Class A

Invesco Small Cap Value Fund - Class A

State Street Russell Small Cap Index Securities Lending Series Fund - Class VIII

Neuberger Berman Genesis Fund - Advisor Class

T. Rowe Price International Value Equity Fund - Advisor Class

The Hartford International Opportunities Fund - Class R4

Franklin Mutual Global Discovery Fund - Class R

Templeton Growth Fund, Inc. - Class A

Invesco Developing Markets Fund - Class A

Victory Sophus Emerging Markets Fund - Class A

Oppenheimer Gold & Special Minerals Fund - Class A

State Street REIT Index Non-Lending Series Fund - Class G

Total
 
I am 31. I am not sure exact year to retire but i have a ways to go. I know i am young so open to pretty aggressive approach.
 
They do look high. Thats why im debating if i should look at other options in the plan.
 
The lowers fee option for equities is likely the State Street S&P 500 Index.
 
Last time I checked, the total US stock market was 65% large-cap, 27% mid-cap and 8% small-cap... I don't think that you would go too wrong with the following:

65% State Street S&P 500 Index Securities Lending Series Fund - Class IX
27% State Street S&P MidCap Index Non-Lending Series Fund - Class J
8% State Street Russell Small Cap Index Securities Lending Series Fund - Class VIII

It would be prudent to look at the fund objectives and holdings to get a sense that they are large, mid and small cap funds, but going from the names that would appear to be the case.

I assume that the ERs for these funds are lower than the rest.... but you should check that out too.

Does your 401k offer a match? Do you contribute more than $5,500 a year? If the answer to both of those is no then you may be better off just doing a deductible IRA... you;ll have better investment choices and lower fees and expenses.
 
Last edited:
Pb4uski,

To answer you questions,

I just checked out the funds your recommended. These are the only true index fund and are the cheapest.

The T rowe price target date funds ER are 1.24 which is pretty high as are many of the other mutual fund offerings. FOr the funds you recommened:

1. State Street S & P 500 Index - ER of .70 Categorized as Large Blend

2. State Street Mid Cap ER of .71 Follows the Mid Cap 400 Index

3. State Street small cap ER of .96 Follows the Russell 2000 Index

4. There is also the State Street REIT. IT has ER of .72 and it folows the Dow Jones U.S. Select Reit Index.

About the 401k, they match up to 6 %. IT is a straight match so i put in 6%, they put in another 6% I need to at least do that for the free money.

It does look like those 3 state street fund are best options. Do you add REIT to that or leave it out? Also, i guess i have no options for bonds? i know i am being aggressive but should have some bonds?
 
bdelgaudio said:
Pb4uski,

To answer you questions,

I just checked out the funds your recommended. These are the only true index fund and are the cheapest.

The T rowe price target date funds ER are 1.24 which is pretty high as are many of the other mutual fund offerings. FOr the funds you recommened:

1. State Street S & P 500 Index - ER of .70 Categorized as Large Blend

2. State Street Mid Cap ER of .71 Follows the Mid Cap 400 Index

3. State Street small cap ER of .96 Follows the Russell 2000 Index

4. There is also the State Street REIT. IT has ER of .72 and it folows the Dow Jones U.S. Select Reit Index.

About the 401k, they match up to 6 %. IT is a straight match so i put in 6%, they put in another 6% I need to at least do that for the free money.

It does look like those 3 state street fund are best options. Do you add REIT to that or leave it out? Also, i guess i have no options for bonds? i know i am being aggressive but should have some bonds?
Click to expand...

I find that my primary residence, being owned, is already a significant percentage of my net worth tied up in real estate and thus don't feel the need to increase the percentage of my money tied up in that one asset class personally. Obviously your situation could be very different from mine however, but if you own a $200k home outright and have a net worth of $1M then real estate is already 20% of your net worth.
 
pb4uski said:
Last time I checked, the total US stock market was 65% large-cap, 27% mid-cap and 8% small-cap... I don't think that you would go too wrong with the following:

65% State Street S&P 500 Index Securities Lending Series Fund - Class IX
27% State Street S&P MidCap Index Non-Lending Series Fund - Class J
8% State Street Russell Small Cap Index Securities Lending Series Fund - Class VIII

It would be prudent to look at the fund objectives and holdings to get a sense that they are large, mid and small cap funds, but going from the names that would appear to be the case.

I assume that the ERs for these funds are lower than the rest.... but you should check that out too.

Does your 401k offer a match? Do you contribute more than $5,500 a year? If the answer to both of those is no then you may be better off just doing a deductible IRA... you;ll have better investment choices and lower fees and expenses.
Click to expand...
The fees look high, my megacorp 401k fees are half or better than those and was just sued for being too high. megaCorp settled 4 people and a lawyer got rich, everyone else is waiting for $2.38 est settlement .
 
If it was me, I would just put it in the SP500 fund and call it good. But that's me. I sure don't like the fees they charge, that .70 is high for an SP500 index fund. But you get a 6% match so that makes it much easier to accept.


Bottom line is I can't recommend anything for you, but I would go for the SP500 fund.
 
Last edited:
I'd split your money between S&P 500 as well as "Small Cap Value Fund" (with the lowest ER) in whatever ratio allows you to sleep at night. At your age, right now I'd be pretty heavy in small cap value IMO.

This of course assumes you're ok leaving it be in market turns. Your level of risk tolerance is something only you can determine.
 
bdelgaudio said:
.... It does look like those 3 state street fund are best options. Do you add REIT to that or leave it out? Also, i guess i have no options for bonds? i know i am being aggressive but should have some bonds?
Click to expand...

Weighted average ER is .7235%... not bad and as Unrealized Potential posted just part of the cost of getting the 6% match.... though with those choices I dunno if I'd do more than 6%... might do anything above that in a deductible tIRA.

That weighting would cover the total US stock market. No need for bonds at 31... ease into them when you are in your late 40s or early 50s... growth is more important than stability at this point.

No need for REIT... that mix has about 3% real estate exposure which is good enough.
 
Last edited:
A terrible list to be sure. I would complain to your HR department and ask for (1) a low cost US total market index fund (typ. Russell 3000) and (2) A low cost total market international fund (typ ACWI). The goal would be to put 30-50% in the international fund and the balance in the US fund. No bonds at your age.

I thought the feds had mandated that every 401K offer a low cost index fund. 0.7% is not low cost. 0.05% is low cost. You are getting ripped off.
 
bdelgaudio said:
1. State Street S & P 500 Index - ER of .70 Categorized as Large Blend
Click to expand...
Above is the best option you have. Contribute to get the maximum match.
Then open a Roth IRA, where you can contribute up to $5,500 per year. Vanguard | Schwab | Fidelity, does not matter. Put your Roth IRA contribution into something called "Extended Market" or "Completion Index". Reference for completion index:
https://www.bogleheads.org/wiki/Extended_market_index_fund
 
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