401k not growing - anyone else?

[zinfamous]

No, I found out that I can just invest future contributions as well as move my existing balance to a different fund.

So I want to roll over my funds from the T. Rowe 2050 to Vanguard Admiral 500 Index (VFAIX). Problem is the minimum is $10,000, but I only have $5,500. Will hit $10,000 later this year.

ah, so your company also provides Vanguard to manage the 401K? do that, then. It seems odd that you can't get the admiral class without minimums within a 401K, but if that is actually true, then you can choose the investor share class and it will ask if you want to update it when you become eligible. It's probably VFIIX if the VFAIX is showing you 10k minimum and ~0.05 exp ratio.

 

[monkeydelmagico]

This is great advice if you plan to retire in 60 years.

The value of balancing beyond total stock exposure in a single perfect index fund is old thinking at this point.

http://jlcollinsnh.com/stock-series/

Old, wise, and wealthy. While I am none of these things yet I tend to take my investment advice from them.

I'm sure there are plenty of folks here who watched their 100% stock portfolio take a dump in 08. Being 100% invested in the stock market is very risk tolerant. The bull doesn't run forever. Even a small percentage of diversification can help buffer against the inevitable bear market.

 

[zinfamous]

Old, wise, and wealthy. While I am none of these things yet I tend to take my investment advice from them.

I'm sure there are plenty of folks here who watched their 100% stock portfolio take a dump in 08. Being 100% invested in the stock market is very risk tolerant. The bull doesn't run forever. Even a small percentage of diversification can help buffer against the inevitable bear market.

exactly. and the smart ones that saw their money plummet by half thought this was the greatest day ever, because they sat on those shares and pumped even more and more and more into those same funds while that was happening. Sitting on bonds and locked into CDs with shitty interest rates compared to the 33% and 20% climbs after 08 would have been very bad in comparison.

The only people that lost on stocks those years were the ones that committed the one true sin by selling off their funds: buy high, sell low! d'oh! On top of that, if you were well-invested and living off of dividends, you really weren't hurt at all being 100% into stocks: Dividends kept coming in while the value of those stocks slowly recovered over 1 year, then skyrocketed. Hindsight, of course--but you just have to accept that the market always goes up and grow thick skin to those dips. Not saying that it's easy. All this assumes a few things: one still had a job and income during that time, so no reason to care about retirement for a few years, and either already retired/living off of dividends or close enough to retirement and well-invested ahead of time where it didn't really matter.

the market will crater, but it will always go up, and without fail. Bonds and REITs and other classes are great for stability, but not when you're young and have a few decades to grow wealth. REITS and certain bond funds aren't that great for taxable account either, because they aren't as tax efficient as low-fee stock index funds.

 

[yh125d]

My main is with Voya, 100% in a Vanguard 2473 VFFVX target 2055 retirement and is currently -3.42% over the last 2 years. Not real happy about that.

My Roth though with Vanguard directly in the same fund is +4.3% since inception. I have no idea how that works.

 

[zinfamous]

My main is with Voya, 100% in a Vanguard 2473 VFFVX target 2055 retirement and is currently -3.42% over the last 2 years. Not real happy about that.

My Roth though with Vanguard directly in the same fund is +4.3% since inception. I have no idea how that works.

This is how. You are looking at your return in one example over two years, vs the fund's total return throughout its life in your second holding, correct?

With the second holding, how long have you had it and what is that return? Or are you saying since your inception? If you've held it for several years longer than the same 2 years with the other holding, that could explain everything (2013-2014 were fantastic, for example. 2015-now...not so great).

Could also be that Voya is charging you some additional fees on top of Vanguard's standard fee (though doubtful very significant)

 

[TheGardener]

I don't think the OP understands that "rollover" and "transfer" have different meanings in the context of 401k land. Makes for a confusing thread.

 

[Capt Caveman]

I don't think the OP understands that "rollover" and "transfer" have different meanings in the context of 401k land. Makes for a confusing thread.

Well, if you actually had a clue, he would have also googled the performance of the stock market it would have answered his first question.

 

[zinfamous]

I don't think the OP understands that "rollover" and "transfer" have different meanings in the context of 401k land. Makes for a confusing thread.

aye.

 

[drinkmorejava]

I feel bad for you guys. My target date funds are dirt cheap

Government TSP Lifecycle 2050 is 0.029%
GE RSP Target 2050 is 0.08%

TSP cheats a little though because their costs are offset by penalties on people who leave the government before they're vested...I guess that would include me.

 

[SeductivePig]

ah, so your company also provides Vanguard to manage the 401K? do that, then. It seems odd that you can't get the admiral class without minimums within a 401K, but if that is actually true, then you can choose the investor share class and it will ask if you want to update it when you become eligible. It's probably VFIIX if the VFAIX is showing you 10k minimum and ~0.05 exp ratio.

I guess I should've mentioned that the $10k minimum is only something I saw when googling, and it was probably for a personal account.

My 401k does not mention anything about a $10k minimum.

So at this point I'm just trying to figure out whether to put everything into the VFIAX, or put some into the midsize and small funds as well.

And to the posters above, it will be a transfer, not a rollover.

 

[NoCreativity]

I guess I should've mentioned that the $10k minimum is only something I saw when googling, and it was probably for a personal account.

My 401k does not mention anything about a $10k minimum.

So at this point I'm just trying to figure out whether to put everything into the VFIAX, or put some into the midsize and small funds as well.

And to the posters above, it will be a transfer, not a rollover.

Vanguard typically waives or lowers the minimum for retirement accounts.

 

[Jeff7]

Those are high, yes.

This is what I have (401k through Fidelity):

60.61%
Spartan® 500 Index Fund - Fidelity Advantage Class
Symbol: FUSVX
Exp Ratio (Gross) 0.07%
Exp Ratio (Net) 0.05%

29.87%
Spartan® Extended Market Index Fund - Fidelity Advantage Class
Symbol: FSEVX
Exp Ratio (Gross) 0.07%
(Net) 0.07%

9.52%
Fidelity® Capital & Income Fund
Symbol: FAGIX
Exp Ratio (Gross) 0.72%
(Net) 0.72%

I'm actually going to lose that last one...I didn't know it was so high.
Edit: lol, apparently I already did and the balance was left over from previous contributions.

Those are all of your other options?
FAGIX is the only bond fund?


The 500 Spartan fund is doing what Vanguard's 500 fund does: Track the S&P 500 index.
Since they're effectively the same, go with what's cheaper.

The S&P 500 fund gets you large company exposure, and the Spartan Extended fund will get you the rest of the market.

Seems like a lot of people are overweight stocks. I'd advise against >50% market exposure at this point in time. Make sure your 401k has a decent allocation of cd's, munis, treasuries, maybe even a bit of GLD, REIT, etc. Get defensive right now. If you can lock in any kind of return you will be doing better than most.


Good luck

Why not >50% stocks? What determines that is your risk tolerance, which is determined in part by how long it'll be until you want the money.
The usual questions: If >50% stocks "at this point in time" is bad, when is a good time? What do you know that isn't reflected in stock prices right now?

 

[zinfamous]

I guess I should've mentioned that the $10k minimum is only something I saw when googling, and it was probably for a personal account.

My 401k does not mention anything about a $10k minimum.

So at this point I'm just trying to figure out whether to put everything into the VFIAX, or put some into the midsize and small funds as well.

And to the posters above, it will be a transfer, not a rollover.

OK, yes, so a transfer, then.

VFIAX is a 500 index fund, so not a total stock market fund (like VTSAX). Putting some of that money into midcap and small indexes is a great idea, because it gives you even broader market exposure.

VTSAX is an effective one-stop shop if you had to pick a single fund to invest in. VFIAX isn't bad at all, either, but you lose out on some of the volatility (greater risk/greater reward) of those midcap stocks.

to that end, the largecap stocks are generally more reliable with far less turnover than the emerging stocks, so you probably want to proportion it something like 70/20/10 from large-mid-small. Those mid and small also typically have higher expense ratios, so that kind of balancing reduces the effect of those larger fees.

I'm no expert, but I think that getting an idea of the actual market representation of prime-large-mid-small cap stocks, one can easily make their own portfolio of total stock exposure by matching that proportion with their own allocation into various representative index funds. In fact, this is what people do, anyway. You may also want to toss in an international index fund at some point. Though I think this isn't entirely accurate, I do like Jim collin's idea that investing entirely in something like VFIAX or VTSAX uS stocks, you are already investing "internationally" because those major companies (Coke, Apple, Microsoft, etc) have international market share. (not entirely accurate because, well, they are simply different companies. Nestle, for example, is not a US company). Still, the success of Apple and Coke absolutely does depend on the success of the global economy. The only thing you miss by not going into an international equity fund is another collection of companies (generally at a higher exp ratio) to invest in.

EDIT: can you invest in VTSAX/VTSMX? It looks like you have nearly full access to all of Vanguard offerings? I would recommend that over VFIAX, and maybe 2-3% into VTBLX

 

[yh125d]

This is how. You are looking at your return in one example over two years, vs the fund's total return throughout its life in your second holding, correct?

With the second holding, how long have you had it and what is that return? Or are you saying since your inception? If you've held it for several years longer than the same 2 years with the other holding, that could explain everything (2013-2014 were fantastic, for example. 2015-now...not so great).

Could also be that Voya is charging you some additional fees on top of Vanguard's standard fee (though doubtful very significant)

When I limit the Vanguard Roth to the same timeframe, It's +1.3%. Supposedly both are .16% expense ratio but I may be looking at the wrong thing

I've had the VG Roth since Dec 2012

 

[zinfamous]

When I limit the Vanguard Roth to the same timeframe, It's +1.3%. Supposedly both are .16% expense ratio but I may be looking at the wrong thing

I've had the VG Roth since Dec 2012

There it is. holding that since 2012 (look at the market from 2012-2014) is going to skew those numbers significantly.

The market has been down/steady from most of 2015-now (nice little bump in Feb, but only after cratering around the New Year).

This return should look significantly better than a fund that has only ever been exposed to a stagnant/down period of growth, such as the previous 2 years.

As far as extra fees, I have very little experience but I haven't seen companies tack on anything significant when offering outside funds. But you still might see some 0.03 or even 0.1 tacked on by Voya for "advertising" or "trade orders" or some bs like that.

Does Voya have their own funds? I'm unfamiliar with them...I'm going to look it up now.

as a visual:
http://performance.morningstar.com/...-return.action?t=SPX&region=usa&culture=en-US

look at the growth from 2012-now, and from 2014-now. Notice anything? Then look at the bar graphs below that chart showing 1, 3, 5, and ytd growth.

This should be very similar to any fund that effectively tracks the S&P 500

 

[clamum]

>1% isn't good.
If you assume a long-term annual return of 7%, that 1% fee is actually >14% of your annual average return.
12b-1 fee: Basically a charge so that they can advertise their services at you and others.

What other options have you got?

Wow, your getting raped. And they even charge you for the strip club expenses and midget throwing parties. 12b-1

That is an example of what the 12b-1 fees are used for and more.

But there is worse, back end loads, front end loads,etc..

Thanks for the replies, guys (and the others).

I did some copy and pasting and here's my available choices, and I added the fees for them too:

I do see that I have those "FUSVX" and "FSEVX" ones that jlee mentioned.

 

[yh125d]

There it is. holding that since 2012 (look at the market from 2012-2014) is going to skew those numbers significantly.

The market has been down/steady from most of 2015-now (nice little bump in Feb, but only after cratering around the New Year).

This return should look significantly better than a fund that has only ever been exposed to a stagnant/down period of growth, such as the previous 2 years.

As far as extra fees, I have very little experience but I haven't seen companies tack on anything significant when offering outside funds. But you still might see some 0.03 or even 0.1 tacked on by Voya for "advertising" or "trade orders" or some bs like that.

Does Voya have their own funds? I'm unfamiliar with them...I'm going to look it up now.

as a visual:
http://performance.morningstar.com/...-return.action?t=SPX&region=usa&culture=en-US

look at the growth from 2012-now, and from 2014-now. Notice anything? Then look at the bar graphs below that chart showing 1, 3, 5, and ytd growth.

This should be very similar to any fund that effectively tracks the S&P 500

Yeah but if I'm looking at % instead of $, and I'm looking at the same time frame (5/14-5/16 when I looked the second time), shouldn't they be the same? Maybe a little different if Voya does add an additional expense I'm not seeing, but not -3.42% to +1.3%


On a general note, Since both my Roth and 401k are currently in the exact same index fund, should I switch one to a different fund? I'm 26, risk tolerant, and currently max my Roth every year and put an additional 20% of my income (including employer cont) into my Voya 401k. I'm tempted to move my Roth into that VTSAX you seem fond of, it's 10.73/10.48 for 3/5 instead of 6.71/6.81 of my VFFVX, and .11% lower ER

 

[SeductivePig]

OK, yes, so a transfer, then.

VFIAX is a 500 index fund, so not a total stock market fund (like VTSAX). Putting some of that money into midcap and small indexes is a great idea, because it gives you even broader market exposure.

VTSAX is an effective one-stop shop if you had to pick a single fund to invest in. VFIAX isn't bad at all, either, but you lose out on some of the volatility (greater risk/greater reward) of those midcap stocks.

to that end, the largecap stocks are generally more reliable with far less turnover than the emerging stocks, so you probably want to proportion it something like 70/20/10 from large-mid-small. Those mid and small also typically have higher expense ratios, so that kind of balancing reduces the effect of those larger fees.

I'm no expert, but I think that getting an idea of the actual market representation of prime-large-mid-small cap stocks, one can easily make their own portfolio of total stock exposure by matching that proportion with their own allocation into various representative index funds. In fact, this is what people do, anyway. You may also want to toss in an international index fund at some point. Though I think this isn't entirely accurate, I do like Jim collin's idea that investing entirely in something like VFIAX or VTSAX uS stocks, you are already investing "internationally" because those major companies (Coke, Apple, Microsoft, etc) have international market share. (not entirely accurate because, well, they are simply different companies. Nestle, for example, is not a US company). Still, the success of Apple and Coke absolutely does depend on the success of the global economy. The only thing you miss by not going into an international equity fund is another collection of companies (generally at a higher exp ratio) to invest in.

EDIT: can you invest in VTSAX/VTSMX? It looks like you have nearly full access to all of Vanguard offerings? I would recommend that over VFIAX, and maybe 2-3% into VTBLX

Unfortunately I don't have VTSAX/VTSMX.

So I did 70% in VFIAX, 20% in VIMSX, and 10% in NAESX.

 

[zinfamous]

Yeah but if I'm looking at % instead of $, and I'm looking at the same time frame (5/14-5/16 when I looked the second time), shouldn't they be the same? Maybe a little different if Voya does add an additional expense I'm not seeing, but not -3.42% to +1.3%


On a general note, Since both my Roth and 401k are currently in the exact same index fund, should I switch one to a different fund? I'm 26, risk tolerant, and currently max my Roth every year and put an additional 20% of my income (including employer cont) into my Voya 401k. I'm tempted to move my Roth into that VTSAX you seem fond of, it's 10.73/10.48 for 3/5 instead of 6.71/6.81 of my VFFVX, and .11% lower ER

Since you already have some in the target retirement, that adds plenty of diversity and stability...far more than you would ever need at your age. General rule of thumb for early investing is 100% stocks. slowly re-balance into bonds as you approach retirement (greater stability). This is exactly what target retirement funds do, btw...but they start with some of that diversity already, which I believe to be far too safe.

If it were me, I would transfer both accounts nearly 100% into VTSAX if I could (VTSMX if your Roth doesn't have the minimum to qualify for admiral shares). But again...nothing wrong with keeping the target retirement if the fee is low, and that is pretty low.


You're also 26...do you want to retire in 10 years? Wouldn't that be awesome? How about spending, like...no money and putting away 50% or more of your income into tax-deferred (401K), tax-sheltered (Roth), 100% TAX FREE (HSA) and your own taxed brokerage account? (to provide interest and dividend income by the time you are ready to retire like a god king at 36?, before tax-advantaged accounts take over in your golden years)

(this is insane to most people, btw...and with good reason. Only recommended if you are happy being a cheapo like myself and/or have a vast income that you can stash away with little hit to your normal habits)

http://www.mrmoneymustache.com/
http://www.madfientist.com/safe-withdrawal-rate/
http://www.madfientist.com/ultimate-retirement-account/

 

[edro]

Up 2.8% and 4.7% YTD.

 

[zinfamous]

Yeah but if I'm looking at % instead of $, and I'm looking at the same time frame (5/14-5/16 when I looked the second time), shouldn't they be the same? Maybe a little different if Voya does add an additional expense I'm not seeing, but not -3.42% to +1.3%

on that, it is odd. my gut tells me that your Roth starts out at a higher value at that time point, but it shouldn't matter--the percent change should still be identical. And I am unaware of any type of 4% fee that is going to show that big of a difference. If that exists, then those fuckers should be in jail.

 

[zinfamous]

Thanks for the replies, guys (and the others).


I do see that I have those "FUSVX" and "FSEVX" ones that jlee mentioned.

Those look good. In response to jlee yesterday, I went back to my Net Benefits account and did see that one of them had access to those Spartan funds. Oh well...if only I knew about this stuff 9 years ago and actually put significant money away then....I would be retired now.

 

[yh125d]

Since you already have some in the target retirement, that adds plenty of diversity and stability...far more than you would ever need at your age. General rule of thumb for early investing is 100% stocks. slowly re-balance into bonds as you approach retirement (greater stability). This is exactly what target retirement funds do, btw...but they start with some of that diversity already, which I believe to be far too safe.

If it were me, I would transfer both accounts nearly 100% into VTSAX if I could (VTSMX if your Roth doesn't have the minimum to qualify for admiral shares). But again...nothing wrong with keeping the target retirement if the fee is low, and that is pretty low.


You're also 26...do you want to retire in 10 years? Wouldn't that be awesome? How about spending, like...no money and putting away 50% or more of your income into tax-deferred (401K), tax-sheltered (Roth), 100% TAX FREE (HSA) and your own taxed brokerage account? (to provide interest and dividend income by the time you are ready to retire like a god king at 36?, before tax-advantaged accounts take over in your golden years)

(this is insane to most people, btw...and with good reason. Only recommended if you are happy being a cheapo like myself and/or have a vast income that you can stash away with little hit to your normal habits)

http://www.mrmoneymustache.com/
http://www.madfientist.com/safe-withdrawal-rate/
http://www.madfientist.com/ultimate-retirement-account/

I would say in a general sense I'm thinking along similar lines, but to do something that early would require a lot more research and effort than I'm willing to take considering I don't really have any interest in anything financial. It isn't fun for me, and that is a big part of it.

They way I'm leaning is more put back as much as I can while living relatively modestly (small house, very low COL in Oklahoma) but while not being at all afraid to splurge on nice things. For example, I only own 3 guns now, two pistols and a shotgun - but I know I plan to get more so when time came to buy a gun safe, I could get a cheaper 12 gun model that would be plenty adequate and have room to grow for $500 and use it for 15 years, but instead I got a 24 gun water/fireproof one for $1000 that I very well may never replace.


And really, I like my job too much to retire that early. I wouldn't want to not work, and not just because I would get bored at home. I truly love my job and it pays very well so by continuing to work into my 50s I can have a significantly higher standard of living, and still retire easily by 60 at the latest and go hang out at my dream house (literally, my biggest plan in life is to literally design my own dream house and build it. Like everyone plans, but maybe, MAYBE 5% of people actually do) on 40 acres in rural america somewhere.


Here's what's available through Voya if any catch your eye

 

[jlee]

Those are all of your other options?
FAGIX is the only bond fund?


The 500 Spartan fund is doing what Vanguard's 500 fund does: Track the S&P 500 index.
Since they're effectively the same, go with what's cheaper.

The S&P 500 fund gets you large company exposure, and the Spartan Extended fund will get you the rest of the market.



Why not >50% stocks? What determines that is your risk tolerance, which is determined in part by how long it'll be until you want the money.
The usual questions: If >50% stocks "at this point in time" is bad, when is a good time? What do you know that isn't reflected in stock prices right now?

Those are not the only options - they are the ones I have elected to use.

Seems like a lot of people are overweight stocks. I'd advise against >50% market exposure at this point in time. Make sure your 401k has a decent allocation of cd's, munis, treasuries, maybe even a bit of GLD, REIT, etc. Get defensive right now. If you can lock in any kind of return you will be doing better than most.


Good luck

If you could predict the market that well, you should be a billionaire by now. Having a stable account value means nothing to me, but having 50% bonds would royally suck if the market took off.

Well, this is what I'm actually trying to do. I said I wanted to do a low cost index fund in the OP

I'm about to transfer my existing funds (only $5500 so far) into VFIAX and VIMSX (80%/20% split). Any advantage to doing that over just 100% in VFIAX?

Also I noticed VFIAX has a $10k minimum.. does that apply to retirement accounts too?

VFIAX is the Admiral share fund ($10k minimum) - I think the one you're looking for is VFINX, but double check before making decisions based on my info.

Since you already have some in the target retirement, that adds plenty of diversity and stability...far more than you would ever need at your age. General rule of thumb for early investing is 100% stocks. slowly re-balance into bonds as you approach retirement (greater stability). This is exactly what target retirement funds do, btw...but they start with some of that diversity already, which I believe to be far too safe.

If it were me, I would transfer both accounts nearly 100% into VTSAX if I could (VTSMX if your Roth doesn't have the minimum to qualify for admiral shares). But again...nothing wrong with keeping the target retirement if the fee is low, and that is pretty low.


You're also 26...do you want to retire in 10 years? Wouldn't that be awesome? How about spending, like...no money and putting away 50% or more of your income into tax-deferred (401K), tax-sheltered (Roth), 100% TAX FREE (HSA) and your own taxed brokerage account? (to provide interest and dividend income by the time you are ready to retire like a god king at 36?, before tax-advantaged accounts take over in your golden years)

(this is insane to most people, btw...and with good reason. Only recommended if you are happy being a cheapo like myself and/or have a vast income that you can stash away with little hit to your normal habits)

http://www.mrmoneymustache.com/
http://www.madfientist.com/safe-withdrawal-rate/
http://www.madfientist.com/ultimate-retirement-account/

*thumbsup*

 

[clamum]

Those look good. In response to jlee yesterday, I went back to my Net Benefits account and did see that one of them had access to those Spartan funds. Oh well...if only I knew about this stuff 9 years ago and actually put significant money away then....I would be retired now.

Hmmm. What do you think about me keeping say 20% in that 2055 Target Date Fund, and then 40% each into FUSVX and FSEVX? Actually, it's probably best if I move completely out of that Target Date Fund, I'm guessing. The expenses are pretty high. I'm pretty risk tolerant cause I'm only 33 and unfortunately won't be retiring any time soon, but I also don't want to completely get fucked and lose everything.