Help me allocate my 401k....

[z1ggy]

Meh, at 30 I think you can still take on a decent amount of risk, especially if you're trying to "catch up".

My 401k is pretty simple set up. It's basically 50% s&p index fund, 30% large cap stocks, 20% mid/small cap stocks. I have a very small percentage left over from company stock I own (and that I probably should have kept pumping money into) but overall I would say my account is aggressive.

I will probably take out a % from the small/mid and large cap funds to place into bonds when I'm around 35. Every 10 years or so, I will lower my risk in favor of buying bonds or cash.

 

[kranky]

Does your 401k offer a Self-Directed Brokerage Plan option?

 

[brianmanahan]

i would probably do the following:

%35 - S&P 500 Index Fund (MSPIX, %0.35 ER)
%15 - Vanguard Small Cap Index Adml (VSMAX, %0.09 ER)
%30 - American EuroPacific Growth R6 (RERGX, %0.49 ER)
%20 - Indexed Bond Fund (MIXIX, %0.40 ER)

putting as much money into that, and rebalancing back to the target %'s once per year.

and also including any holdings from my IRAs or taxable into those percentages.

then in 10 years i'd probably reevaluate and see if i want to make any changes.

 

[Exterous]

Most funds require 1k-3k initial buy ins

Most 4xx plans waive the fund minimums

That said, an off-the-cuff thought would be:

* 30%: Vanguard Small Cap Index Adml (VSMAX) (Vanguard Small-Cap Index Fund (Admiral Shares))

Just a quick comment about the small caps: There have been quite a few papers done on Small vs Mid and there are many opinions that Small are overvalued compared to the relative performance of Mid Caps:

https://www.tiaa-cref.org/public/pdf/inv_insight_midcapstocks_022812.pdf

http://socialize.morningstar.com/NewSocialize/forums/p/27802/27802.aspx#27802

https://www.bogleheads.org/forum/viewtopic.php?t=132452

Given a sustained period of small cap out performance Small Caps have become very popular - potentially artificially prolonging their longest period of large cap out performance. Will that continue? Well my crystal ball is cloudy but I start getting nervous about investments when a quick google search on them turns up all kinds of investment advice to get into small caps now that they have had such a period of sustained growth. Yield chasers showing up en mass is rarely a good thing

http://www.wisdomtree.com/blog/index.php/u-s-equities-historical-trends-of-large-caps-vs-small-caps/

The growth of small and mid have been very similar over the past decade even up through 2015 (even though this only shows up through 2013)

 

[Exterous]

One other thing: Saying you want to take risks is great but actually being able to follow through on that is a whole other story. Can you actually stomach seeing your retirement savings drop by 40-50%? 2008 shows us that a whole shit load of people thought they could but then sold at\near the bottom and missed out on the start of one of the biggest bull markets in history setting their plans back years if not decades. Keep in mind you may need to stay the course through years of watching money 'disappear'

So while a higher bond % will likely not give you returns as high as a higher stock % might it will certainly do a lot better than a plan where you invest riskily and then sell when it drops.

Your ability to handle losing five plus figures of retirement savings isn't something we can tell you. It is something you have to figure out yourself. And being over confident about your ability only hurts you in the long run so be honest with yourself.

 

[nk215]

For those option, I would put the entire amount into s&p500 and forget about it.

 

[Nograts]

i would probably do the following:

%35 - S&P 500 Index Fund (MSPIX, %0.35 ER)
%15 - Vanguard Small Cap Index Adml (VSMAX, %0.09 ER)
%30 - American EuroPacific Growth R6 (RERGX, %0.49 ER)
%20 - Indexed Bond Fund (MIXIX, %0.40 ER)

putting as much money into that, and rebalancing back to the target %'s once per year.

and also including any holdings from my IRAs or taxable into those percentages.

then in 10 years i'd probably reevaluate and see if i want to make any changes.

He can't even get into the admiral shares, he's only got 3k currently? Unless 401k's wave that shit too, dafuq?

There is no point talking allocation outside of 2 funds until OP has at least 50k IMO. If he only saves 3k a year when he's early 40's he can diversify, and that might be an okay allocation.

For 'catchup', and his time frame, there should be ZERO bonds in his portfolio.

 

[dullard]

He can't even get into the admiral shares, he's only got 3k currently? Unless 401k's wave that shit too

As far as I know 401k plans are company wide limits. So as long as the sum of contributions from the entire company reach a certain level, then you can get into the specific class of shares.

For example, with Vanguard, as long as the company has at least $5 million invested, then you can buy institiutional shares instead of admiral shares. As far as Vanguard is concerned, it is just one big pot.

 

[Exterous]

As far as I know 401k plans are company wide limits. So as long as the sum of contributions from the entire company reach a certain level, then you can get into the specific class of shares.

For example, with Vanguard, as long as the company has at least $5 million invested, then you can buy institiutional shares instead of admiral shares. As far as Vanguard is concerned, it is just one big pot.

:thumbsup: Companies of a certain size can get the minimums waived although if they go through a third party that offers Vanguard funds that may come into play. (Company may be over the Vanguard limit but the provider doesn't have the Admiral shares available)

 

[brianmanahan]

He can't even get into the admiral shares, he's only got 3k currently?

minimums don't matter in 401ks

There is no point talking allocation outside of 2 funds until OP has at least 50k IMO. If he only saves 3k a year when he's early 40's he can diversify, and that might be an okay allocation.

with a 401k it is easy enough to just pick the allocation you want and let it grow over time. and he should be able to save 18$k per year in that thing.

For 'catchup', and his time frame, there should be ZERO bonds in his portfolio.

IMHO its best to start at least with some, go through a %20-%40 drop in stock prices, then see if you feel like you are able to handle that kind of drop without bonds.