Help with 401K setup

[jpg7n16]

Thank you all so much for the advice and recommendations. I appreciate it so much, and I definitely understand more clearly how all of this works. I updated my allocations to the following:

25% SSgA S&P 500 Index
20% SSgA S&P Mid Cap
20% Allianz NFJ Small Cap
20% PIMCO Total Return
10% SSgA Government Money Market
5% Janus Overseas

I just used a combination of your recommendations and came up with this. Let me know what you think. Thanks again!

This is better than what you had before.

Agreed

[ashleyd1983]

Ok great. Thank you all so much for all of the wonderful advice! I really appreciate your help! Have a nice weekend!

[jpg7n16]

No problemo! Glad to help

I'd still like to convince you to lower the cash/bonds more... but then you already knew I'd say that My bond fund is 4% + the bond pieces of my other funds puts me at 8% bonds. I have $0 in money market funds, and the cash positions held by my other funds gives me 4% in cash/short-term investments. (According to fidelity's asset classes calculator)

But since no one can predict the future, there is no such thing as the perfect portfolio. I hope your's works out really well for you, and you get extra rich and send me and Jim some cash

Remember to rebalance periodically. Once a year will do fine.

[jIM_Ohio]

No problemo! Glad to help

I'd still like to convince you to lower the cash/bonds more... but then you already knew I'd say that My bond fund is 4% + the bond pieces of my other funds puts me at 8% bonds. I have $0 in money market funds, and the cash positions held by my other funds gives me 4% in cash/short-term investments. (According to fidelity's asset classes calculator)

But since no one can predict the future, there is no such thing as the perfect portfolio. I hope your's works out really well for you, and you get extra rich and send me and Jim some cash

Remember to rebalance periodically. Once a year will do fine.

Reality is "history" shows that adding bonds lowers return without lowering volatility when held in small or moderate doses. For example when comparing an 80-20 portfolio to a 100% equity portfolio, the stats are the following:

100% equity is 10.5% annual return with a deviation of 18.5
80-20 is 10.0% annual return with a deviation of 14
data is from this site here
Flexible Retirement Planner

There are two ways to interpret this
almost the same return, with a ride 25% less volatile

or the opposite, which is investor added a significant position to bonds (1/5 of portfolio) and their returns could be higher without them, without much more volatility (much more risk).

Worst case with all stocks 66% of the time is returns between -8% and +29%
Worst case with 20% bonds with same confidence interval is -4% to +24%

I am more than willing to lose 4% more to get that extra 5%


More modern financial planning, according to studies I am reading, is suggesting investors stay 100% equity for as long as possible, then when retirement is being planned, put breaks on and add a lot more than 20% bonds.

But studies are about crunching numbers, it does nothing to suggest investor can sleep at night. If holding bonds makes you comfortable, a 25% position in bonds is not going to kill the plan or make it successful... don't let me or others tell you the risks to take... just do research and do what lets you sleep.

[jpg7n16]

...More modern financial planning, according to studies I am reading, is suggesting investors stay 100% equity for as long as possible, then when retirement is being planned, put breaks on and add a lot more than 20% bonds...

Doesn't that just contradict everything you just said above it? I believe this quoted statement means to have everything in stocks (100/0 not 80/20) until the few years before retirement when you are preparing for distributing the portfolio and/or relying on the income the portfolio provides. That's why they suggest bonds at that point because bonds generate income, and not every stock does. So around retirement, you need bonds for their income and stability.

But from now until then, you want tons of growth. And nothing beats stocks on growth for the long term.

Forbes: Asset Allocation Calculator

Also check out how much less a S/B/C portfolio of 70/20/10 is projected to earn compared to a 95/5/0.

You can change the stocks to 10.5% and bonds to 8% like your other site uses.

But you can't really use my portfolio (extra aggressive) for a moderate/conservative investor. Which is why above I suggested the OP have 15% in bonds. 30% in cash and bonds is IMO really high, my 5% is low - 15% seemed a good compromise.

[jIM_Ohio]

Doesn't that just contradict everything you just said above it? I believe this quoted statement means to have everything in stocks (100/0 not 80/20) until the few years before retirement when you are preparing for distributing the portfolio and/or relying on the income the portfolio provides. That's why they suggest bonds at that point because bonds generate income, and not every stock does. So around retirement, you need bonds for their income and stability.

But from now until then, you want tons of growth. And nothing beats stocks on growth for the long term.

Forbes: Asset Allocation Calculator

Also check out how much less a S/B/C portfolio of 70/20/10 is projected to earn compared to a 95/5/0.

You can change the stocks to 10.5% and bonds to 8% like your other site uses.

But you can't really use my portfolio (extra aggressive) for a moderate/conservative investor. Which is why above I suggested the OP have 15% in bonds. 30% in cash and bonds is IMO really high, my 5% is low - 15% seemed a good compromise.

I will not suggest anyone ever go 100-0 (the individual makes that decision on their own). I suggested 60-40 because that was worst case for the best case scenario (or best case for the worst case?)- meaning if the OP was conservative, then the 60-40 suggestion I made would probably have met those needs while still provided decent returns.

Also check out how much less a S/B/C portfolio of 70/20/10 is projected to earn compared to a 95/5/0.

Not sure on their return numbers (13.5% for equities and 9% for bonds), I had a 400k difference over 30 years. Because the calculator did not provide ranges, I don't think it is effective, because the ranges of the returns (like $2 M best case, $900k worst case) are part of the 30 year planning process... even if the average was $1.4 M or $1.8 M for one portfolio or the other, part of planning is knowing worst case and avoiding it, or trying to get more best cases than worst cases.

Which was my point... you get lower returns with more bonds, yet its not like the volatility really went away or diminished at all.

However some people need the bonds to sleep at night, so there is no reason for me to convince anyone to take more risk than they are comfortable with.

When a person is comfortable with the risks they take (or not take) that is the best portfolio for them, whether you or I would make same decision is irrelevant.

[kv968]

Allocation aside, you also want to keep track of expenses. I noticed a few of the offerings are Class A shares. With these you're most likely paying a "load" fee of >5% every time you invest. If you could find something similar without that fee, you'd be better off.