Financial Newb / 401k Help

[kv968]

This is what it looks like right now. -> http://i.imgur.com/ZLvSvvl.jpg

There are a lot of different target date years (2010 - 2050), I chose 2045.

You just equally weighted all of your holding (which could be a good or bad thing) but I'm sure you're getting a ton of overlap in doing so.

What I'd suggest you take a look at is using the target date fund as a core holding and "tweak" it a little if you'd like.

For example, using the 2045 Target Date Fund (assuming the expense ratio is truly 0.35%) I'd look into putting about 80% in there, 10% in Dodge & Cox and 5% in Fidelity Low-Priced (both to give the allocation a value tilt) and 5% Toyota stock just to say "you're in the game" if you want to own some company stock. With that allocation you'd have 52% U.S./32% Int'l/10% bonds/5% cash and a slight value tilt in the large cap. Might not be perfect but something to consider.

[jIM_Ohio]

You recommended what YOU hold in your 401k however the OP is 26 and prefers higher risk. Having 40% in fixed isn't fitting that bill.

Agreed on first point, I would debate second point.

I am 60-40 because I save 25% of my gross income. I will reach my goals just as likely in 15 years whether I am 80-20 or 60-40, so I clearly choose the lower risk path to get there.

The OP does not know what they are doing, so having a cash position to rebalance from makes sense, and having a less volatile portfolio while learning makes sense.

Savings rate matters more than asset allocation anyways, and it's clear the OP has a lot of homework to do, and if they answer the question (of what a 60-40 asset allocation is), they will be able to easily liquidate cash (no short term trading penalties) and make a better decision as well.

I also chose 10 investments, with 10% contributions to all 10- whenever they login all funds should be relatively equal- its easy to see what is outperforming or underperforming. I manage money for clients and do it this way, I manage my own money the same way.

Pick 5 funds do 20% each
pick 6 funds do 16% each
Pick 10 funds do 10% each

to get same quick analysis benefit

[kv968]

Agreed on first point, I would debate second point.

I am 60-40 because I save 25% of my gross income. I will reach my goals just as likely in 15 years whether I am 80-20 or 60-40, so I clearly choose the lower risk path to get there.

The OP does not know what they are doing, so having a cash position to rebalance from makes sense, and having a less volatile portfolio while learning makes sense.

Savings rate matters more than asset allocation anyways, and it's clear the OP has a lot of homework to do, and if they answer the question (of what a 60-40 asset allocation is), they will be able to easily liquidate cash (no short term trading penalties) and make a better decision as well.

I also chose 10 investments, with 10% contributions to all 10- whenever they login all funds should be relatively equal- its easy to see what is outperforming or underperforming. I manage money for clients and do it this way, I manage my own money the same way.

Pick 5 funds do 20% each
pick 6 funds do 16% each
Pick 10 funds do 10% each

to get same quick analysis benefit

Agreed...savings rate has a lot to do with the amount of risk needed to be taken. And there's no sense in taking on extra risk if it's not required.

I like the equal weighting of funds due to the simplicity but I don't think it's wise to equally weight a portfolio across all options just because they are available as the OP is doing. Could be way too much overlap and most likely not enough (or desired) diversification.

As far as being in cash...it would be easier for the OP volatility-wise until he learns and decides what his actual allocation will be. However even if the money is invested in the meantime it wouldn't be too hard to just rebalance the whole portfolio once the decision is made. There most likely aren't any short-term trading penalties involved with the funds he has to choose from but that is something to look for.

[isaac]

Math Question

Okay I have a Math question. It's probably pretty simple and I'm just missing something but here goes.

If I were to follow Jim's advice of 10% each of these

Vanguard prime money market
Col trust stable govt fund
Pimco total return
Vanguard Inflation protected securities

Vanguard Ins Index fun
Vanguard small cap index
Vanguard mid cap index
Vanguard TTL INTL Stk index
MFS Institutional Equity
Toyota stock

BUT, Toyota Stock is ONLY available to fund with my Company Match. I have to make my selections separately then they're added together. I can't figure out what percentages I'd need to put in for both My contributions (6%) and my Company Match (4%) to equal a total of 10% each.

[humandraydel]

10% / 10 = 1%. So 1% in each of the 10 funds. That is as long as you can put 1% company match in company stock and the other 3% in funds.

[isaac]

Sorry I wasn't clear with my problem. I wish to evenly divide 100% into 10 Funds but only 9 of them are available with my 6% contribution, and all 10 are available with my 4% company match. So it would look like this... ???


My 6% Contribution
11% Vanguard prime money market
11% Col trust stable govt fund
11% Pimco total return
11% Vanguard Inflation protected securities

11% Vanguard Ins Index fun
11% Vanguard small cap index
11% Vanguard mid cap index
11% Vanguard TTL INTL Stk index
12% MFS Institutional Equity
(100%)

My 4% Company Match
9% Vanguard prime money market
9% Col trust stable govt fund
9% Pimco total return
9% Vanguard Inflation protected securities

9% Vanguard Ins Index fun
9% Vanguard small cap index
9% Vanguard mid cap index
9% Vanguard TTL INTL Stk index
9% MFS Institutional Equity
19%??? Toyota stock

I know this isn't the correct answer to achieve a combined total of 10% per fund, but maybe this is too difficult to figure out and I should just "wing-it" ???

[jIM_Ohio]

Okay I have a Math question. It's probably pretty simple and I'm just missing something but here goes.

If I were to follow Jim's advice of 10% each of these

Vanguard prime money market
Col trust stable govt fund
Pimco total return
Vanguard Inflation protected securities

Vanguard Ins Index fun
Vanguard small cap index
Vanguard mid cap index
Vanguard TTL INTL Stk index
MFS Institutional Equity
Toyota stock

BUT, Toyota Stock is ONLY available to fund with my Company Match. I have to make my selections separately then they're added together. I can't figure out what percentages I'd need to put in for both My contributions (6%) and my Company Match (4%) to equal a total of 10% each.

Use 10 options for your contributions, take out one of the cash options for match and replace it with the company stock, still 10 options

You are focused way too much on details and not doing homework. Have you googled asset allocation yet?