Opinions for 403b allocation

**corn18** · 08-29-2015, 07:18 AM

Pick an asset allocation you are comfortable with and then set up a 3 fund account that reflects that:

STOCKS:

SPTN 500 INDEX ADV (FUSVX) Exp Ratio Gross .07, Net: .05, Exp Cap .05, Mgmt Fee: .025

BONDS:

SPTN US BOND IDX ADV (FSITX) Exp Ratio Gross .17, Net: .07, Exp Cap: .07, Mgmt Fee: .05

INTERNATIONAL:

They all suck.

No, it is not diversified enough as you want to cover the whole US equity market and get some international in there, but those expense ratios will KILL your returns over the next 30 years.

I have about the same funds in my Fidelity 401k and I do a 60/40 split in my 401k in those 2 funds. Then I have my IRA's and taxable retirement accounts that I buy low cost international funds to balance it all out. I view all my retirement accounts as a whole and make my allocations across all of them.

BTW, you should visit bogleheads.org You already sound like a boglehead. That is a good thing.

Tom

**jmetsrule** · 08-29-2015, 04:45 PM

Yeah, I'm reading the Bogle boards, and I've even read The Boglehead's Guide to Investing. It was an interesting read, and it made a lot of sense. I have just recently opened up a Roth IRA with Vanguard. I like the idea of thinking of my entire collection of retirement accounts as one portfolio, but I'm nervous about the fact that a good amount of my retirement money will be in this 403b. I suppose I could use the Roth IRA for low-cost international funds to help balance it out, but I'm not sure if that's the best route, either. I want the Roth IRA to grow tax-free.

I appreciate the response, Tom.

**feh** · 08-31-2015, 12:25 PM

Originally posted by jmetsrule View Post

I like the idea of thinking of my entire collection of retirement accounts as one portfolio

That's exactly what you should do.

If you've been reading bogleheads, you know what to do. In summary:

1 determine asset allocation
2 determine asset location
3 choose lowest cost funds
4 save, invest & rebalance as necessary

**snafu** · 09-05-2015, 08:06 AM

a couple of other points...You need to double check that you are contributing your total 'allowable' sum to a retirement plan. If there is a contribution sum remaining you can open a low cost retirement account with Vanguard that focusses on their Index fund.

While you make initial choices for your 403b, it will need adjusting from time to time to keep the allocation percentages in check. Some aspects of your allocation will surge so annual or biannual adjustments are common. I've changed choices when a particularly successful fund manager left the organization.

As others emphasis, you need to see your ROTH as an extension of your over all retirement plan. I also include SS as part of the plan.

I hope it's ok to suggest you read The Millionaire Next Door or The Automatic Millionaire likely available at your library.

I wonder why you feel you need such a large EF [$ 20.K]. Did you park $ 10K in a regular savings account? What has your EF earned in the past 12 months?

**jmetsrule** · 09-08-2015, 06:12 PM

Snafu, thanks for the reply. I've actually already read The Millionaire Next Door. It makes a lot of sense. The reason for the larger EF is because we have important and very necessary medicine in our family that is--well, quite expensive. If something catastrophic were to happen, I want to make sure that our EF can cover the medicine as well for a time until adjustments can be made.

Additionally, if we should need a car, we want to have a nice chunk available to pay for all or most of it upfront.

Finally, it helps the wife sleep better at night, which is worth a lot to me.

We've got the money in Capital One 360, earning .75.

I'll be using our Vanguard Roth IRA to try and balance things about a bit in the portfolio.

My wife's retirement is also setup similarly to mine, with the same asset allocation issues.

Appreciate the help, everyone.

-Joe

**sandrark** · 09-15-2015, 10:01 AM

The Spartan funds are great options.

Reading the Boglehead site is another great option. They have a long thread there called the "Three Fund Portfolio" that explains pretty clearly why most investors need only three funds: Domestic Stock Index; Bond Index; International Fund Index.

You are exactly right that you can use your Roth account for the International fund. Before you do that, you need to decide on you asset allocation.

I am employed at a university that has a generous pension fund; my asset allocation looks at the pension as essentially an annuity. Because of that, I feel more comfortable being aggressive in my personal investments. My asset allocation is 100% stocks, which may not be advisable for others.

Look at the Boglehead site and read about the Personal Investment Statement; writing one for myself really helped me clarify my major investment thoughts:

1) Index funds only, with minimal costs (since cost and fees are one of the only things we can control).

2) Invest 18% of my gross salary (8% mandatory into the pension, 10% voluntary into the 403(b), with a 14% employer contribution to the pension).

3) Rebalance once a year, or when my allocations move +/- 5%.

Opinions for 403b allocation