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cubsfinger
Chicago Cubs Fan
Member since Mar 2017
328 posts

401k advice.
I am new to investing in my 401k. I am going to invest 15% of my pay with an employer match of 50% up to 5 % invested. The research that I've done shows that the company that is used for 401k isn't great. Should I just contribute 5% through my company and invest the other 10% through somewhere ?
This post was edited on 10/2 at 6:56 pm


GoldenD
LSU Fan
Houston
Member since Jan 2015
745 posts

re: 401k advice.
It depends on what makes them “not great”. If the fund selection is limited and the fees are high then just put in 5% to get the free money from the match and max out an IRA.


cubsfinger
Chicago Cubs Fan
Member since Mar 2017
328 posts

re: 401k advice.
Do you or y'all have any suggestions for somebody that I could work with in building a ira?


TheWalrus
LSU Fan
Memphis
Member since Dec 2012
16161 posts

re: 401k advice.
I'm in my late 20s and decided to just invest up to the 6 percent half match and invest extra in other mutual funds. I don't see the point in tying up more than I need to in there and would rather have access to it whenever I want.


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GoldenD
LSU Fan
Houston
Member since Jan 2015
745 posts

re: 401k advice.
Simplist solution is to open an account with Vanguard and just put your money in a target date retirement fund. It will hold a mix of funds and the ratio of stocks/bonds will be rebalanced as needed.


AUCE05
Atlanta Braves Fan
Member since Dec 2009
21226 posts

re: 401k advice.
I would pay my debt off first. Without knowing who, or what fund they invest in, any advice is just a preference of the poster.


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MSUmtowndawg
Mississippi St. Fan
Jackson, MS
Member since Sep 2010
794 posts

re: 401k advice.
I have my 401k with T. Rowe Price and it is in a target date retirement fund. They offer other funds with higher returns like Blue Chip Growth Trust and Vanguard Institutional Index Plus Fund.

What are the pros/cons of these other funds? Am i missing out on greater return? Economy is booming so is blue chip good until next election time? Everyone here mentions Vanguard, should i change to it? So many questions.

I do not have enough knowledge to confidently make decisions about all of this. background info: 31 yrs old(but didn't start 401k until 25 yrs old), contributing 10%(raising it at each pay raise) and company contribution is 4.25%


leoj
Texas A&M Fan
Member since Nov 2010
2408 posts

re: 401k advice.
What are the symbols of those funds. Look at what their holdings are. Do not pay attention to the last year return, every fund will be over 10-12% and really the past 5 years will be high too.

I am in VFIAX. It has a .05% fee and just mirrors the S&P 500. So I get my 1:1 match up to 5%, obvious tax benefits, and it is just set and forget.

Obviously it will drop 20-50% at some point, but I’m 29 and in thisfoe the long haul so it’s not anything I’m concerned with. Also allows me to hold google, Apple, Berkshire, Facebook, etc, and focus my individual purchases on less represented stocks so I can diversify and add more value to my overall portfolio.


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Dellort
Davidson Fan
Member since Jun 2014
292 posts

re: 401k advice.
What makes you think the 401k your employer has is bad? Not saying your wrong, I work in this field and it’s pretty disgusting when I come across accounts with fees north of 3%.

If it’s high just get the match from your employer. How far away are you from retirement? Vanguard is one of the low cost providers but there are better options out there sometimes. I personally am not a fan of target date retirement funds. They serve their purpose for anyone to lazy to take 10 minutes to do a little investment research. You’ll pay higher fees in them and they usually are way more conservative than you should be for your age group.

Indexing is a popular option because it’s cheap and you’ll get the “market” return. It’s a bit oversold, but it’s been a good choice this past decade with large growth companies running the show.

Portfolio charts.com is a great free resource to see how different model portfolios have done over the years. You can even backtest your own there. TD Ameritrade is a good place to open up and IRA. They have quite a few commission free ETFs.
This post was edited on 10/7 at 12:18 pm


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