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Started By
Message
Vanguard Funds in 401k
Posted on 4/30/12 at 10:59 am
Posted on 4/30/12 at 10:59 am
I have seen on here vanguard is the way to go on your 401k, in my plan I have several to choose from including a long term bond index. Should I just contribute to the one with the highest overall return and the lowest operation expense or should I be looking at each fund differently?
Operating fees are listed between $3.70/per$1000 to $1.70/per. ROI was between ~4% and 10%, since inception.
Feedback is appreciated.
Name/ Type of Option Average Annual Total Return as of 03/31/12 1yr. 5yr. 10yr. Since Inception
SCHWAB S&P INDEX/ Large Blend 8.47% 2.03% 4.07% 5.28%
VANGUARD BALANCED INDEX INV/ Moderate Allocation 7.94% 4.40% 5.58% 7.98%
VANGUARD EUROPEAN STOCK INDEX INV/ Europe Stock (7.11%) (3.81%) 5.56% 7.28%
VANGUARD GROWTH INDEX INV/ Large Growth 11.66% 5.09% 4.44% 8.38%
VANGUARD MID-CAP VALUE INDEX INV/ Mid - Cap Value 2.92% 1.51% N/A 4.24%
VANGUARD REIT INDEX INV/ Specialty -Real Estate 12.76% 0.31% 10.45% 10.86%
VANGUARD SMALL CAP VALUE INDEX INV/ Small Value 0.50% 1.58% 6.28% 6.97%
VANGUARD TARGET RETIREMENT 2015/ Target Date 2011 - 2015 5.51% 3.60% N/A 5.92%
VANGUARD TARGET RETIREMENT 2025/ Target Date 2021 - 2025 4.50% 2.68% N/A 5.86%
VANGUARD TARGET RETIREMENT 2035/ Target Date 2031 - 2035 3.49% 1.99% N/A 6.12%
VANGUARD TARGET RETIREMENT 2045/ Target Date 2041 - 2045 3.49% 2.04% N/A 6.51%
VANGUARD TOTAL INTERNATIONAL STOCK INDEX INV/ Foreign Large Blend (7.13%) (2.01%) 6.87% 4.44%
Operating fees are listed between $3.70/per$1000 to $1.70/per. ROI was between ~4% and 10%, since inception.
Feedback is appreciated.
Name/ Type of Option Average Annual Total Return as of 03/31/12 1yr. 5yr. 10yr. Since Inception
SCHWAB S&P INDEX/ Large Blend 8.47% 2.03% 4.07% 5.28%
VANGUARD BALANCED INDEX INV/ Moderate Allocation 7.94% 4.40% 5.58% 7.98%
VANGUARD EUROPEAN STOCK INDEX INV/ Europe Stock (7.11%) (3.81%) 5.56% 7.28%
VANGUARD GROWTH INDEX INV/ Large Growth 11.66% 5.09% 4.44% 8.38%
VANGUARD MID-CAP VALUE INDEX INV/ Mid - Cap Value 2.92% 1.51% N/A 4.24%
VANGUARD REIT INDEX INV/ Specialty -Real Estate 12.76% 0.31% 10.45% 10.86%
VANGUARD SMALL CAP VALUE INDEX INV/ Small Value 0.50% 1.58% 6.28% 6.97%
VANGUARD TARGET RETIREMENT 2015/ Target Date 2011 - 2015 5.51% 3.60% N/A 5.92%
VANGUARD TARGET RETIREMENT 2025/ Target Date 2021 - 2025 4.50% 2.68% N/A 5.86%
VANGUARD TARGET RETIREMENT 2035/ Target Date 2031 - 2035 3.49% 1.99% N/A 6.12%
VANGUARD TARGET RETIREMENT 2045/ Target Date 2041 - 2045 3.49% 2.04% N/A 6.51%
VANGUARD TOTAL INTERNATIONAL STOCK INDEX INV/ Foreign Large Blend (7.13%) (2.01%) 6.87% 4.44%
Posted on 4/30/12 at 11:15 am to Drilltiger
quote:
Should I just contribute to the one with the highest overall return and the lowest operation expense
Worst possible approach. you should:
quote:
or should I be looking at each fund differently
Find out what the risks are in each investment class, decide if you are okay with those risks given what your outlook for return in the asset class is, and then make a decision.
If you don't want to do all that, then just plow it all into a target retirement date fund.
Posted on 4/30/12 at 12:06 pm to Drilltiger
my highest return fund for the last 2-3 quarters is also the one with the highest expense.. I can't justify dropping it for a lower expense when it outperforms everything else.
Posted on 4/30/12 at 12:59 pm to Drilltiger
Second what Flask said, past returns do not mean shite for future returns.
How old are you? And what is your risk tolerance and investment objective? I.e mind taking on more risks for theoretical greater reward?
How old are you? And what is your risk tolerance and investment objective? I.e mind taking on more risks for theoretical greater reward?
Posted on 4/30/12 at 1:06 pm to Drilltiger
The reason Vanguard is so well thought of is that they tend to have very low expense ratios. That's what it costs to meet fund overhead.
Whether they happened to earn a good return or not is pretty irrelevant since nobody has figured out yet how to do that consistently.
Note also that this applies mainly to index funds. An index fund invest in an index (like the S&P 500) blindly - it does not attempt to pick individual stocks. It just buys the index. It turns out that this coupled with the low costs generally does better than actively managed funds.
So your only question once you go the index route is to determine your risk tolerance. Personally, unless you are already familiar with asset allocation and risk tolerance I think just buying a target retirement fund is the way to go.
Whether they happened to earn a good return or not is pretty irrelevant since nobody has figured out yet how to do that consistently.
Note also that this applies mainly to index funds. An index fund invest in an index (like the S&P 500) blindly - it does not attempt to pick individual stocks. It just buys the index. It turns out that this coupled with the low costs generally does better than actively managed funds.
So your only question once you go the index route is to determine your risk tolerance. Personally, unless you are already familiar with asset allocation and risk tolerance I think just buying a target retirement fund is the way to go.
Posted on 4/30/12 at 1:16 pm to foshizzle
Thanks for all the input.
I am not familiar with the allocation of each fund at all, I am early in my career, and I feel I can be a little more risky but not sure to what extent and how long.
I do not have a lot of knowledge on this end of investing, nor do I have the time to actively manage.
I am comfortable with some higher fees, with the expectation that it is managed more actively, but I guess that may not always be the case.
I am not familiar with the allocation of each fund at all, I am early in my career, and I feel I can be a little more risky but not sure to what extent and how long.
I do not have a lot of knowledge on this end of investing, nor do I have the time to actively manage.
I am comfortable with some higher fees, with the expectation that it is managed more actively, but I guess that may not always be the case.
Posted on 4/30/12 at 1:16 pm to baytiger
quote:
my highest return fund for the last 2-3 quarters is also the one with the highest expense.. I can't justify dropping it for a lower expense when it outperforms everything else.
Absolute or Alpha?
Posted on 4/30/12 at 1:20 pm to Drilltiger
When deciding, I usually just look at the top holdings within the fund. If the majority of the holdings include stock I would own independently (most of my funds are primarily equity allocated - I'm younger) then I choose it.
That's what I do, may or may not be the best method.
That's what I do, may or may not be the best method.
Posted on 4/30/12 at 1:26 pm to Drilltiger
quote:
I am early in my career, and I feel I can be a little more risky but not sure to what extent and how long.
I'm also very early in my career, so I'll share what I did in my 401k.
50% - 2045 retirement date fund
15% - S&P 500 index
15% - US Small cap fund
20% - EAFE all cap fund
This allows a certain degree of guidance and rebalancing in my portfolio, as well as a added layer of agressiveness. I plan on rebalancing annually.
Posted on 4/30/12 at 1:26 pm to TheHiddenFlask
I don't remember, the report is at home
pretty sure absolute though
pretty sure absolute though
This post was edited on 4/30/12 at 1:28 pm
Posted on 4/30/12 at 1:44 pm to TheHiddenFlask
quote:
I'm also very early in my career, so I'll share what I did in my 401k.
Youse is crazeeeee...
Posted on 4/30/12 at 1:54 pm to baytiger
quote:
pretty sure absolute though
absolute is pretty irrelevant for judging fund performance, with all due respect.
The only reason I can see using absolute is if that is your only available option to access the asset class.
Posted on 4/30/12 at 1:54 pm to tirebiter
quote:
Youse is crazeeeee...
For sharing, or for the allocation?
Posted on 4/30/12 at 2:37 pm to Drilltiger
15% international
20% balanced Index
23% large growth
10% small cap
10% Mid cap
10% target Retirement (pick your date)
7% REIT
5% Europe
Overweight growth slightly, diverse allocation accross all sizes, sectors, geographies
UNDERWEIGHT Europe
20% balanced Index
23% large growth
10% small cap
10% Mid cap
10% target Retirement (pick your date)
7% REIT
5% Europe
Overweight growth slightly, diverse allocation accross all sizes, sectors, geographies
UNDERWEIGHT Europe
Posted on 4/30/12 at 3:15 pm to TheHiddenFlask
quote:
absolute is pretty irrelevant for judging fund performance, with all due respect.
The only reason I can see using absolute is if that is your only available option to access the asset class.
I'm not due any respect. I have no financial training. I just poke on this board because I think I might learn something, and every now and then I'll give my worthless input.
Posted on 4/30/12 at 3:49 pm to TheHiddenFlask
quote:
I'm also very early in my career, so I'll share what I did in my 401k. 50% - 2045 retirement date fund 15% - S&P 500 index 15% - US Small cap fund 20% - EAFE all cap fund This allows a certain degree of guidance and rebalancing in my portfolio, as well as a added layer of agressiveness. I plan on rebalancing annually
Since you shared, I'll share for opinion sake.
But first, for the OP, that selection of Vanguard funds seems a little weird. Their biggest funds seem to be MIA.
Anywho, my Roth includes:
Vanguard Total Stock Market ETF (VTI)
Vanguard MSCI EAFE ETF (VEA)
Vanguard MSCI Emerging Markets (VWO)
Vanguard MSCI FTSE All World ex US Small Cap ETF (VSS)
Vanguard Total Bond Market ETF (BND)
I split up the international stuff so I could have some rebalancing ability. Plus, word and my research showed that the Total International ETF didn't really cover Small cap like the VTI does for the US.
From what I see with Vanguard though, their Target Retirement Funds just use the simple 3 holding portfolio with Total US, Total International, and Total US Bond Market.
Posted on 4/30/12 at 4:49 pm to TheHiddenFlask
Not for sharing, for aggression, but way back when I was a high equity allocator which was easy to choose in the late 80's-90's. I was semi-joking although that is recognizing you are informed, young, and aggressive. Nothing right nor wrong and my crystal ball seems to be semi-permanently hazed over these days.
Posted on 4/30/12 at 5:17 pm to greenhead11
quote:
15% international
20% balanced Index
23% large growth
10% small cap
10% Mid cap
10% target Retirement (pick your date)
7% REIT
5% Europe
Overweight growth slightly, diverse allocation accross all sizes, sectors, geographies
UNDERWEIGHT Europe
You have a lot more flexibility in your 401k than I have in mine.
If you roll in my Roth IRA with my 401k holdings it begins to look more like your allocation.
Posted on 4/30/12 at 5:19 pm to TheHiddenFlask
quote:
You have a lot more flexibility in your 401k than I have in mine.
I was happy to find out recently that my 401k wasn't as dreadful as first believed. I don't have the choices I really want, but I think they'll end up better than what I initially thought.
Now I just got to save my pennies for the Jan 1st enrollment.
Posted on 4/30/12 at 5:22 pm to tirebiter
quote:
Not for sharing, for aggression, but way back when I was a high equity allocator which was easy to choose in the late 80's-90's. I was semi-joking although that is recognizing you are informed, young, and aggressive. Nothing right nor wrong and my crystal ball seems to be semi-permanently hazed over these days.
Part of it is that I am young and aggressive, the other part is that I want nothing to do with fixed income. I hold a ~5-10% of my total retirement assets in short duration bonds and high yield floaters, but I'm terified of interest rate risk right now. I would rather keep it in my savings account yielding .65% than be out 5-10 years at these rates.
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