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401k Allocation
Posted on 5/24/14 at 10:36 pm
Posted on 5/24/14 at 10:36 pm
Unfortunately, I still have about 30 years until retirement. My employers 401k plan is with TRowe Price and they have about a dozen of the most basic options to invest in. My company is private so there is no company stock to invest in.
In the past, I have been mostly investing in the target date funds, Russell 2000 fund, and Blue Chip funds. I have been reading more and examining the expense ratios of the funds and I'm starting to wonder if I would be better off using Warren Buffett's philosophy of using the low expense S&P index fund and a bond fund. The expense ratio of the S&P index fund is about 1/3 of the others. The 10 year return of the S&P index fund is equal to or a little less than the other available options. Do you think it would be a good idea to invest the bulk of the money in the S&P index fund and leave it alone? What % would you invest in the S&P fund and what % in a bond fund?
In the past, I have been mostly investing in the target date funds, Russell 2000 fund, and Blue Chip funds. I have been reading more and examining the expense ratios of the funds and I'm starting to wonder if I would be better off using Warren Buffett's philosophy of using the low expense S&P index fund and a bond fund. The expense ratio of the S&P index fund is about 1/3 of the others. The 10 year return of the S&P index fund is equal to or a little less than the other available options. Do you think it would be a good idea to invest the bulk of the money in the S&P index fund and leave it alone? What % would you invest in the S&P fund and what % in a bond fund?
1
Posted on 5/25/14 at 8:37 am to bogart
I have a similar time horizon and put 100% of my 401k into VINIX which is a low fee vanguard fund that is very similar to the S&P
Posted on 5/25/14 at 8:50 am to jso0003
Nailed it. 100% lowest fee S&P index fund.
Posted on 5/25/14 at 10:05 am to jmtigers
I've never heard of particularized love for the S&P. Why chose that over, say, a low cost Vanguard total market fund?
Posted on 5/25/14 at 3:46 pm to Joshjrn
In my case it is because the expense ratio of the S&P 500 index is about 1/3 less than all of the available options. The upside potential of the total fund fund over the next 30 years doesn't seem to justify the expenses.
Posted on 5/26/14 at 1:10 am to bogart
Yeah, the total fund is a bit more expensive, but you can break it down into more specific funds and save several basis points. I'm like you with thirty years to retirement. My 401k breakdown is 80% equities and 20% bonds. Of the equities i have 35% in a total international fund (no other international offerings) and domestically i have half in s&p 500 with the remaining half split between mid and small caps. If I had REITs available i would probably put about 5-10% in that. You may do well over 30 years, but diversifying a bit will cut down a lot on market fluctuations and will reduce the risk that you underperform.
Posted on 5/26/14 at 1:16 am to hombreman9
Looks like you're anchored, btw.
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