401k Investment Diversification

Yeah haven’t done it yet was just getting opinions. My options are basically limited to all the vanguard target funds. There are some supplemental ones and the ones I listed are the ones worth mentioning out of those. I am with fidelity if that makes it easier to know. Why did you decide on 30%?

Just my take..

Focus more over the next 10-15 years on the amount you’re pumping in rather than the investment selection.

Once a solid base is built up, the investment selection will become more important. Amount saved will be the biggest determinant of the size later on.

If you’re pumping in the ~$23k/yr, then ignore my take.

Luckily I’m in a position I can max it out, which is a blessing.

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If you’re pumping in the ~$23k/yr, then ignore my take.

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Living below my means so I am able to do this. So how would your take change?

Just be aware that Vanguard Target Retirement 2060 has a 35% allocation to foreign stocks. Do you want 1 in 3 of your retirement dollars going into foreign stocks? They have absolutely sucked for the last 15 years and mostly sucked for the last 25.

Not giving advice, just pointing something out that you might not be aware of.

You're young. Go aggressive (but diversify). You've got time to figure something out if you don't like where you are in 15 years.

Do a Google search for "periodic table of investments". It shows, for the most part that what is hot today is usually cold tomorrow, but it will be hot again. Translation: spread out your stock investments in different stock types (large stocks, small stocks, growth stocks, and value stocks) so that when one cools off, the other may be getting hot.

Also, there is such a thing as opportunity costs. Holding cash or bonds, even inside of a fund at your age, may prevent you from realizing years and years of gains in the stock market if you continue to do it over your working life. Get a savings account for cash, at your age, you need your assets to work.

The main thing is you are starting at 25, which is great. Hit the 401k as hard as you can if one is available, and also fund a Roth if you are eligible. Go heavy on American stocks, at least in the early decades.

To encourage your early stock investment, I'll share an anecdote I've mentioned before. When I was a little older than you in about 1995, I saved up $5,000 and put it in a taxable Fidelity Blue Chip Growth mutual fund. It was my first stock market purchase. It's been riding ever since, with no additional contributions except automatic reinvestment of dividends.

It's seen lots of ups and downs (I recall when it once went from over 20K to about 12k in a few days), but today it is worth $102,000. I don't look at it but once or twice a year, but I did see it was over $105K last week before a recent dip. I'm going to have a hard time ever cashing it out because it's been so interesting to watch over the decades.

Also, I read an article about federal employees who had over a million in their TSP, the equivalent of a 401k for feds. They tended to share three characteristics: (1) started contributing when young, (2) maxed out contributions, and (3) went heavy on the C fund, which is basically the S&P 500. These are folks who don't generally earn big salaries, but they all stacked it up with the power of the market and time.

At 25, you have a golden opportunity: time. Take advantage of it, because you can't get it back once it has passed.

20% VIGIX (growth/tech)
20% VINIX (S&P 500)
10% VMCIX (mid-cap index)
10% VMGMX (mid-cap growth)
10% VSCIX (small-cap index)
10% VSGAX (small-cap growth)
10% VIVIX (value)
5% VTSNX (total international index)
5% VWILX (international growth)


You can simplify and just do (1) 20% small-cap fund and (1) 20% mid-cap fund. Do not choose a target date fund, as they underperform. After a year of playing around with options, I’m most content with the above selections. Don’t plan on revising for minimum 15 years. I’m 38, by the way.