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Allocate my 401K! (Part Two) (1 Viewer)

Nick Vermeil

Nick Vermeil

Footballguy
I finally qualify for the 401k at my new company.  Based on initial research all of these funds have performed well over the last several years (Shocker). Nine years ago (!) I posted a now archived thread with the funds at my old company and got some good feedback and reasoning from the FBG quants.  Here is a list of the new funds I have access to:

QDWBQ   MetLife GAC Series 25157  CI0

DFFGX   DFA Short-Term Government I

FTBFX  Fidelity Total Bond

FBNRX  Templeton Global Bond R^

VEIRX  Vanguard Equity-Income Adm

SWPPX  Schwab S&P 500 Index

TRBCX  T. Rowe Price Blue Chip Growth

GFMGX  Gerstein Fisher Multi- Factor Growth Eq

MVCKX  MFS Mid Cap Value R6

PESPX  Dreyfus Mid Cap Index Inv

JVMIX  JHancock Disciplined Value Mid Cap I

HRAUX  Eagle Mid Cap Growth R6

AVPAX  American Beacon Small Cp Val Inv

WTBRSML  BlackROck Russell 2000 Index Fund R

HSLYX  Hartford Small Cap Growth Y

MINHX  MFS International Value R4

DFIEX  DFA international Core Equity I

GFIGX  Gerstein Fisher Multi-Factor Intl Gr Eq

DEMSX  DFA Emerging Markets Small Cap I

GFMRX  Gerstein Fisher Mlt-Ftr GL Rl Est Sec

and then a series of American Funds retirement date target plans for every 5 years. 

I want to remain fairly aggressive without being reckless as I am still behind.  GO!

 
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Find low fee funds that track an index.  Hard to know which of those are better than others unless you give tickers and the fees associated with each.

A 10% return on a fund that has 2% fees is worse than a fund that gets a 9% return with .2% fee.  Fees kill returns, and most funds don't beat index funds.

 
Nick Vermeil said:
Fidelity Total Bond  - 15

Schwab S&P 500 Index -75

DFA international Core Equity - 10 
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Edit - Also, if you cannot allocate your contributions regularly make your contribution into the target fund and then distribute from that funds to your index funds on a monthly or quarterly basis.  This way you stay as close to your target asset mix as possible.  

The other option is to have your auto deposit into something that would otherwise be taxable like the global bond or something.  

 
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adonis said:
Find low fee funds that track an index.  Hard to know which of those are better than others unless you give tickers and the fees associated with each.

A 10% return on a fund that has 2% fees is worse than a fund that gets a 9% return with .2% fee.  Fees kill returns, and most funds don't beat index funds.
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Tickers added for the curious. I am looking into the fees today as well.  Thanks.

 
Gawain said:
Throw up fees and your age. If you're under 45, I'd go with:

Schwab S&P 500 Index -100
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Normally and under 99% of circumstances, I'd probably agree with this, as it is an answer Warren Buffet would give too. 

However, after almost a decade of a bull markets, CAPE ratios are at historic highs. Historically (past performance does not guarantee future results yada yada yada), when CAPE levels are where they are now (this looks back over 100 years), your 10 year returns will be at their lowest. 

With that, I'd say half bond fund half S&P, keep it there until a market crash, which might not be for another few years, then make the shift to 100% S&P.

 
culdeus said:
Much of this was written before these mega ETF type funds as well as during the time when the risk free ROR was something better than .25%.  
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There are problems with the MPT, but those aren't really two of them...

Mega ETFs just give you more and cheaper options, they actually fit in quite well with the theory as they give you opportunity to find uncorrelated options.

Having a low risk free rate just changes the slope of the line, it doesn't make it vanish.

 
fantasycurse42 said:
Normally and under 99% of circumstances, I'd probably agree with this, as it is an answer Warren Buffet would give too. 

However, after almost a decade of a bull markets, CAPE ratios are at historic highs. Historically (past performance does not guarantee future results yada yada yada), when CAPE levels are where they are now (this looks back over 100 years), your 10 year returns will be at their lowest. 

With that, I'd say half bond fund half S&P, keep it there until a market crash, which might not be for another few years, then make the shift to 100% S&P.
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Get your money out of the market now?

 
Buckychudd said:
There are problems with the MPT, but those aren't really two of them...

Mega ETFs just give you more and cheaper options, they actually fit in quite well with the theory as they give you opportunity to find uncorrelated options.

Having a low risk free rate just changes the slope of the line, it doesn't make it vanish.
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That's fine, but I would point people to bogleheads or something that is more updated for present considerations and in a happier format.  (nitpick)

I'd also say you need to come to grips with the idea that RFror might just be near 0 for the foreseeable future virtually no matter what, and plan accordingly.  

 
culdeus said:
That's fine, but I would point people to bogleheads or something that is more updated for present considerations and in a happier format.  (nitpick)

I'd also say you need to come to grips with the idea that RFror might just be near 0 for the foreseeable future virtually no matter what, and plan accordingly.  
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I don't disagree with either of these.

I should have linked something other than the wiki page.  Basic concept is that you can diversify with uncorrelated assets to lower risk and achieve better returns, I should have left it at that.

 
Juxtatarot said:
100% and be done with it.  These decisions don't need to be so complicated.
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You guys are nuts, unless OP is at 0% retirement funding.  IMO, no way a 45 year old should be 100% equities, particularly on the back of an 8 year old bull market.  30% total bond is more reasonable, with 55% S&P, 15% International. Or something similar.

Right now I'm at the inflection point, same age, and at 55-35-10 (10% RE).  Since REITs are now the 11th S&P sector it's fair to say I'm 65-35.  And even now I'm nervous about my allocation being too aggressive.

Everyone thinks they have the mental makeup to be aggressive until the markets drop 30%.  

 
Sand said:
You guys are nuts, unless OP is at 0% retirement funding.  IMO, no way a 45 year old should be 100% equities, particularly on the back of an 8 year old bull market.  30% total bond is more reasonable, with 55% S&P, 15% International. Or something similar.

Right now I'm at the inflection point, same age, and at 55-35-10 (10% RE).  Since REITs are now the 11th S&P sector it's fair to say I'm 65-35.  And even now I'm nervous about my allocation being too aggressive.

Everyone thinks they have the mental makeup to be aggressive until the markets drop 30%.  
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Not for the shrewd Flaming Swords of the Elf-King Dharmaytar investor.

 
Sand said:
You guys are nuts, unless OP is at 0% retirement funding.  IMO, no way a 45 year old should be 100% equities, particularly on the back of an 8 year old bull market. 
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He's dollar cost averaging this money over 20+ years and wants to be "fairly aggressive without being reckless".  I have no issue with your recommendation, by the way.  "Fairly aggressive without being reckless" can mean different things to different people. 

 
xulf said:
Get your money out of the market now?
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We could be getting there. Avi Gilburt says we may hit 2600.

http://www.marketwatch.com/story/stocks-test-support-and-subsequently-rally-2017-10-02

However, as long as support holds on the next test within the coming two weeks, I believe the market will be setting up another 50-point rally up toward the 2,550-2,560 region next, as shown on the daily chart. Ultimately, as long as the market retains support, the primary count has to continue looking up.

Lastly, I believe the market will be coming back to the 2,400 region, but it is a matter of time. In the case of a breakdown of support over the next several weeks, then we will see that region rather quickly, as represented on the 60-minute chart. However, as long as support holds, it is likely that this rally can take us into the Thanksgiving time frame, and the market may not begin wave (4) back toward 2,400 in earnest until 2018.

He's pretty much been right all the way up. So when support breaks, it could be look out below.

 
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On any drain, 100% equities is a no brainer barring the look of a recession.

Go 30% S&P, 40% small cap growth, 30% large cap growth. Run screaming when we break support.

You can look up all the tickers and see which performs the best. I track all my and I have like 80 funds to choose from.

Recently, Small Caps made a huge run and Emerging Markets have been on a tear for the last year. here's yours: https://finance.yahoo.com/chart/DEMSX

 
Juxtatarot said:
He's dollar cost averaging this money over 20+ years and wants to be "fairly aggressive without being reckless".  I have no issue with your recommendation, by the way.  "Fairly aggressive without being reckless" can mean different things to different people. 
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As I said in my response, if he has 20k right now, then yeah, plowing it all into equities is probably fine.  Even if the market tanks he's DCAing into those low costs.  If he has 2M that calculus is a whole lot different.

 
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