Vanguard Diehards

Re: 401k fund selection

gacutil — Tue, 10 Jun 2008 21:12:13 GMT

Lauren, Thanks a lot for the detailed response, it is quite informative and very helpful. I am leaning towards the third option for 2 reasons: 1) although I value Vanguard most of the investment companies, I don't want to keep all eggs in one basked; 2) I am not good at math and it is harder to calculate 3 plans as one portfolio. Thanks again. Lana

Re: 401k fund selection

laurenvignec — Tue, 10 Jun 2008 20:56:07 GMT

Hello Lana,

OK, there are a few pretty good options. You have really good funds in your 401k plan so that makes things easier.

First there is the super-simple option. You could put the whole Vanguard 401k into either the STAR fund or a Target Retirement fund that matches your asset allocation plan. Then you could use a similar Fidelity balanced or Target Retirement fund for the Fidelity 401k. You would not get exactly the asset allocation you want, but it would be close, and it would certainly make investing easy. The only thing you'd have to do is keep saving and investing.

The second option will be attractive if you strongly favor Vanguard as a company. In this option you could fill up the entire 401k at Fidelity with their S&P 500 index fund, which should have the lowest expenses of all of their options. That would be 34.7% of your whole portfolio. The Vanguard 401k would make up (at present) 65.3% of the portfolio. So you would then reduce your holdings of the S&P 500 fund in the Vanguard 401k and increase your holdings of the other funds until the entire portfolio meets your asset allocation.

If you took this option then every so often (perhaps every year) you would want to rebalance the entire portfolio as one portfolio.

A third option is to set up each of the three 401k plans as a 65/35 portfolio. This is pretty close to what you already have, so few changes would be made. You would probably want to reduce your stock holdings in the Vanguard 401k and increase the bond holdings. 45% of the 401k in the S&P 500 fund, 35% in the bond fund and 10% each in the other two funds. Then you could set up a similar kind of 65/35 portfolio in the Fidelity 401k, but I don't really know enough about Fidelity funds to suggest individual funds.

This plan is slightly more complicated but since all of your assets are tax-deferred anyway it really makes no difference where you put the assets. I've noticed that a lot of investors with different accounts, all tax-deferred, like to have each account asset allocated if possible.

These three options end up in about the same place. The idea is to see the whole portfolio as one portfolio, and have the whole portfolio match your risk tolerance. Basically, it is just a matter of deciding how you want to do this mechanically.

Best wishes,

Re: 401k fund selection

gacutil — Mon, 09 Jun 2008 20:58:35 GMT

Sorry for the formatting - it is being lost while posting.

Re: 401k fund selection

gacutil — Mon, 09 Jun 2008 20:57:21 GMT

We would like to have about 65% in stocks (65/35 ratio) with 10% of international stocks. Her 401K at Vanguard offers the following funds: Windsor II VWNFX Total Bond VBMFX Target Retiremend Funds 2005 through 2050 Small-Cap Index Fund NAESX Star Fund VGSTX Primecap Fund VPMCX International Growth VWIGX Inflation-Protected Securities VIPSX Explorer Fund VEXPX Capital Opportunities VHCOX 500 Index VFINX Third Avenue Value TAVFX Oppenheimer Global A OPPAX Dodge & Cox Balanced DODBX Davis NY Venture A NYVTX Artisan International ARTIX His 401K at Fidelity (was rolled over by his previous company). We plan to keep as a Traditional Roth. I assume we will have most of Fidelity funds available. His new 401K at Principal: Vanguard Windsor II VWNFX 45% Vanguard Intermediate-Term US Treasury Fund VFIUX 35% Principal Small-Cap Stock Index 20% Appreciate any input Lana

Re: 401k fund selection

laurenvignec — Tue, 03 Jun 2008 23:12:59 GMT

Hello Lana,

Well, the two of you seem to be doing pretty well so far. I think that the best thing to do is probably to pick funds from Fidelity and Vanguard that will bring (or keep) your whole portfolio, viewed as one entity, as close as possible to your desired asset allocation.

So, what is your desired asset allocation?

401k fund selection

gacutil — Mon, 02 Jun 2008 14:14:53 GMT

Hi, My husband needs help building his 401K portfolio. Here are some stats: Emergency funds - present. Debts - house. 44 years old Filing status - married filing jointly, tax rate 25%. Risk tolerance - moderate. Her 401K at Vanguard: 141.000 Vanguard 500 Index Fund Investor Shares 46.86% Vanguard Capital Opportunity Fund 11.2% Vanguard International Growth Fund 12.09% Vanguard Total Bond Market Index Fund 29.85% His old 401K at Fidelity: 75.000 Was rolled over by his company from Ameritrade. We now need to choose the funds and basically create his portfolio at Fidelity. His new 401K plan is with Principal and has only 3 Vanguard funds available: Vanguard WIndsor II Vanguard Primecap Fund Vanguard Explorer Fund The rest of the funds are mostly from the Principal family plus someRussel and American Funds. Could someone help make fund selections for his portfolio at Fidelity and Principal? Your advise is very much appreciated. Lana