|
DholmbladRU posted:Im sorry, I am not familiar with that acronym.
|
#
?
Jun 9, 2015 03:35
|
|
|
|
| # ? May 12, 2024 23:03 |
|
|
DholmbladRU posted:Im sorry, I am not familiar with that acronym. Expense ratio - what percentage of the balance the fund managers take every year for managing the fund. It's also helpful to know the load, which is a chunk taken off the top of an initial investment (front-end load) or sale (back-end load). Most worthwhile mutual funds these days are no-load, but there are really terrible options in some 401(k)s.
|
|
#
?
Jun 9, 2015 03:37
|
|
|
Dik Hz posted:ER means expense ratio. It's the percent of your assets you pay each year to the dude/dudette managing your assets. We get a bit jargonistic in this thread. Maybe there should be a list of acronyms in the OP. Ah it looks like the 'Total Inv. Expense Gross' at actually pretty high(at least compared to vanguard funds Ive seen). In principal they look to range from .5% -> 1.26%. Most of them look to be .6-.8%. It looks like my investments in Small/Mid U.S. Equity have the highest expense ratio, three of them are over 1.x one is 1.5...
|
|
#
?
Jun 9, 2015 03:39
|
|
|
If your company isn't matching, you might want to consider maxing out an IRA ($5,500) with Vanguard before contributing to your 401k.
|
|
#
?
Jun 9, 2015 03:51
|
|
|
ohgodwhat posted:If your company isn't matching, you might want to consider maxing out an IRA ($5,500) with Vanguard before contributing to your 401k. Ive already done that! And based off the advice of individuals here dropped the $ in a target date fund they have.
|
|
#
?
Jun 9, 2015 03:53
|
|
|
If there's no matching a 401(k) is still a good idea but not quite as critical. After you leave you might be able to roll it into your next employer's 401(k) if they have a better one or, failing that, into your IRA.
|
|
#
?
Jun 9, 2015 04:05
|
|
|
DholmbladRU posted:Ah it looks like the 'Total Inv. Expense Gross' at actually pretty high(at least compared to vanguard funds Ive seen). In principal they look to range from .5% -> 1.26%. Most of them look to be .6-.8%. It looks like my investments in Small/Mid U.S. Equity have the highest expense ratio, three of them are over 1.x one is 1.5...
|
|
#
?
Jun 9, 2015 04:12
|
|
|
Calpers to dump even more active funds/expensive money managers: http://www.wsj.com/articles/calpers-to-cut-external-money-managers-by-half-1433735976 I guess big pension are wising up to how exotic investments like hedge funds or private equity aren't the best for employees.
|
|
#
?
Jun 9, 2015 04:15
|
|
|
moana posted:As others have said, that's pretty bad. Any chance of talking to whoever's in charge of the 401k and trying to get them to switch providers? The last company I was working for did Vanguard and it was pretty awesome. Or at least to offer a low-cost SP500 index? Unfortunately my company is pretty cheap, and probably just went with the lowest(cost to them) provider. I am certainly going to inquire, and am already on the job hunt. But wont be holding my breath for a switch in providers.
|
|
#
?
Jun 9, 2015 04:22
|
|
|
It looks like my question is right in line with the last couple pages of discussion. My company is considering starting a 401(k) managed by NuSource Financial. In the presentation to us (I'm a part owner to be clear), the NuSource rep was pushing hard for a JP Morgan fund package whose fees struck me as insane. The only point of reference I have is my Vanguard investments. Just to give an example, JPM's Target 2045 fund's ER for the equivalent of admiral shares is 0.63, while Vanguard's is 0.18. We asked the rep if we could choose to go with a different fund package, and his response was: quote:The vanguard funds are available. That said, it makes no sense to use them at this time for the following reasons: Points 1 and 3 seem like non-points to me (on the scale of a retirement fund, outperformance over the course of 8 years seems like nothing). What about point 2? He also attached this spreadsheet, which I'm not sure I understand: 
Papercut fucked around with this message at 18:40 on Jun 9, 2015 |
|
#
?
Jun 9, 2015 18:36
|
|
|
Wait wait wait what? You pay 75 BPS to the people running the 401k on top of the funds ER? 
|
|
#
?
Jun 9, 2015 18:57
|
|
|
I don't understand enough about those contracts to give any helpful advice about Point 2, but my guard is put up by the fact that Points 1 and 3 are a straight up snow job. It's utterly useless to compare two funds on one sample of the 8 year return, and those two funds have different holdings and management strategy anyway. And Morningstar awards are the dried-up ejaculate left over from last night's finance industry circlejerk. Historically, a lot of 401k deals are cheap for the company but lovely for the employees, because the company's 401k purchaser doesn't understand or doesn't care about fund expenses. So thanks for doing better.
|
|
#
?
Jun 9, 2015 19:44
|
|
|
Created a spreadsheet based off information which I thought might be a better allocation of future 401k investments, based on the funds available in my plan. http://i.imgur.com/1nwSRZ3.png Any thoughts on this? Would it also be advantageous to trade current funds, to align with future allocation noted in the above screen? DholmbladRU fucked around with this message at 19:53 on Jun 9, 2015 |
|
#
?
Jun 9, 2015 19:48
|
|
|
DholmbladRU posted:Created a spreadsheet based off information which I thought might be a better allocation of future 401k investments, based on the funds available in my plan. Am I reading this wrong or do you have the same S&P 500 fund listed twice?
|
|
#
?
Jun 9, 2015 20:00
|
|
|
Super Dan posted:Am I reading this wrong or do you have the same S&P 500 fund listed twice? Ah yeah. It should be just once. edit: http://i.imgur.com/fkpx1sg.png DholmbladRU fucked around with this message at 20:05 on Jun 9, 2015 |
|
#
?
Jun 9, 2015 20:02
|
|
|
Papercut posted:It looks like my question is right in line with the last couple pages of discussion. I'd tell that snake oil salesman to go pound sand. Maybe talk to Vanguard directly? https://investor.vanguard.com/what-we-offer/small-business/overview
|
|
#
?
Jun 9, 2015 20:10
|
|
|
mrmcd posted:Wait wait wait what? slap me silly posted:I don't understand enough about those contracts to give any helpful advice about Point 2, but my guard is put up by the fact that Points 1 and 3 are a straight up snow job. It's utterly useless to compare two funds on one sample of the 8 year return, and those two funds have different holdings and management strategy anyway. And Morningstar awards are the dried-up ejaculate left over from last night's finance industry circlejerk. Barry posted:I'd tell that snake oil salesman to go pound sand. Maybe talk to Vanguard directly? https://investor.vanguard.com/what-we-offer/small-business/overview Thanks for the responses, this is the same sentiment I was getting. The whole thing seems way off, to the point where I don't think I would put my own money in it (so why would my employees, unless they didn't know any better?). I had seen that Vanguard had their own small business 401(k)'s, so I will look into that for comparison.
|
|
#
?
Jun 9, 2015 20:14
|
|
|
JPM2045 fund had better returns, but has 2x the fees. I'm not sure if Growth of 10k on M* is fee adjusted? I'd look directly to Vanguard for 401k servicing.
|
|
#
?
Jun 9, 2015 20:29
|
|
|
SiGmA_X posted:JPM2045 fund had better returns, but has 2x the fees. I'm not sure if Growth of 10k on M* is fee adjusted? It sounds like it did beat them, including fees, over the past eight years. But eight years is nothing and it's a weird number to pick. I'm betting going to ten or twenty years would turn the numbers around, why else would they only pick eight? The 0.75 additional ER on everything is absurd for a retirement plan. I may be spoiled by mine but you shouldn't be making your employees pay extra fees, especially fees that are an additional four times as expensive as regular investor shares.
|
|
#
?
Jun 9, 2015 20:56
|
|
|
Desuwa posted:It sounds like it did beat them, including fees, over the past eight years. But eight years is nothing and it's a weird number to pick. I'm betting going to ten or twenty years would turn the numbers around, why else would they only pick eight? It's 8 years because the fund didn't exist before then (did they have some equivalent prior to that? Don't know). But it's still too short a timeframe to put much stock in it.
|
|
#
?
Jun 9, 2015 21:02
|
|
|
Some Investor Guy posted:2. However, if you deduct TPA and advisor fees (no one works free) from vanguard, the JPM 2045 fund outperformed Vanguard by more than 20% over the past 8 years! Refer to JPM 2045 - Vanguard.xls. I don't understand his point here. I have a Roth IRA direct with Vanguard and a 401k, through Fidelity, that holds the same vanguard funds. Am I paying these TPA fees for the fidelity version of the same fund? I couldn't find anything that said so on the website... It sounds like he is saying that in order to get the Vanguard funds you have to pay 75 BPS to some non-Vanguard person. I assume that non-Vanguard person is him. Wouldn't the better comparison be the fund return without a middle man?
|
|
#
?
Jun 9, 2015 21:21
|
|
|
Desuwa posted:So I just put two and two together and realized that my workplace does allow for the mega-backdoor Roth. They allow it into both the 401k and IRA but I'd do the IRA so that, if necessary, I can withdraw the conversions five years after they convert. I do a mega-backdoor Roth IRA every year. I haven't encountered any downsides or gotchas yet.
|
|
#
?
Jun 9, 2015 21:34
|
|
|
Boot and Rally posted:I don't understand his point here. I have a Roth IRA direct with Vanguard and a 401k, through Fidelity, that holds the same vanguard funds. Am I paying these TPA fees for the fidelity version of the same fund? I couldn't find anything that said so on the website... I believe he's saying that if you buy the JPM funds you don't pay the extra 75 bps. Probably because he or his company get a kickback from JPM for pushing their funds. Its kind of like how my tax brokerage account at Fidelity has "commission free buys" on funds they have marketing deals with, except much much shadier.
|
|
#
?
Jun 9, 2015 21:37
|
|
|
Boot and Rally posted:I don't understand his point here. I have a Roth IRA direct with Vanguard and a 401k, through Fidelity, that holds the same vanguard funds. Am I paying these TPA fees for the fidelity version of the same fund? I couldn't find anything that said so on the website... I think the original question was "Can you get us better funds such as Vanguard funds?" And the answer from the sales guy is "Yes we can, but it requires us to pay 0.25% to a 'record keeper' and we take our own cut of 0.5% (he even says "nobody works for free"). Now look at these other funds over here that are a much better deal because XYZ." Edit: I agree with mrmcd, its likely that the funds they are pushing have special "partnerships" which reduce the net expense ratio. I highly doubt it would be a difference of 0.75% that he uses, but I suppose its possible. What did he claim for the ER for the JPM fund? Unless it is 0.18% with no additional fees from him or a 'record keeper' (still too new to investing to even understand what this is or why its necessary. Is it a fee from say Vanguard for other people using their funds?), I am pretty sure he is counting all expenses for the Vanguard and only the originator's (is this the right terminology?) fees for the JPM. Gripen5 fucked around with this message at 21:49 on Jun 9, 2015 |
|
#
?
Jun 9, 2015 21:39
|
|
|
Gisnep posted:I'm not sure what you mean with this statement. How else could you perform a mega-backdoor Roth other than it ending up in your Roth IRA? Do you mean your plan allows for conversion of your after-tax 401k into your Roth 401k? Yes, my plan allows for Roth in-plan conversions. I'd get better vanguard shares in the 401k but more restrictions on withdrawing it so I won't be doing it in-plan. I don't have enough money to max out a mega-backdoor but I can live without a ton of money for at least five years.
|
|
#
?
Jun 9, 2015 21:48
|
|
|
Gripen5 posted:I think the original question was "Can you get us better funds such as Vanguard funds?" Most providers especially for small businesses are pretty much a ripoff since even for good funds they always demand a sky high cut. Small businesses would be better off just going to Vanguard directly instead of dealing with snake oil salesmen.
|
|
#
?
Jun 10, 2015 02:25
|
|
|
Papercut posted:In the presentation to us (I'm a part owner to be clear)
|
|
#
?
Jun 10, 2015 03:12
|
|
|
Kobayashi posted:I'm working full time for a smaller company that does not (yet) have a 401k. I make too much to contribute to a Roth IRA. Do I have any other tax advantaged options besides a traditional IRA? I looked at the SEP IRA and Solo 401k, but at first glance I do not think I qualify because I am not self-employed or freelancing. Asked this a few pages ago but didn't see anything. Is there anything I should look at other than a traditional IRA?
|
|
#
?
Jun 10, 2015 04:48
|
|
|
Kobayashi posted:Asked this a few pages ago but didn't see anything. Is there anything I should look at other than a traditional IRA? Without 401k or other workplace plan your other retirement funding options are pretty limited. You can always do a taxable account if you have money to spare and no current access to more retirement savings options.
|
|
#
?
Jun 10, 2015 05:01
|
|
|
Kobayashi posted:Asked this a few pages ago but didn't see anything. Is there anything I should look at other than a traditional IRA? Backdoor Roth. You contribute to an after tax IRA and convert it to a Roth. You pay additional tax on the earnings between the contribution and the conversion but if it's only there for a few days before converting that burden is tiny. If you have an existing pre-tax IRA you will pay tax on part of the conversion according to the percentage of your IRA that's pre-tax. If you don't already have assets somewhere else, Vanguard is the thread favourite and is used to doing this. Also bug your employer to get a 401(k) plan that's not from some lovely predatory 401(k) manager; Vanguard is, again, a good choice but not the only choice.
|
|
#
?
Jun 10, 2015 05:12
|
|
|
etalian posted:Without 401k or other workplace plan your other retirement funding options are pretty limited. Desuwa posted:Backdoor Roth. You contribute to an after tax IRA and convert it to a Roth. You pay additional tax on the earnings between the contribution and the conversion but if it's only there for a few days before converting that burden is tiny. If you have an existing pre-tax IRA you will pay tax on part of the conversion according to the percentage of your IRA that's pre-tax. Awesome, that's what I figured. My new employer is a fast-growing startup that should have a 401k program in place in the next few months. In the meantime I'll take the money that I ordinarily would have contributed to my 401k and put that into a traditional IRA. Since I may be able to influence what my employer does, is a Roth 401k still a good option to lobby for? As for converting, I rolled two 401k accounts from previous employers over to Vanguard earlier. I now have a rather large rollover IRA in my Vanguard account. It's my understanding that this presents substantial tax implications for any future traditional IRA conversions. Is it possible to incrementally convert my rollover IRA as I can afford it? I'll have to save quite a bit of money to afford the entire conversion.
|
|
#
?
Jun 10, 2015 05:33
|
|
|
Kobayashi posted:Awesome, that's what I figured. My new employer is a fast-growing startup that should have a 401k program in place in the next few months. In the meantime I'll take the money that I ordinarily would have contributed to my 401k and put that into a traditional IRA. Since I may be able to influence what my employer does, is a Roth 401k still a good option to lobby for? I'm not sure about what it takes to get a Roth 401(k), might depend on which manager you go with. It's a good option to have. As for the traditional IRA I would contribute up to the maximum to an after-tax IRA and rollover as you can afford it. There's no limits on how often you can rollover or restrictions on how much you can, but if X% of your IRA is pre-tax/earnings you'll pay tax on X% of the rollover. There's no real downside to contributing up to your limit now and converting later, the tax burden from the earnings will be small if you roll it over as fast as you can. If your tax rate is high now but you expect it to drop in retirement it's not a terrible idea to do after-tax contributions until you retire then convert at a lower tax rate. Conversions have to sit in a Roth IRA for five years before you can withdraw them penalty free if you retire early, though. Desuwa fucked around with this message at 08:25 on Jun 10, 2015 |
|
#
?
Jun 10, 2015 06:30
|
|
|
Papercut posted:Points 1 and 3 seem like non-points to me (on the scale of a retirement fund, outperformance over the course of 8 years seems like nothing). What about point 2? As far as the small out performance of the JP Morgan fund since 2007 that's pretty much worthless as a standalone fact. Do they take on more risk? What's the underlying investment look like? How do they plan to change the investment mix over time? What happens to the fund when it hits it's target date, typically you roll into retirement fund, what's that look like? You also need to judge the offer based on the total portfolio, not just one asset. On the surface I don't see anything fundamentally wrong with the JPM target date funds, you could certainly do worse things with your employees money. Although it's possible that JPM has a secret sauce they gives their target date fund better return with less risk than a similar product from Vanguard the safe bet is always to go with the lower cost. Cost is real, next years returns are imaginary. Probably, over time, the higher expenses will tell and over the next 30 years it's likely to under perform a similar fund with lower expenses. I would absolutely not go through that Broker though.
|
|
#
?
Jun 10, 2015 13:37
|
|
|
About ten months ago, I began a job with a local county government. I immediately set off paying all $6000 of my graduate student loans, and finished early this year. I then started putting away money into my retirement savings -- in addition to what the county already puts away for me, I am able to deduct pre-tax pay into a 457b deferred compensation plan. I also try to put away after-tax cash into a Roth IRA with Charles Schwab. So I've set up to put away $1375 a month into my deferred compensation plan pre-tax, and average about $600 a month post-tax into my Roth IRA. I make approximately $3000 a month pre-tax. My current portfolio looks like this: Total: $ 5,509 Roth IRA Schwab International Index Fund (SWISX): 14.49%; ER 0.23% Schwab S&P 500 Index Fund (SWPPX): 16.48%; ER 0.09% Schwab Total Market Index Fund (SWTSX): 7.48%; ER 0.10% 457 b: Vanguard Institutional Index Fund Institutional Shares (VINIX): 20.47%; ER 0.04% Vanguard Target Retirement 2010 Fund Investor Shares (VTENX): 6.19%; ER 0.16% Vanguard Total International Stock Index Fund Investor Shares (VGTSX): 19.83%; ER 0.22% Vanguard Small Capitalization Index Fund Investor Shares (NAESX): 15.06%; ER 0.23% The average expense ratio across all of my portfolio is 0.15%. With the loans paid off, I am totally debt-free. I live with my family, so my only fixed obligations are about $300-$400 a month to help chip in for food/rent. Am I doing okay? DrSunshine fucked around with this message at 17:21 on Jun 10, 2015 |
|
#
?
Jun 10, 2015 17:15
|
|
|
About to buy a house. I have enough in individual stocks to cover the down payment. Would selling those be a smart move to then free up the cash I'd otherwise use for the down payment? I could then put the cash in more diversified investments. I'll probably be maxing out my 401k and IRA this year regardless.
|
|
#
?
Jun 10, 2015 17:47
|
|
|
Why couldn't you just switch the stocks around into what you want and save yourself the trouble of buying and selling? You also have the capital gains (or losses) implications for selling your stock. I'd err on the side of using the cash (provided you have enough) and reserve the stock for a semi-liquid emergency fund in case something goes wrong.
|
|
#
?
Jun 10, 2015 17:54
|
|
|
It sounds like you're pretty young so the fact that you have no debt and you're already saving means that yes, you're doing fine. As long as you have a fund for emergencies -several months of living expenses, preferably in a savings account if you can get on with non-negligible interest, you're good. Your asset allocation looks a bit weird to me, the 6% in the 2010 target fund stands out as weird. If you don't want to worry about it put everything in the IRA into a target fund with an appropriate year. You've also got no bonds in your IRA. Decide on the percentage of stocks and bonds you want and aim for that. Desuwa fucked around with this message at 17:59 on Jun 10, 2015 |
|
#
?
Jun 10, 2015 17:56
|
|
|
DrSunshine posted:About ten months ago, I began a job with a local county government. I immediately set off paying all $6000 of my graduate student loans, and finished early this year. I then started putting away money into my retirement savings -- in addition to what the county already puts away for me, I am able to deduct pre-tax pay into a 457b deferred compensation plan. I also try to put away after-tax cash into a Roth IRA with Charles Schwab. So I've set up to put away $1375 a month into my deferred compensation plan pre-tax, and average about $600 a month post-tax into my Roth IRA. I make approximately $3000 a month pre-tax. My current portfolio looks like this: You have a lot of overlap in asset classes between your funds, is that intentional? I put together a quick table of your funds and where they are invested: code:Since you didn't specify when you plan to retire I'll assume you're pretty young and use the figures from the Vanguard 2055 retirement fund as comparison. The asset allocation in that fund is 54% domestic stocks (split 80% large cap, 20% extended = 43% large cap total, 11% extended market total), 36% international stock, and 10% bonds. Relative to that allocation you are overallocated in medium and small cap domestic stocks and underallocated in bonds. That's not to say your allocation is wrong, just that you should be aware of it and consider whether it is in line with your goals and risk tolerance.
|
|
#
?
Jun 10, 2015 17:57
|
|
|
Desuwa posted:It sounds like you're pretty young so the fact that you have no debt and you're already saving means that yes, you're doing fine. As long as you have a fund for emergencies -several months of living expenses, preferably in a savings account if you can get on with non-negligible interest, you're good. It's because my employer doesn't seem to offer a Vanguard bond index fund. So I decided to use the Target 2010 fund, since someone who's retired in 2010 should probably have a higher ratio of bonds. I'll definitely look into getting some bonds in my portfolio, though! The bond fund options available through Schwab's OneSource list (no commissions!) are not really attractive, since they all seem to hover around the 0.30-0.50% expense ratio range. Which kind of befuddles me, since it shouldn't take that much maintenance if they're just index funds? Mr.Radar posted:You have a lot of overlap in asset classes between your funds, is that intentional? quote:I put together a quick table of your funds and where they are invested: I want to become financially independent by the time I'm in my late 30's and 40's. I know that my current income isn't enough to get there, but I've gotten very good marks on my recent performance evaluations and I'm quite confident that a promotion is in the near future for me. So what I want out of my portfolio is really strong growth. Right now I'm only saving about 65% of my income, but I'd like to push that up to 80-90% if I can, while I'm still living with my folks. Thanks a bunch for the analysis by the way!! DrSunshine fucked around with this message at 18:20 on Jun 10, 2015 |
|
#
?
Jun 10, 2015 18:10
|
|
|
|
| # ? May 12, 2024 23:03 |
|
|
Barry posted:Why couldn't you just switch the stocks around into what you want and save yourself the trouble of buying and selling? You also have the capital gains (or losses) implications for selling your stock. Wouldn't I be paying the same gains taxes by selling and then buying index funds for whatever I chose? Maybe I'm missing something important here.
|
|
#
?
Jun 10, 2015 18:28
|
|