Help set up my 401k

[jganz]

ok.. im not really letting you set it up but i thought i would get some of your thoughts..

I will not substitute your judgement for my own.. i just wanted to get some of your thoughts... I am also risk tolerant..

I have pretty much all the vanguard funds to choose from.. I have narrowed down to 5 that i am thinking of going with.. they are

Equity income inv
small cap growth index inv
small cap value index inv
total bond index inv
us value inv

if you chose those what percentages would you choose.. if you prefer other funds within vanguard.. please let me know and i will research these as well

thanks for your thoughts..:smxB:

 

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[kurtyordy]

some may disagree, but I put the lion share of my funds in emerging markets, overseas funds.

 

[taichijedi]

some may disagree, but I put the lion share of my funds in emerging markets, overseas funds.

I agree that emerging markets are going to be the way to go, and have a nice percentage there myself. If you don't mind my asking, what is your time horizon for this account, as it will impact the decisions in regards tot he allocations you are considering.

You should have at least 10% in Vanguard's bond fund, as a stop loss for what we have witnessed in the last 12 months. Mind you, it will not completely cover you from losses, but it will offset some and preserve capital in pullbacks and adverse economic conditions.

Also, dependent on how savvy you are within the markets, have you ever considered a self-directed IRA? It is certainly more inline with the fastlane mentality, as you have total control of your funds and their allocation, even down to individual stocks if you so choose. If you are good in the markets, and comfortable investing, this might be the way to go for you.

Remember that only 20% of fund managers actually manage to beat the market in any given year, even fewer achieve that feat consecutively. If you had put your retirement in an S&P tracking Spyder (SPY), you would have had the same performance metric as 80% of the money managers out there. I know my money manager didn't call and let me know of the impending peril my money was in.

:cheers:

 

[kurtyordy]

I agree that emerging markets are going to be the way to go, and have a nice percentage there myself. If you don't mind my asking, what is your time horizon for this account, as it will impact the decisions in regards tot he allocations you are considering.

You should have at least 10% in Vanguard's bond fund, as a stop loss for what we have witnessed in the last 12 months. Mind you, it will not completely cover you from losses, but it will offset some and preserve capital in pullbacks and adverse economic conditions.

25 years. I just do it so as not to give away the company match. It is like throwing away money.

Regarding bonds and allocation mix, I typically do not hedge. I am in the minority in believing that if I can afford to invest, I should be willing to lose it all and swing for the fences. What is the point of the exercise for 10-15%, give 100-500%, or just take my money.

Again, I know I am in the minority, and please do not invest using this strategy, because more than likely you will get raped.

 

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[taichijedi]

25 years. I just do it so as not to give away the company match. It is like throwing away money.

This is what I do as well. Hey its free money, I'd be a fool to turn that down. (Until my own investments carry my expenses+, then I'll be a fool to stay!!)

Regarding bonds and allocation mix, I typically do not hedge. I am in the minority in believing that if I can afford to invest, I should be willing to lose it all and swing for the fences. What is the point of the exercise for 10-15%, give 100-500%, or just take my money.

Again, I know I am in the minority, and please do not invest using this strategy, because more than likely you will get raped.

Hey, that's great Kurt. If its your style to swing for the fences, then go for it. You're right, that's not really my bag in my retirement plan, I use my investment account for most of my speculation and high risk investments. I am actually "Ironing" out the details of an option strategy that I recently learned that should allow me to net 10% of my investment account with very little risk. that becomes a 150% ROI per annum.

Ahh, the glories of compounding!!!

 

[taichijedi]

Oh yeah, and the small cap growth fund should get some heat on it too in short order. the small caps tend to heat up faster than the blue chips due to their smaller capital requirements and greater operational flexibility. Definitely money to be had. Remember, back in 1991, there was a small startup that developed during a recession. Today, it's called Microsoft.

For the Babe Ruth portfolio, Emerging Markets and Small Cap Growth Fund are your plays!!

Good Luck!!

 

[jganz]

thanks for all the thoughts.. this is actually my wifes plan.. she just took a new job with a large trust..

I like the thoughts on emerging economies (overseas funds).. i will do some research on the ones she has available..

at a glance i see

artisan international
vanguard global equity
a few more..

once again thanks for the thoughts..

 

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[taichijedi]

Just be aware, Jax. An International Fundis not an Emerging Markets Fund. While the Int'l may contain a percentage of emerging market assets in their portfolio mix, they also include foreign stable firms. This allows for diversification against domestic risk, but reduces the overall expected return the portfolio can achieve.

The Vanguard Int'l Growth has only 22.40% emerging market exposure, with a median market cap of $32.0 billion, so it acts like a hedge really against the movements of the US economy. Emerging markets are 100% growth stocks, designed with smaller companies in mind (the median market cap in this portfolio is $13.0 Bil) to leverage the high growth potential inherent in smaller firms.

Just a difference in growth rate, really. They both carry roughly the same risk characterisitcs.