Managing 401k after Job Change

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archbish99
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Managing 401k after Job Change

Post by archbish99 »

Emergency funds: $12k in CDs and Savings
Debt: Mortgage, 5/5 ARM (2/2/5), $417k @ 3.25% until March 2022
Tax Filing Status: Married Filing Jointly
Tax Rate: 25% Federal, 0% State
State of Residence: Washington
Ages: 36 & 34
Desired Asset allocation: 50% stocks / 50% bonds
Desired International allocation: 40% of stocks

Total portfolio: Low-to-mid six figures

Current retirement assets

His Old 401k - 89%
In-plan funds:
  • Vanguard S&P 500 Index (ER 0.0113%) - 22.5%
  • PIMCO Total Return (ER 0.27%) - 10.8%
  • DFA Small/Mid-Cap Value (ER 0.2568%) - 1.8%
  • Int'l Growth (ER 0.571%) - 1.5%
  • Int'l Value (ER 0.5714%) - 1.4%
  • Vanguard Russell 2000 Growth (ER 0.01%) - 0.6%
In BrokerageLink:
  • Vanguard Intermediate-Term Bond (BIV, ER 0.07%) - 21.4%
  • Vanguard Total Stock Market (VXUS, ER 0.11%) - 12.7%
  • iShares TIPS (TIP, ER 0.20%) - 6.7%
  • Vanguard Small Cap Value (VBR, ER 0.07%) - 5.2%
  • Vanguard Extended Market (VXF, ER 0.08%) - 4.4%
Funding types:
  • 83.4% Pre-tax
  • 5.6% Roth
Her Traditional IRA at Vanguard - 11%
Target Retirement 2040 (VFORX, ER 0.16%) - 11%

His New 401k - 0%
(Not kidding, it's really that new.)

New annual Contributions
  • $18,500 new 401k + $6,000 matching
  • $5,500 her IRA
  • $10-15k other; probably going to some combination of mortgage principal or our son's 529 (not listed here)
Available funds

Funds available in old 401(k)
(Most of these don't have ticker symbols listed; I didn't just forget.)
  • BTC LifePath 2020, 2030, etc. (ER 0.08%)
  • Fidelity Contrafund (ER 0.38%)
  • Fidelity Growth Company (ER 0.38%)
  • Vanguard Russell 1000 Growth Index (ER 0.0216%)
  • Vanguard Russell 1000 Value Index (ER 0.0202%)
  • Vanguard S&P 500 Index (ER 0.0113%)
  • Artisan Mid-Cap (ER 0.5024%)
  • DFA Small/Mid-Cap Value (ER 0.2568%)
  • Vanguard Russell 2000 Growth Index (ER 0.01%)
  • International Growth (ER 0.571%)
  • International Value (ER 0.5714%)
  • PIMCO All-Asset All-Authority Fund (PAUIX, ER 1.99%)
  • PIMCO Inflation Response Multi-Asset Fund (PIRMX, ER 1.06%)
  • PIMCO Total Return (ER 0.27%)
  • Vanguard Short-Term Bond Index (VBIPX, ER 0.04%)
  • BlackRock Short-Term Investment (ER 0.04%)
  • BrokerageLink
Funds available in new 401(k)
(A few without symbols here as well.)
  • Fidelity 500 Index (FXSIX, ER 0.03%)
  • Fidelity Contrafund (FCNKX, ER 0.58%)
  • Fidelity Growth Company (FGCKX, ER 0.66%)
  • TRP Large-Cap Value (TILCX, ER 0.57%)
  • Baron Growth (BGRIX, ER 1.05%)
  • Fidelity Low-Priced Stock (FLPKX, 0.58%)
  • Fidelity Mid-Cap Index (FSTPX, 0.04%)
  • Fidelity Mid-Cap Stock (FKMCX, 0.46%)
  • JPMorgan Mid-Cap Value (FLMVX, 0.86%)
  • American Beacon Small-Cap Value (AVFIX, 0.84%)
  • Fidelity Small-Cap Index (FSSSX, 0.04%)
  • Fidelity Diversified International (FDIKX, ER 0.92%)
  • Fidelity Global ex-US Index (FSGSX, ER 0.08%)
  • Oppenheimer Developing Markets (ODVIX, ER 0.88%)
  • Vanguard International Value (VTRIX, ER 0.43%)
  • Third-Avenue Real Estate Value (TAREX, ER 1.13%)
  • Fidelity Real Estate Index (FSRVX, ER 0.09%)
  • Aggressive Allocation (ER 0.6605%)
  • Fidelity Freedom 2010, 2020, etc. (ER 0.64%)
  • Fidelity Puritan (FPUKX, ER 0.46%)
  • Moderate Allocation (ER 0.5944%)
  • Morley Stable Value (ER 0.55%)
  • Fidelity Capital & Income (FAGIX, ER 0.73%)
  • Fidelity US Bond Index (FXSTX, ER 0.035%)
  • Metropolitan West Total Return (MWTIX, ER 0.44%)
  • Oppenheimer Int'l Bond (OIBIX, ER 0.6%)
  • PIMCO Real Return (PRRIX, ER 0.45%)
  • PIMCO Total Return (PTTRX, ER 0.51%)
  • BrokerageLink
Questions
I have been using the high-ER in-plan fund choices to accumulate money, then occasionally transferring the funds to BrokerageLink and buying lower-ER ETFs, rebalancing in the process. Since there will be no new contributions, I probably need to somewhat lock down what's in the old 401k.

The new 401k has some nice index options, and some... well-reputed active funds with corresponding fees, let's say. I'm particularly curious about the Stable Value Fund, since I remember reading some threads here about how attractive they can be, but it was theoretical because at the time I didn't have access to one. One open question is whether I should roll some or all of the funds from the old 401k to the new 401k (or to an IRA).

Since I'm basically starting my new 401k from scratch, this seems like a good time for an all-up portfolio review. I've done several of these myself, once upon a time, but the multi-401k scenarios always got a little beyond my comfort zone. I'd really appreciate the collective wisdom of my fellow Bogleheads giving me some thoughts on the path forward!
Last edited by archbish99 on Wed Nov 15, 2017 11:44 am, edited 2 times in total.
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CaliJim
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Re: Managing 401k after Job Change

Post by CaliJim »

To start off....

I'd consider rolling the old 401k into a self directed traditional IRA in order to get access to a Life Strategy or Target Date fund/etf.
Consolidate that money into one fund with the AA you want, and fogedaboutit for a while.

Then you have one less account to rebalance.

What's that 'brokerage link' option in the new 401k? Can you use that to get access to an LS or TD fund?

I'm all for simplicity.

Otherwise

Fidelity 500 Index (FXSIX, ER 0.03%)
Fidelity Global ex-US Index (FSGSX, ER 0.08%)
Fidelity US Bond Index (FXSTX, ER 0.035%)

look like good choices for you.
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archbish99
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Re: Managing 401k after Job Change

Post by archbish99 »

Yes, in both old and new 401ks, the BrokerageLink lets me pull money into a brokerage account. I can then buy nearly any Fidelity mutual fund, or (for a pretty reasonable commission) buy ETFs, or (for a pretty ugly commission) buy most other companies' mutual funds. The new 401k has a $2,500 minimum to start BrokerageLink, so it'll be a few months before that becomes an option.

I hear you on the simplicity, though the thought of giving up a 0.0113% ER S&P 500 fund is hard.... :?
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Ethelred
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Re: Managing 401k after Job Change

Post by Ethelred »

archbish99 wrote: Wed Nov 15, 2017 11:15 am Emergency funds: $12k in CDs and Savings
Debt: Mortgage, 5/5 ARM (2/2/5), $417k @ 3.25% until March 2022
Tax Filing Status: Married Filing Jointly
Tax Rate: 25% Federal, 0% State
State of Residence: Washington
Ages: 36 & 34
Desired Asset allocation: 50% stocks / 50% bonds
Desired International allocation: 40% of stocks

Total portfolio: Low-to-mid six figures
I'll keep my comments pretty high level.

You look to be well set up, and doing a good job of saving for retirement. Your plan to pay down mortgage principal also looks sound. Both of your 401ks are excellent. I see no reason you'd want to rollover to an IRA, which would have higher fees, though I might consider rollover from the old 401k to the new one for simplicity (but it's not a big deal).

There are a few things I'd say:
1. Your stock to bond allocation is extremely low for someone of your age. A more normal allocation would be something like 80% stocks, maybe 70% at a push. Over the long timeframe you have before retirement, a 50% stock portfolio is almost certain to underperform a portfolio with a higher percentage.
2. $12k strikes me as a small emergency fund for a family. Are you sure you can cover any emergencies with either that or temporary credit - new car, health problems or losing your job?
3. Your current stocks portfolio seems to be a mish-mash of index funds that cover most of the market, index funds tilted to various factors and mid-level ER active funds. You need to decide how you want to allocate your funds, and be prepared to stick with it. It seems strange that there's no ex-U.S. total market fund in your old 401k, but you can get that from Brokeragelink if needed, or rollover into your new 401k and get it there.
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ruralavalon
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Re: Managing 401k after Job Change

Post by ruralavalon »

In my opinion your 50% bond allocation is very high for your ages (34 and 36).

. . . .

Some additional information would be helpful.

What returns have been paid in the Fidelity Stable Value Fund? Is there a guaranteed rate of return?

Will your current 401k plan accept a rollover from your old 401k? Some plans permit that, some don't.

If a rollover into the current plan is permitted, then that would be a good idea to consider. That would give you one less account to keep track of and manage. Also the current 401k has better fund choices offered for international stocks.

A fund you would lose is access to, if you did that rollover, is the DFA Small/mid Value Fund, ER 0.2568%. Is access to that DFA fund important to you?

Does the old 401k allow Roth contributions? Does your current 401k allow Roth contributions?

Will either or both of you be eligible to receive a substantial pension?

You can simply add this to your original post using the edit button, it helps a lot if all of your information is in one place.

. . . . .

In the current 401k these are the funds to consider using in my opinion:
Fidelity 500 Index Fund Institutional Class (FXSIX) ER 0.035%
Fidelity Small-cap Index Fund Institutional Class (FSSSX) ER 0.04%
Fidelity Global Ex-U.S. Index Fund Premium Class (FSGDX) ER 0.08%
Vanguard International Value Fund (VTRIX) ER 0.43%
Fidelity Stable Value Fund
Fidelity U.S. Bond Index Fund Institutional Class (FXSTX) ER 0.045%
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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archbish99
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Re: Managing 401k after Job Change

Post by archbish99 »

Ethelred wrote: Wed Nov 15, 2017 11:57 am 1. Your stock to bond allocation is extremely low for someone of your age. A more normal allocation would be something like 80% stocks, maybe 70% at a push. Over the long timeframe you have before retirement, a 50% stock portfolio is almost certain to underperform a portfolio with a higher percentage.
True -- I've been turning the ratio down by directing new contributions to bonds for roughly the last year, because the market looks insane. But of course, we can see how that has turned out so far.
Ethelred wrote: Wed Nov 15, 2017 11:57 am 2. $12k strikes me as a small emergency fund for a family. Are you sure you can cover any emergencies with either that or temporary credit - new car, health problems or losing your job?
That's a fair point with the job change. We have enough in our HSA to cover the out-of-pocket max on our insurance, which covers health issues. The car is new enough that insurance plus the emergency fund should get us a new car if it's totaled; we also plan to use part of the salary difference to start saving toward our next car, which will make that less of a risk over time.

That leaves job loss as the remaining major risk. At my old job, I would have gotten over five months of pay if I were laid off, due to my tenure. At my new job, it's five weeks (because of my lack of tenure) and increases more slowly. My old job assured me that they'd willingly take me back in a heartbeat, though if I were laid off due to an economic downturn that offer might be harder to take advantage of. We might want to beef this up.
Ethelred wrote: Wed Nov 15, 2017 11:57 am 3. Your current stocks portfolio seems to be a mish-mash of index funds that cover most of the market, index funds tilted to various factors and mid-level ER active funds. You need to decide how you want to allocate your funds, and be prepared to stick with it. It seems strange that there's no ex-U.S. total market fund in your old 401k, but you can get that from Brokeragelink if needed, or rollover into your new 401k and get it there.
The intent was to have a slight SV tilt using primarily index funds; since I had to pay a commission each trade in BrokerageLink, I tried to approximate that in the in-plan funds despite the higher ERs, then dump everything but the S&P 500 fund into BrokerageLink roughly once a year. Hence having two funds for every category; add in that the Small/Mid and Int'l funds came in Growth or Value flavors but not neutral... and yes, "mish-mash" describes the appearance pretty well.
ruralavalon wrote: Wed Nov 15, 2017 12:01 pm What returns have been paid in the Fidelity Stable Value Fund? Is there a guaranteed rate of return?

Will your current 401k plan accept a rollover from your old 401k? Some plans permit that, some don't.
YTD (Daily)* +1.42%
Average Annual Returns
1 Yr +1.61% 3 Yrs +1.44% 5 Yrs +1.26% 10 Yrs +1.93%

Not guaranteed, though; "While the Fund's investment objective includes capital preservation, there is no assurance that the fund objective will be achieved. Unit price, yield and return will vary."

Yes, I'm reasonably sure they'll accept the rollover; it was mentioned during orientation as an option.
ruralavalon wrote: Wed Nov 15, 2017 12:01 pm If a rollover into the current plan is permitted, then that would be a good idea to consider. That would give you one less account to keep track of and manage. Also the current 401k has better fund choices offered for international stocks.

A fund you would lose is access to, if you did that rollover, is the DFA Small/mid Value Fund, ER 0.2568%. Is access to that DFA fund important to you?

Does the old 401k all Roth contributions? Does your current 401k allow Roth contributions?

Will either or both of you be eligible to receive a substantial pension?
Not caught up in the DFA fund, no. The old plan allowed Roth contributions, which I did briefly, but switched back. I'm making the tax bet that Traditional will be better as long as I'm in the 25% bracket or higher. The rest of the Roth portion of the 401k was from After-Tax contributions I converted to Roth once they were in. The new plan, sadly, doesn't offer After-Tax contributions, though it does allow Roth if I wanted to do that. No pensions.

Thanks for the input so far, folks -- I'm headed to bed, but I'll check back in the morning.
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Ethelred
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Re: Managing 401k after Job Change

Post by Ethelred »

archbish99 wrote: Wed Nov 15, 2017 12:29 pm True -- I've been turning the ratio down by directing new contributions to bonds for roughly the last year, because the market looks insane. But of course, we can see how that has turned out so far.
You are on the Bogleheads forum. I think you've been here long enough to know that no-one is going to recommend timing the market like that. Especially when you're in your thirties and should have plenty of time for your investments to recover.
The intent was to have a slight SV tilt using primarily index funds; since I had to pay a commission each trade in BrokerageLink, I tried to approximate that in the in-plan funds despite the higher ERs, then dump everything but the S&P 500 fund into BrokerageLink roughly once a year. Hence having two funds for every category; add in that the Small/Mid and Int'l funds came in Growth or Value flavors but not neutral... and yes, "mish-mash" describes the appearance pretty well.
You need to work out your asset allocation, and stick with it. And implement it in a simple way. There's no need to invest in both DFA small/mid value and Vanguard SCV in the same 401k. Something you've maybe missed is that it's possible to automate your investments to go into BrokerageLink, and then automate where they go within BL, even if it's not as simple as doing so in the main part of the 401k.

If you want to tilt to SCV slightly, do something like this (assuming a 70/30 stock bond split - you need to decide this number):
30% Total US stock market or S&P500
10% SCV
30% Total International stock market (or 25% total international, plus 5% Int. small or Int. value or Int. SV)
30% Total bond market. Replace some of this with international bonds if you think it justified. Some do, some don't.

It should be fairly obvious which funds you'd want for this. In your old 401k, you'd need to get the international and bonds from BL. I think you'll have fee-free Fidelity funds available for this. The DFA fund for SCV is well-respected here by those who are willing to consider active funds (many aren't), and it's recommended by Larry Swedroe, or you can go for the lowest SCV fees and use the Vanguard ETF you are already using in BL.

In the new 401k, you can use
Fidelity 500 Index (FXSIX, ER 0.03%)
Fidelity Global ex-US Index (FSGSX, ER 0.08%)
Fidelity US Bond Index (FXSTX, ER 0.035%)
plus a SCV fund from BL.
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ruralavalon
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Re: Managing 401k after Job Change

Post by ruralavalon »

archbish99 wrote: Wed Nov 15, 2017 12:29 pm
Ethelred wrote: Wed Nov 15, 2017 11:57 am 1. Your stock to bond allocation is extremely low for someone of your age. A more normal allocation would be something like 80% stocks, maybe 70% at a push. Over the long timeframe you have before retirement, a 50% stock portfolio is almost certain to underperform a portfolio with a higher percentage.
True -- I've been turning the ratio down by directing new contributions to bonds for roughly the last year, because the market looks insane. But of course, we can see how that has turned out so far.
At ages 34 and 36 I suggest about 25 - 30% in bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

archbish99 wrote: Wed Nov 15, 2017 12:29 pm
ruralavalon wrote: Wed Nov 15, 2017 12:01 pm If a rollover into the current plan is permitted, then that would be a good idea to consider. That would give you one less account to keep track of and manage. Also the current 401k has better fund choices offered for international stocks.

A fund you would lose is access to, if you did that rollover, is the DFA Small/mid Value Fund, ER 0.2568%. Is access to that DFA fund important to you?

Does the old 401k all Roth contributions? Does your current 401k allow Roth contributions?

Will either or both of you be eligible to receive a substantial pension?
Not caught up in the DFA fund, no. The old plan allowed Roth contributions, which I did briefly, but switched back. I'm making the tax bet that Traditional will be better as long as I'm in the 25% bracket or higher. The rest of the Roth portion of the 401k was from After-Tax contributions I converted to Roth once they were in. The new plan, sadly, doesn't offer After-Tax contributions, though it does allow Roth if I wanted to do that. No pensions.
I suggest rolling the old 401k over into the current 401k. That would give you one less account to keep track of and manage. Also the current 401k has better fund choices offered for international stocks.

Since there is no pension eligibility, I suggest traditional 401k contributions. For most people traditional 401k contributions will probably be better. TFB blog post, "The case against Roth 401k". "I think for most people the majority, if not 100%, of the contribution should go to a Traditional 401(k)."

Wiki article, "Traditional vs Roth".
"Tax considerations:
* If your current marginal tax rate is 15% or less, prefer a Roth.
* If you expect to have higher marginal rates than your current marginal rate for most of your career, prefer a Roth.
* If you will have a traditional account or a pension large enough to meet your expected retirement expenses (and you expect to take that pension shortly after retiring), prefer a Roth.
* Otherwise, prefer a traditional account."

archbish99 wrote: Wed Nov 15, 2017 12:29 pm
ruralavalon wrote: Wed Nov 15, 2017 12:01 pm What returns have been paid in the Fidelity Stable Value Fund? Is there a guaranteed rate of return?
YTD (Daily)* +1.42%
Average Annual Returns
1 Yr +1.61% 3 Yrs +1.44% 5 Yrs +1.26% 10 Yrs +1.93%
In my opinion the returns on the Stable Value Fund are not good enough to use that fund as a substitute for an intermediate-term bond fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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ruralavalon
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Re: Managing 401k after Job Change

Post by ruralavalon »

Asset allocation.
archbish99 wrote: Wed Nov 15, 2017 11:15 am Ages: 36 & 34
Desired Asset allocation: 50% stocks / 50% bonds
Desired International allocation: 40% of stocks
At ages 34 and 36 I suggest about 20 - 25% in bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). You can find lots of debate here on international allocation, opinions rangeing all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).
archbish99 wrote: Wed Nov 15, 2017 12:29 pmThe intent was to have a slight SV tilt using primarily index funds . . .
If you want a tilt, then I suggest using a small-cap value index fund at around 25-30% of domestic stocks. Rick Ferri, etf.com, "To Tilt Or Not To Tilt?".

This works out to about 20% bonds, 20% international stocks (if you wish an international value tilt then perhaps 5% value, 15% other), 20% domestic small-cap value, and 40% other domestic stocks.

Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.


Fund selection.
In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

It is often better to treat all accounts together as a single unified portfolio, rather than view each account separately. Here that helps you get your domestic small-cap value tilt, without having to resort to using the BrokerageLink.

Domestic stocks. For domestic stocks I suggest using a total stock market index fund where available; otherwise an S&P 500 index fund is good enough by itself for domestic stocks. "In a 401(k) plan with limited choices one might very well opt for an S&P 500 index fund to serve as the domestic stock component of a three-fund portfolio." Wiki article, Three-fund portfolio, "Other considerations". An S&P 500 index fund covers 81% of the U.S. stock market, and in the 25 years since the creation of the first total stock market fund the performance of the two types of funds has been almost identical. Morningstar “growth of $10k” graph, VFINX vs VTSMX. In the first 10 years the S&P 500 fund did better, in the last 10 years the total market fund did better, and over the 25 years the total market fund gave a little more return (0.11% per year), but at the cost of a little more volatility (risk): nisiprius post, in the forum discussion "Exchanging the S&P 500 for the TSM". See also Allan Roth, CBS Moneywatch, "John C. Bogle on the S&P 500 vs. the Total Stock Market". So it seems that adding a little in mid/small cap stocks trying to mimic the holdings of a total stock market fund has historically added little in performance.

If you want to add Fidelity Small-cap Index Fund Institutional Class (FSSSX) ER 0.04%, then an 82/18 mix of S&P 500 and small-cap funds will approximate the content of a total stock market index fund. Wiki article, "Approximating total stock market".


International stocks.
In your current 401k Fidelity Global Ex-U.S. Index Fund Premium Class (FSGDX) ER 0.08% is very diversified, it covers stocks of larger companies in both emerging and developed markets, including Canada. All that it lacks is stocks of smaller companies, which are just 04% of a total international stock index fund, this is a fairly minor omission in my opinion.

In your current 401k Vanguard International Value Fund (VTRIX) ER 0.43% can provide a value tilt in international stocks, if you wish that.


Bonds.
archbish99 wrote: Wed Nov 15, 2017 12:29 pm
ruralavalon wrote: Wed Nov 15, 2017 12:01 pm What returns have been paid in the Fidelity Stable Value Fund? Is there a guaranteed rate of return?
YTD (Daily)* +1.42%
Average Annual Returns
1 Yr +1.61% 3 Yrs +1.44% 5 Yrs +1.26% 10 Yrs +1.93%
In my opinion the returns on the Stable Value Fund are not good enough to use that fund as a substitute for an intermediate-term bond fund.

In your current 401k Fidelity U.S. Bond Index Fund Institutional Class (FXSTX) ER 0.045% is very diversified total bond market type fund. It tracks the Bloomberg Barclays U.S. Aggregate Bond Index, the broadest domestic bond index there is.



Example portfolio.
Here is an example portfolio that you could consider. This is a three-fund type portfolio, modified as necessary to accommodate the fund offerings in your 401k to give value tilts. Current portfolio size = "Low-to-mid six figures". New annual contributions = about $30k. The asset allocation is about 20% bonds, 20% international stocks (perhaps 5% value, 15% other), 20% domestic small-cap value, and 40% other domestic stocks. The percentages given are percentages of the total portfolio, not of a given account. The suggestion is to switch both the existing balances and the new contributions to the funds indicated. All percentages and dollar amounts are rounded off, so may not add up exactly.

Her Traditional IRA @ Vanguard (11% of total; adds $5.5k/yr = 18% of new annual contributions)
11%, Vanguard Small-cap Value Admiral Shares (VSIAX) ER 0.07%.

His New 401k, includes rollover of old 401k (89% of total; adds $18k/yr now, adds $18.5k/yr starting next year, + $6k employer match = 82% of new annual contributions)
40%, Fidelity 500 Index Fund Institutional Class (FXSIX) ER 0.035%
09%, Fidelity Small-cap Index Fund Institutional Class (FSSSX) ER 0.04%
15%, Fidelity Global Ex-U.S. Index Fund Premium Class (FSGDX) ER 0.08%
05%, Vanguard International Value Fund (VTRIX) ER 0.43%
20%, Fidelity U.S. Bond Index Fund Institutional Class (FXSTX) ER 0.045%


Rebalancing.
Because the funds will grow at different and unpredictable rates, it may be necessary every year or two to rebalance in order to maintain the desired asset allocation. Wiki article, "Rebalancing". You can easily adjust the asset allocation by exchanging between funds inside the 401k.

. . . . .

I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.

If you have any questions just ask.

I hope that this helps.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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archbish99
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Re: Managing 401k after Job Change

Post by archbish99 »

Thanks -- there's a lot of useful info here. In the interest of simplifying, I'm considering not retaining the tilt and using the IRA to hold Extended Market rather than SCV, but in general I think this is a good framework for how to restructure things. It looks like the added ER of keeping the cheaper S&P 500 fund in the old 401k is roughly $20/year, which may or may not be worth the price.
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Watty
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Re: Managing 401k after Job Change

Post by Watty »

+1 on needing more in the emergency fund. Emergency money is not just for bad things, there will likely be a few times in your life when having cash readily available will allow you to take advantage of unexpected opportunities.

Another +1 on having too high a percent of bonds. Since you are in your 30's now some of the retirement money will not be spent for 60 years when you are in your 90's.

If you don't already have one then it would be good to also have a car fund to save up to be able to pay cash for your next car.

If you are eligible for a Roth then some people use the Roth for emergency money.

https://www.bogleheads.org/wiki/Roth_IR ... gency_fund
CaliJim wrote: Wed Nov 15, 2017 11:29 am I'd consider rolling the old 401k into a self directed traditional IRA in order to get access to a Life Strategy or Target Date fund/etf.
Consolidate that money into one fund with the AA you want, and fogedaboutit for a while.
Another +1.
Last edited by Watty on Thu Nov 16, 2017 2:07 pm, edited 1 time in total.
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ruralavalon
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Re: Managing 401k after Job Change

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archbish99 wrote: Wed Nov 15, 2017 11:00 pm Thanks -- there's a lot of useful info here. In the interest of simplifying, I'm considering not retaining the tilt and using the IRA to hold Extended Market rather than SCV,
If you go with an extended market index fund the IRA, then you can reduce or skip the small-cap index fund in the 401k.

archbish99 wrote:but in general I think this is a good framework for how to restructure things. It looks like the added ER of keeping the cheaper S&P 500 fund in the old 401k is roughly $20/year, which may or may not be worth the price.
On the S&P 500 funds it's 0.035% vs 0.0113%, a difference of 0.0237% in expense ratios, better in the old 401k.

Remember that rolling the old 401k over let's you use less expensive international stock funds in the current 401k. On the international stock index funds, it's 0.571% vs 0.08%, a difference of 0.491% in expense ratios, better in the current 401k. On the international value stock funds it's 0.5714% vs 0.43%, a difference of 0.1414% in expense ratios, better in the current 401k.

So on balance the overall weighted average expense ratio will be lower in the current 401k.
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Ethelred
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Re: Managing 401k after Job Change

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ruralavalon wrote: Thu Nov 16, 2017 6:32 am Remember that rolling the old 401k over also gets you a more less expensive international stock funds in the current 401k. On the international stock index funds, it's 0.571% vs 0.08%, a difference of 0.491% in expense ratios, better in the current 401k. On the international value stock funds it's 0.5714% vs 0.43%, a difference of 0.1414% in expense ratios, better in the current 401k. So on balance the overall expense ratio will be lower in the current 401k.
There's no need to use those high-ER active funds for total international, though. He can access fee-free Fidelity index funds through BrokerageLink at no cost, or Vanguard ETFs for $5, in either account. The Fidelity total international and non-US funds both have a 0.1% ER.
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ruralavalon
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Re: Managing 401k after Job Change

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Ethelred wrote: Thu Nov 16, 2017 7:06 am
ruralavalon wrote: Thu Nov 16, 2017 6:32 am Remember that rolling the old 401k over also gets you a more less expensive international stock funds in the current 401k. On the international stock index funds, it's 0.571% vs 0.08%, a difference of 0.491% in expense ratios, better in the current 401k. On the international value stock funds it's 0.5714% vs 0.43%, a difference of 0.1414% in expense ratios, better in the current 401k. So on balance the overall expense ratio will be lower in the current 401k.
There's no need to use those high-ER active funds for total international, though. [emphasis added] He can access fee-free Fidelity index funds through BrokerageLink at no cost, or Vanguard ETFs for $5, in either account. The Fidelity total international and non-US funds both have a 0.1% ER.
What "high-ER active funds for total international"????

In the current 401k there is a low expense ratio international index fund that is very suitable, which is Fidelity Global Ex-U.S. Index Fund Premium Class (FSGDX) ER 0.08%. They can get that without bothering with the BrokerageLink or ETFs.
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Ethelred
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Re: Managing 401k after Job Change

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ruralavalon wrote: Thu Nov 16, 2017 2:02 pm What "high-ER active funds for total international"????
In the current 401k there is a low expense ratio international index fund that is very suitable, which is Fidelity Global Ex-U.S. Index Fund Premium Class (FSGDX) ER 0.08%. They can get that without bothering with the BrokerageLink or ETFs.
Well, I think I was confused earlier, but actually the point still stands. The same fund or similar is available through Brokeragelink in the old 401k, without needing to transfer to the new 401k. I'd argue a rollover between the two accounts is more hassle than using Brokeragelink.
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Re: Managing 401k after Job Change

Post by cherijoh »

Ethelred wrote: Wed Nov 15, 2017 11:57 am It seems strange that there's no ex-U.S. total market fund in your old 401k, but you can get that from Brokeragelink if needed, or rollover into your new 401k and get it there.
It is actually quite common to see an SP&P 500 fund and then an Extended Market fund which can be combined to mimic the total market index. Something similar can be done by combining the Russell 1000 with small cap stocks.
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Ethelred
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Re: Managing 401k after Job Change

Post by Ethelred »

cherijoh wrote: Thu Nov 16, 2017 3:41 pm
Ethelred wrote: Wed Nov 15, 2017 11:57 am It seems strange that there's no ex-U.S. total market fund in your old 401k, but you can get that from Brokeragelink if needed, or rollover into your new 401k and get it there.
It is actually quite common to see an SP&P 500 fund and then an Extended Market fund which can be combined to mimic the total market index. Something similar can be done by combining the Russell 1000 with small cap stocks.
That makes sense, yes. Except that I was talking about international (ex-U.S.) not US.
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