401 K options

[fruitbowlk]

Hello All,

These are the options for me to choose from. Options? This is for my new job.

Thx

Investment options
The Plan offers a wide variety of investment options which have been specifically
chosen to help you reach your retirement goals. The Plan also offers you flexibility,
allowing you to change your investment elections on a daily basis. Through Wells Fargo,
you have the following investment options:

Target date funds
 Fidelity Freedom Income Fund
 Fidelity Freedom 2010 Fund
 Fidelity Freedom 2020 Fund
 Fidelity Freedom 2030 Fund
 Fidelity Freedom 2040 Fund
 Fidelity Freedom 2050 Fund

Individual fund options
 Wells Fargo Stable Return Fund N2
 Vanguard Total Bond Market Index Inst
 Oakmark Equity & Income Fund I
 Invesco Van Kampen Growth and Income Fund I
 Dodge & Cox Stock Fund
 Wells Fargo Advantage Index Fund Admin
 Fidelity Contrafund
 American Funds Growth Fund of America R4*
 Perkins Mid Cap Value T
 Morgan Stanley Institutional Mid Cap Growth P**
 American Beacon Small Cap Value Fund Y
 JPMorgan Small Cap Equity Select Fund R5
 Fidelity Diversified International Fund**

* You must wait 30 days before transferring or realigning $5,000 or more back into the American Funds Growth

[jpg7n16]

If you have to ask, you should pick the Freedom fund that most closely matches your expected retirement date.

Do you have other retirement savings as well? How is it invested?

And how far away is retirement for you?

[bjl584]

It's going to depend on your age, years to retirement, and individual risk tolerance.

[scubatim84]

None of them are really good options, honestly. The Fidelity Freedom target date fund which correlates to when you want to retire is the least poor option. However, that being said, you should push your benefits coordinator to demand the Freedom Index fund series. The Freedom Index fund series is exactly what it sounds like...lower-cost index funds which will provide better return due to lower cost. Fidelity doesn't like advertising that this fund series exists, but it does, and if you can get your company to incorporate it into their offerings then I would definitely use that series for your 401k.

[fruitbowlk]

Do you have other retirement savings as well? Yes

How is it invested? prfdx,pexmx,prgfx,psilx,trrdx

And how far away is retirement for you? 30 years more before retirement age.

[jpg7n16]

Do you have other retirement savings as well? Yes

How is it invested? prfdx,pexmx,prgfx,psilx,trrdx

And how far away is retirement for you? 30 years more before retirement age.

Assuming equal weighting in all 5 of those (since you didn't say how much was in each), you are around 70% domestic, and 30% international. No bonds at all. That looks like an allocation for a very aggressive growth strategy. Are you comfortable with that much risk?

To make your 401k similar, you could do:

Wells Fargo Advantage Index Fund Admin 70%
Fidelity Diversified International Fund 30%

If you're not comfortable with that much risk, then you should invest your 401k differently, and should reallocate your current portfolio.

[kv968]

Assuming equal weighting in all 5 of those (since you didn't say how much was in each), you are around 70% domestic, and 30% international. No bonds at all. That looks like an allocation for a very aggressive growth strategy. Are you comfortable with that much risk?

To make your 401k similar, you could do:

Wells Fargo Advantage Index Fund Admin 70%
Fidelity Diversified International Fund 30%

If you're not comfortable with that much risk, then you should invest your 401k differently, and should reallocate your current portfolio.

That would make the portfolio similar (and much more easy) country exposure-wise however he'd be losing out on small and mid-cap exposure.

With those two funds he'd only have 12% in mid-caps and no small. With the 5 funds (assuming equal weighting), he'd have 20% mid and 12% small. Much more balanced. Maybe add in some JP Morgan Small Cap to those two funds to help with that. Plus I'd say get at least a little bond exposure regardless of risk tolerance.

[scubatim84]

Even if someone is willing to tolerate the risk of a 100% stock portfolio, I agree that this is probably something no one should be doing. If the market does poorly for a few years, then yes on average over time stocks will yield more return but the frequency matters too. A long-term average of 9-10% on stocks doesn't help you too much if it starts off with 10 years of sub-par returns in a row. You'll end up with less money than you did if you had say 20-30% in bonds to help buffer possible losses.