401k: what percent of portfolio?

[james22]

Assuming 401k options are generally limited to funds (index or otherwise), I'm curious how constrained most are?

[Guest longinvestor]

Mine is currently <5%. 10 years ago it was 80%.I've switched more jobs in the last 5 years than the previous 15 and though it was for professional and personal reasons, the ability to rollover to an IRA & convert to Roth was a nice kicker to quit. Over the next 10 to 15 years, the difference this would make in my networth is stunning. 401K's are shackling indeed. When I hear some of my friends leaving their 401K with their former employers, I go into top gear trying to get them to pull it out! Can't believe how naively misinformed folks are about finances. One of them is a PhD!

[bookie71]

Sorry, we don't have a 401-K, we have an old fashioned profit sharing plan (the company makes all the contributions , not the employees). It is about 66% of portfolio.

[no_thanks]

Mine is currently <5%. 10 years ago it was 80%.I've switched more jobs in the last 5 years than the previous 15 and though it was for professional and personal reasons, the ability to rollover to an IRA & convert to Roth was a nice kicker to quit. Over the next 10 to 15 years, the difference this would make in my networth is stunning. 401K's are shackling indeed. When I hear some of my friends leaving their 401K with their former employers, I go into top gear trying to get them to pull it out! Can't believe how naively misinformed folks are about finances. One of them is a PhD!

 

What do you mean, they quit before their 401K is vested? 

[Guest longinvestor]

Mine is currently <5%. 10 years ago it was 80%.I've switched more jobs in the last 5 years than the previous 15 and though it was for professional and personal reasons, the ability to rollover to an IRA & convert to Roth was a nice kicker to quit. Over the next 10 to 15 years, the difference this would make in my networth is stunning. 401K's are shackling indeed. When I hear some of my friends leaving their 401K with their former employers, I go into top gear trying to get them to pull it out! Can't believe how naively misinformed folks are about finances. One of them is a PhD!

 

What do you mean, they quit before their 401K is vested?

No, left the money in their former employer's 401K plan. Kinda like an orphan, unattended and under the watchful eye of plan administrator fees.

[valuecfa]

401k: ~5%

Roth IRA: ~70%

Brokerage: ~25%

[luck]

my wife's 401k has done decently in $FCNTX mostly & no fees.  i figure if will danoff learned from peter lynch, might be okay to have a small percent of the net worth in more growth-driven or PEG plays.  but, that said, probably a good idea to turn it into an ira at some point.

[no_thanks]

I actually just typed a little table up this weekend for my wife to show her boss.  The approx. 50 employee company uses The Hartford.  Awful fees and selection, but they 50% match up to 5%, so we do that.  Why would a company not chose the optimal plan.  I think Wells Fargo gave them a loan, and is the administrator of the plan.  Does anyone know what the company's incentives are when choosing a plan?

[adesigar]

Mine is currently <5%. 10 years ago it was 80%.I've switched more jobs in the last 5 years than the previous 15 and though it was for professional and personal reasons, the ability to rollover to an IRA & convert to Roth was a nice kicker to quit. Over the next 10 to 15 years, the difference this would make in my networth is stunning. 401K's are shackling indeed. When I hear some of my friends leaving their 401K with their former employers, I go into top gear trying to get them to pull it out! Can't believe how naively misinformed folks are about finances. One of them is a PhD!

 

What do you mean, they quit before their 401K is vested?

No, left the money in their former employer's 401K plan. Kinda like an orphan, unattended and under the watchful eye of plan administrator fees.

 

Depending on the state you live in keeping money in a 401k provides better protection of assets than an IRA.

[constructive]

I actually just typed a little table up this weekend for my wife to show her boss.  The approx. 50 employee company uses The Hartford.  Awful fees and selection, but they 50% match up to 5%, so we do that.  Why would a company not chose the optimal plan.  I think Wells Fargo gave them a loan, and is the administrator of the plan.  Does anyone know what the company's incentives are when choosing a plan?

 

Employees only see one side of the cost equation - the fund fees. The company also has to pay administration fees. By offering plans with expensive funds, and by doing business with their bank, insurer, or payroll processor they can reduce the admin fees. (Some of those expensive funds kick back money to the administrator.)

 

The best way to look at it is a total fee basis. Fidelity often comes out the winner, or Vanguard for larger companies.

 

I volunteered for my company's 401k committee and we chose to switch to Fidelity.

[no_thanks]

I actually just typed a little table up this weekend for my wife to show her boss.  The approx. 50 employee company uses The Hartford.  Awful fees and selection, but they 50% match up to 5%, so we do that.  Why would a company not chose the optimal plan.  I think Wells Fargo gave them a loan, and is the administrator of the plan.  Does anyone know what the company's incentives are when choosing a plan?

 

Employees only see one side of the cost equation - the fund fees. The company also has to pay administration fees. By offering plans with expensive funds, and by doing business with their bank, insurer, or payroll processor they can reduce the admin fees. (Some of those expensive funds kick back money to the administrator.)

 

The best way to look at it is a total fee basis. Fidelity often comes out the winner, or Vanguard for larger companies.

 

I volunteered for my company's 401k committee and we chose to switch to Fidelity.

 

Thanks.  I assumed it had something to do with fees on the back end. 

[matjone]

My company uses wells.  Honestly at that level I don't have a lot of interest in managed funds so I'd rather just use vanguard.  Running that large of a portfolio you are unlikely to outperform by too much even if the manager is talented.  Only thing you can guarantee is that you'll pay higher fees.

 

adesigar, what do yo mean by 401k money being safer?  you mean in a bankruptcy?

[james22]

Near 40% in my 401k.

 

Shift between Vanguard's Total Stock Market/Total International Market and Total Bond Market institutional share index funds (aligning market exposure with the expected return/risk profile per Hussman - all TBM today).