Big Boy 401K Transactions

Investing
#1

Hey everyone,

Before Jeremy’s course, I hate to say it but I never bothered to look in detail at my 401K plan and definitely was intimidated about investment questions in general.

After the course, I took a look at the investment options offered by my employer. Sadly they do not offer any index funds. The past 5 years all contributions (company matches full 3%) were going to [FID FREEDOM 2050 K (FNSBX)]. The target date was fine but the red flag was the expense ratio at 0.65%. I bravely decided to put my new found investment knowledge to use.

I transferred the money out of that investment fund and allocated into 3 separate funds:

[FID 500 INDEX (FXAIX)] - 0.015% expense ratio and 54% allocation in my 401K

Fidelity® International Index Fund (FSPSX) - 0.035% expense ratio and 35% allocation in my 401K

Fidelity® Total Bond Fund (FTBFX) - .45% expense ratio which is the worst of 3. Luckily this is only 11% allocation in my 401K.

I tried to mirror the allocation based on Fidelity’s FIPFX.

Couple questions:

  1. Did these transactions make sense or should I have stayed with FID FREEDOM 2050 K (FNSBX)?

  2. If they did make sense, do I check the FIPFX periodically (every few years for example) so I can re-adjust my allocation? I would imagine the allocation % for stocks won’t be the same in 10 to 15 years.

Never thought I’d even be capable of making and understanding these decisions a couple months ago.

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#2

Hi Chris,

Those all make sense (and are all index funds). There should be an option in your 401k to automatically rebalance, but not much to stress about.

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#3

Thanks @Chadmethner! I was so focused on looking for the words “target date index fund” I completely missed the fact I had a custom three fund portfolio that included index funds.

Happy I understand the basics of all this!

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#4

You did great! I also put my new knowledge to use. I was told by a Financial Advisor to put 25% of my 401K in T. Price. Well as I was taking the course I logged in to check the expense ratio - it was 0.54%! I wasted no time and reallocated it into 0.03% index funds. Although they are all US stocks because that is what my company offers, I will balance that by maxing out my Schwab Roth IRA this year $6K) and buying a target date index fund. Hopefully, that helps. This same advisor said their company will charge me 1% of my holdings should I become a client. At the time (a month ago) I said oh sure that is better than 2%. And then I bought this course. My Lawd! I will not be going with them. I will mind my business and use Vanguard, Fidelity or Schwab for extra index funds acquisition. Knowledge is power. But more importantly, self-investment to get that knowledge is more powerful.

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