Help with 457 deferred compensation

Investing
#1

I finally decided to open a 457b with my employer. It is through Nationwide and I was initially going to choose the T. Rowe Price 2050 fund [TRPMX] but I noticed that the expense ratio is a bit high at 0.45%. Now i’m wondering if i should pick my funds individually or should I just stick with the target date fund.

Here are the options I have and the ones in bold are what i’m leaning towards. I’ve also put the percentage towards each one.

[Small Cap 5%]
Vanguard Small Cap Index Fund- VSCIX expense ratio is 0.04
Vanguard Small Cap Growth Index Admiral-VSGAX expense ratio is 0.07
DFA US Targeted Value -DFFVX expense ratio is 0.29

[Mid Cap 5%]
Vanguard Mid Cap Index Fund-VMCIX expense ratio is 0.04
Allspring Spec Mid Cap Val R6-OTCKX expense ratio is 0.70
MFS Mid Cap Growth R6-OTCKX expense ratio is 0.66

[Large Cap 44%] or should i just pick this fund at 54% and forget about the small and mid cap funds?
Vanguard Institutional Index Funds-VINIX expense ratio is 0.04
Vanguard Equity-Income Admiral-VEIRX expense ratio is 0.19
T.Rowe Price Institutional Large-Cap Growth-TRLGX expense ratio is 0.55

[International 36%]
Vanguard International Growth Fund Admiral-VWILX expense ratio is 0.32
American Beacon Intl Equity R6-AAERX expense ratio is 0.71

[Bonds 10%]
Vanguard Total Bond Market Index Admiral-VBTLX expense ratio is 0.05
DFA Inflation-Protected Securities-DIPSX expense ratio is 0.11
Metropolitan West Total Return Bond-MWTSX expense ratio is 0.36
TIAA-CREF High-Yield Institutional-TIHYX expense ratio is 0.36

Also if i pick them individually then i would have to adjust the percentages every few years right? So that is why I wasn’t sure if I should just stick to the target date fund to keep things easy!

Any help is greatly appreciated!

#2

Hi @YRaya!

Thank you for the question. It comes down to a personal decision! The target date fund would be the simplest option since you set it and forget it. But, like you said, it’s slightly more expensive. Building your own portfolio is cheaper, but does require more effort.

If you stick with building your own portfolio, you could set a recurring calendar reminder to adjust the percentages on a schedule that you create. There are generally two reasons the percentages would be adjusted: 1) different funds go up and down in value so you rebalance back to the weights that you want 2) you make portfolio slightly less risky as you get closer to retirement (when you will spend the money).

I don’t think there is a right or wrong answer here. A lot comes down to what you are most comfortable with. Both are good options!

Let us know if you have any other questions!

Shane