Is SSDLX a good option to max out?

Investing
#1

I am about halfway through the course and would like advice on my current situation. I am 41, I have roughly 58k in a rollover IRA, and 38k in a rollover Roth with my financial advisor. My job just started offering a 401k and Roth 401k with a 4% match.

I chose the 2050 target date fund SSDLX and I currently contribute 6% to 401k and 6% to the Roth 401k. I also still contribute 250 a month to the Roth with my financial advisor.

What is the best move to gain the most in the next 25 years? Is SSDLX a good choice to keep contributing to? There is also an index fund SSSYX. I may even be able to contribute more per paycheck, should I put everything to the Roth 401k instead splitting it with the 401k? Part ways with my financial advisor and also start contributing to an index fund outside of the employer plan?

#2

According to my quick search it seems that SSSYX is an index fund that has its holdings mostly in U.S. stock. SSDLX, being a target date index fund, has holdings in U.S. stock, international stock, and bonds.

I personally prefer SSDLX because it is a target date index fund which means it already follows the 3 fund portfolio model. Also both expense ratios are < .10% and using the knowledge from the PFC course, the difference between the two is negligible. They are both great expense ratios, kudos to you!

As for your question about where you should contribute I would like to cite this image from PFC:

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According to that checklist you should contribute to your 401k up to match (which you already do, great job!) and then ensuring you max out your Roth IRA before maxing out your 401k.

Whether you contribute to the traditional or Roth 401k is up to you and whether you would like to contribute tax deferred or post tax. For example however, if you chose to max out the traditional 401k you can reduce your taxable income by $20,500.

Also a quick note, make sure that you spread out your 401k max throughout the year so that your employer continues to match!

To answer your last question, if you want to part with your financial advisor that is up to you. I would weigh out the pros and cons of doing so.

#3

Covers it pretty well. I agree.

#4

Thanks for the response @rafu22 ! One more question on the investing checklist, what is the difference between the Roth IRA and Roth 401k, aside from the yearly maximums?

I think the benefits of untaxed growth in the Roth 401k is more important at this time than reducing my taxable income so I may adjust my contributions to 4% to the 401k per check to get the match, then 8% to the Roth 401k

#5

Sounds like a good plan!

As far as the difference between Roth ira & Roth 401k I believe the main difference is the max & the fact that your company offers a match for the 401k. Also with a roth IRA, generally speaking you should have more options to invest with depending with the brokerage you’ve chosen to go with!

Good luck with everything!

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