Rate these 401k options for safety (Stable Value / Bond funds)

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CT-Scott
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Rate these 401k options for safety (Stable Value / Bond funds)

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Can someone please evaluate the pros/cons of the following 401k options, if protection/preservation is one's primary goal. Keeping this more PP-related, feel free to comment as to what percentage of our PP funds should be allocated to which of these.

My 401k (Fidelity):

A1) Stable Value Fund: Wells Fargo Stable Value Fund Class M
36.50% - CORPORATE/TAXABLE MUNICIPAL SECURITIES
25.70% - MORTGAGE BACKED SECURITIES (MBS)
15.40% - U.S. TREASURY/AGENCY
11.00% - ASSET BACKED SECURITIES (ABS)
6.50% - OTHER U.S. GOVERNMENT
4.90% - CASH/EQUIVALENTS
* Note: there are more details I can grab about these, so if I'm not including details that you think are important, let me know and I can see if that info is available

A2) ABTIX - American Century Government Bond Fund R5 Class

A3) VSIGX - Vanguard Intermediate-Term Treasury Index Fund Admiral Shares

A4) VBTLX - Vanguard Total Bond Market Index Fund Admiral Shares

A5) WACSX - Western Asset Core Bond Fund Class IS

* There is also a "World Bond" fund (HFARX), which I didn't bother listing, because I'm assuming it's not as "safe", but feel free to comment on this one, too.

**********

My wife's 401k (Prudential):

B1) Stable Value Fund: Fixed Income Fund
33% - CIGNA Stable Value
25% - Prudential Guaranteed Long Term Fund
25% - Prudential Stable Value Fund
17% - MassMutual SYNGIC

B2) High Yield Bond / Prudential Fund
Top 5 sectors:
81.22% - High Yield
6.19% - ABS
2.23% - Private Corp Inv Grade
1.90% - Emerging Markets
0.17% - International
* This is apparently the only bond fund available in my wife's 401k and, if I'm reading it right, it consists largely of corporate junk bonds. It states the following:
The Separate Account (the “Fund”) seeks to provide at least 200 bps of excess return over its benchmark over a full market cycle (typically five to seven years), by identifying high yield investments through a disciplined, relative value approach.
There is no assurance the objectives will be met.
Fixed income investment (bond) funds are subject to interest rate risk; their value will decline as interest rates rise. Fund shares are not guaranteed by the U.S. Government. High yield "junk" bonds involve a greater risk of default of payment of principal and interest than higher-rated bonds. Also, these bonds tend to be less liquid than higher-rated securities. Therefore, an investment in the Fund may not be appropriate for short-term investing.
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by dualstow »

I would answer if I could find some pros among the cons.
Some people use a treasury bullet (I don't) instead of the cash/longbond barbell, so maybe you can make use of (A3).
None of the rest looks very pp-friendly, does it.

I can put what I want in my retirement accounts, but they aren't very large. I have most of my investments in a taxable account. At least it's tax-efficient.
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CT-Scott
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by CT-Scott »

dualstow wrote: Sat Apr 18, 2020 11:39 amI would answer if I could find some pros among the cons.
Some people use a treasury bullet (I don't) instead of the cash/longbond barbell, so maybe you can make use of (A3).
None of the rest looks very pp-friendly, does it.
Just to clarify, are you saying that you prefer A3 (VSIGX) better than A1 (the Wells Fargo Stable Value Fund)? If it's being insured and we're not predicting a complete collapse of the US economy in the next year, then shouldn't that Stable Fund still be relatively "safe"?

As for my wife's options...I don't like any of them. But, again, I'm thinking that the Stable Value fund (assuming it's insured, and ideally by more than one insurer) seems better than the one bond fund option they've given her.

All of this makes me wonder if I might be better off looking for ways to withdraw all of my money out of the 401k accounts completely, even if it involves taking a big tax hit. I don't think my mind is there yet, but perhaps I shouldn't be so enthusiastic about trying to "max out" our 401k's, which is what we've been doing for the last few years, including the extra "catch up" that my wife contributes to her 401k (she's a few years older than me - I'm not eligible yet).

I really like reducing our AGI today, since we're in a high tax bracket, but sometimes I wonder if the added freedom/flexibility I'd get by having more of it outside of a locked-up 401k might have merit.
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by yankees60 »

CT-Scott wrote: Sat Apr 18, 2020 4:12 pm
dualstow wrote: Sat Apr 18, 2020 11:39 amI would answer if I could find some pros among the cons.
Some people use a treasury bullet (I don't) instead of the cash/longbond barbell, so maybe you can make use of (A3).
None of the rest looks very pp-friendly, does it.
Just to clarify, are you saying that you prefer A3 (VSIGX) better than A1 (the Wells Fargo Stable Value Fund)? If it's being insured and we're not predicting a complete collapse of the US economy in the next year, then shouldn't that Stable Fund still be relatively "safe"?

As for my wife's options...I don't like any of them. But, again, I'm thinking that the Stable Value fund (assuming it's insured, and ideally by more than one insurer) seems better than the one bond fund option they've given her.

All of this makes me wonder if I might be better off looking for ways to withdraw all of my money out of the 401k accounts completely, even if it involves taking a big tax hit. I don't think my mind is there yet, but perhaps I shouldn't be so enthusiastic about trying to "max out" our 401k's, which is what we've been doing for the last few years, including the extra "catch up" that my wife contributes to her 401k (she's a few years older than me - I'm not eligible yet).

I really like reducing our AGI today, since we're in a high tax bracket, but sometimes I wonder if the added freedom/flexibility I'd get by having more of it outside of a locked-up 401k might have merit.
You may be too young for one of these but you'll need to see what ARE the provisions in each of your 401(k)'s for an "in service transfer".

https://www.centerfinplan.com/money-cen ... g-your-job

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by dualstow »

CT-Scott wrote: Sat Apr 18, 2020 4:12 pm
dualstow wrote: Sat Apr 18, 2020 11:39 amI would answer if I could find some pros among the cons.
Some people use a treasury bullet (I don't) instead of the cash/longbond barbell, so maybe you can make use of (A3).
None of the rest looks very pp-friendly, does it.
Just to clarify, are you saying that you prefer A3 (VSIGX) better than A1 (the Wells Fargo Stable Value Fund)?
No. A few of my friends have stable value funds. Come to think of it, they like to boast about it. O0 They're not pp'ers, but that's their safety net. I've never met anyone, in the flesh or online, who ditched a stable value fund, so i just kind of glossed over it.

Before you created this special thread (which is a good idea), I think you asked about mid-term treasurys. I was just commenting that nothing else looks like it fits.

How to mix the stable value fund and the intermediate, I don't know. Other 3 assets, I don't know. Like you said, not very good options. Hence my reluctance to answer the original questions at all until you bumped it.

Any chance of lobbying your employer to increase the options?
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by yankees60 »

Do a Bing search on something like "how safe are stable value funds" and you'll find things like this:

https://www.thestreet.com/opinion/a-ret ... t-13089404


A Retirement Plan Rip Off That Insurance Companies Hope You Don't Learn More About

Stable value funds at attractive to yield-hungry investors in retirement plans. But they do not adhere to rigorous reporting rules like mutual funds or other products in 401(k)s.

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by CT-Scott »

yankees60 wrote: Sat Apr 18, 2020 4:51 pmYou may be too young for one of these but you'll need to see what ARE the provisions in each of your 401(k)'s for an "in service transfer".

https://www.centerfinplan.com/money-cen ... g-your-job
Ooh, that's very interesting. I'm 48, so I'm too young for this, but my wife is approaching 55, so we will definitely look into that later this year.
dualstow wrote: Sat Apr 18, 2020 5:12 pmBefore you created this special thread (which is a good idea), I think you asked about mid-term treasurys. I was just commenting that nothing else looks like it fits.

How to mix the stable value fund and the intermediate, I don't know. Other 3 assets, I don't know. Like you said, not very good options. Hence my reluctance to answer the original questions at all until you bumped it.
Gotcha.
dualstow wrote: Sat Apr 18, 2020 5:12 pmAny chance of lobbying your employer to increase the options?
Well my employer has a pretty good selection of Vanguard stock funds (as well as the bond funds I mentioned). Is there a particular fund (or funds) that I should recommend?

As for my wife, her options seem pretty awful across the board, and I suspect that company will be less interested in entertaining suggestions from their employees, but I did tell her that she should let them know how awful their options are.
yankees60 wrote: Sat Apr 18, 2020 5:15 pm Do a Bing search on something like "how safe are stable value funds" and you'll find things like this:

https://www.thestreet.com/opinion/a-ret ... t-13089404


A Retirement Plan Rip Off That Insurance Companies Hope You Don't Learn More About

Stable value funds at attractive to yield-hungry investors in retirement plans. But they do not adhere to rigorous reporting rules like mutual funds or other products in 401(k)s.
Yeah, that's one of the articles I read and which had me concerned. The question is, should I be *SO* concerned about it that I move my funds back into some of the stock funds, bond funds, and/or age-based funds that I have available? Right now, I'm still expecting a big drop in the stock market, so I don't want to move back in there yet. So, if anything, I would consider moving *some* of my funds into one or more of the bond funds (based on advice here - which, so far, isn't pushing me that way) and keeping some in the Stable Value fund, and/or "rescuing" some of my money via a 401k loan, or even a COVID-19 withdrawal (if they don't require proof) or a home-buying withdrawal (which would involve paying both the 10% penalty *and* taxes, so I don't like that idea, either).
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by dualstow »

CT-Scott wrote: Sun Apr 19, 2020 5:14 pm
dualstow wrote: Sat Apr 18, 2020 5:12 pmAny chance of lobbying your employer to increase the options?
Well my employer has a pretty good selection of Vanguard stock funds (as well as the bond funds I mentioned). Is there a particular fund (or funds) that I should recommend?
Which ones do they already offer? If you only have it on paper, maybe you could take a picture of the list.
• Total Stock Market would be best. Dirt cheap ER and does the job.
• Next best: (S&P) 500 fund.
RIP Johnathan Joss, aka John Redcorn on King of the Hill
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

Post by CT-Scott »

dualstow wrote: Sun Apr 19, 2020 5:39 pm
CT-Scott wrote: Sun Apr 19, 2020 5:14 pm
dualstow wrote: Sat Apr 18, 2020 5:12 pmAny chance of lobbying your employer to increase the options?
Well my employer has a pretty good selection of Vanguard stock funds (as well as the bond funds I mentioned). Is there a particular fund (or funds) that I should recommend?
Which ones do they already offer? If you only have it on paper, maybe you could take a picture of the list.
• Total Stock Market would be best. Dirt cheap ER and does the job.
• Next best: (S&P) 500 fund.
Yes, they have VFIAX. That's what I was largely invested in before I moved my money out of it late February. Sorry, I guess what I was asking was whether there was a Vanguard Treasury fund that was better for PP-purposes than the ones I had available?
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Re: Rate these 401k options for safety (Stable Value / Bond funds)

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RIP Johnathan Joss, aka John Redcorn on King of the Hill
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