401k question

[Fradika]

Greetings,

I am thinking about implementing the PP in my 401k. I'll probably be somewhat limited to TIAA CREF mutual funds. In this limited window, the following funds capture my attention:

Equity Index: TINRX (33%)
Money Market: TIRXX (34%)
Bond Index: TIORX (33%)

I realize the Bond Index is broader than LTT and that MM accounts aren't exactly cash, but I'm working within what seems available.

I welcome ideas about how I might implement Gold into this plan, for a 25x4 allocation. Thanks in advance

[melveyr]

I like to think of cash vs. bonds as a continuum. The only real difference between cash and bonds is the duration. They are both fixed income, cash just has a really short maturity.

The bond fund you are proposing is going to have a return profile similar to what one could expect from a blend of cash and 30 year Treasuries. If I were in your shoes I would probably do

50% Bond fund
25% Stocks
25% Gold

or

60% Bond fund
20% Stocks
20% Gold

[Ad Orientem]

If a PP is doable with little trouble then I'd say go for it. Unfortunately experience has shown that most 401Ks are just not PP friendly. It's reached the point where my generic advice in such cases is to just go with a conservative 2-3 fund Jack Bogle special and call it a day. Obviously this is a judgment call on your part though. You will need to weigh PP advantages vs convenience. In most, but not all cases, I think a boglehead portfolio is the better choice based on the pain in the @$$ factor of trying to jam the PP round peg into the square 401K hole.

Your mileage may vary.

[Fradika]

Thanks everyone, this is helpful. I'm inquiring about the possibility of holding ETFs in my plan (it's actually a 403b, rather than a 401k). If it is, I'm thinking to do a 4x25 ETF mix (TLT, BIL, VTI, SGOL). I welcome any input. Thanks!

[Pointedstick]

If your 403b has a brokerage window, you're home free! Verify how much you can put in the brokerage part; most won't let you put all of it in there. But as long as you're allowed at least 25%, you can make a full PP using an ETF in the brokerage portion. SGOL is fine, but I'd only use that if it was commission-free with Schwab. Otherwise, I'd use IAU, which has a lower expense ratio.

[Fradika]

Thanks, everyone!

One more question: Do mutual funds fall inside or outside of the brokerage window?

[Pointedstick]

The managed part of the 403b will have an assortment of pre-selected mutual funds for you to invest in (usually most of these are awful). Your brokerage window will allow you to buy anything not restricted by the plan. This could be individual stocks, individual bonds, ETFs, mutual funds, you name it.  Most choose ETFs since they're typically lower-cost than similar mutual funds.

[sophie]

Be sure to read the fine print on the funds in that 403b.  First, a brokerage window at TIAA-CREF is extremely unlikely, but definitely ask and let us know if there's good news. 

Second, many of the funds available to you are variable annuities, not mutual funds.  Some of these (like Real Estate and Traditional) are unique to T-C and really worthwhile investment opportunities, but with restrictions that you need to know about before jumping in.  For example, you typically can't move money out of TIAA Traditional without a phone call and a 10 year transfer payout schedule.

For these reasons plus the ones that Ad Orientem mentioned, T-C and the PP should be regarded as mutually exclusive.  If you can swing a PP in your other investment accounts, it would make a good complement to T-C.  Otherwise, you might consider holding physical gold to supplement your T-C savings (e.g. 10%) as insurance.

[Fradika]

Thanks everyone, I have asked about the particulars of my 403b plan; I'll let you know as soon as I hear back from them--it may take a bit of time. I'm heartened by the support and ideas you all have expressed, it helps make a challenging process seem a bit easier. Thanks for that!