401k Help

[jsnikeris]

Hi all,

I've been attempting to set up a PP for a couple years now, but given the limited choices in my 401k, and lack of non-retirement investments, it's been rough going. Also, I'm concerned that I'm leaving growth on the table while having a sub-optimal PP. Any suggestions would be greatly appreciated.

So here's what I've got going on now:

401k* (76% of investments)
-----
51.88% - SPTN 500 IDX ADV IS (FXAIX)
48.12% - Stable Value Fund

Vanguard IRA (24% of investments)
-----
23% - ETFS GOLD TRUST (SGOL)
77% - US TREASURY BOND (> 27 years)

So, if we consider the Stable Value Fund as cash, and the gold fund as gold, my current allocation is:
39% Stock
36% Cash
18% Bonds
6% Gold

I don't have any physical gold holdings (or cash on hand to purchase some), but I plan on using the proceeds from my next ESPP sale (I do this every 3 months) to purchase a coin or two.

How would you make the best of this situation?

* Other options in my 401k (Expense Ratio):
- Vanguard Target funds (0.07%)
- VANG SM CP IDX IS PL (VSCPX) (0.06%)
- SPTN INTL INDEX FAI (FSPSX) (0.075%)
- MELLON AGGR BD (0.0446%)
- LARGE CAP STOCK FUND (0.523%)
- SMALL/MID CAP STOCK (0.855%)
- INTERNATIONAL FUND (0.62%)
- GLOBAL FIXED INCOME (0.53%)

[Ugly_Bird]

How would you make the best of this situation?

Talk to your 401k plan administrator. I'm sure there are options. Tell them exactly what types of funds you are looking for.
I hesitated for a while but then did. Surprisingly I've got gold and ltt etfs with no problem. Given it is with JH, not too bad...
Asking for brokerage window is another option. I did, in my case they were willing to do this, but the costs were too high, so this was opted out.

[Ad Orientem]

Trying to combine a variety of taxable and non taxable accounts into a single 4x25 PP is challenging. Most of us run a separate PP in each one. 401Ks have a tendency to be a HUGE pain in the @$$. Far too many are just not PP compatible without going to crazy lengths. It's a bit like trying to jam the proverbial square peg into a round hole. Rather than going nuts trying to figure out how to make it all work, my usual advice is to just run a Jack Bogle special in your 401K and call it a day. You can run the PP in your other accounts.

Split your 401K between the cheapest available stock market index fund/ETF and an intermediate term bond index fund, or if available, the cheapest government bond fund you can find. Adjust your asset allocation according to your risk tolerances (usually age) and move on.

[jsnikeris]

Thanks for the responses so far. I'm considering changing my 401k allocation to:

1/3: SPTN 500 IDX ADV IS (FXAIX) (Stock) (ER: 0.03)
1/3: Stable Value Fund (Cash) (ER: 0.3569)
1/3: Fund that tracks Barclays Capital U.S. Aggregate Index (Bond) (ER: 0.0446)

This gets some bond exposure into my 401k, and gets some money out of that high ER stable value fund.

I could also then shift more of my IRA allocation into a gold fund and get closer to 25 25 25 25. I know that owning physical gold is preferable, but it's probably going to be at least a year until I'm able to start purchasing gold with after-tax dollars.

What do you folks think about the above?

[stuper1]

I'm no expert on this stuff, but I would just go 1/3 to 1/2 in the stock index fund and 1/2 - 2/3 in the bond index fund, and skip the higher ER stable value fund.  You can think of the bond index fund as a mix of longer-term and shorter-term (cashish) bonds.  Then, hold gold and emergency cash outside your 401k and you should be in good shape, especially as you start building your physical gold portion.

[jsnikeris]

Thanks again for the replies.

So two of you suggested just going stocks and bonds in the 401k. However, consider an economic downturn where both stocks and bonds go down in value. Wouldn't I want some cash in my 401k (even if at a high ER) so that I could rebalance and purchase stocks and bonds at a discount?

[Ad Orientem]

Having a cash reserve is never a bad idea.

[jsnikeris]

Okay, went 33/33/33 stocks/bonds/stable value in my 401k, and shifted my whole IRA to gold, so now I'm pretty close to 25/25/25/25. Moving forward, I'll try to pick up some physical gold, and get back into owning treasury bonds directly.

Thanks for the discussion, all!

[ochotona]

Oh dear, my new 401(k) is not as good as it seems. It turns out I can only put 50% of my assets into the Schwab self-directed 401(k). The only funds worth holding on the original custodian side are Vanguard Small Company Value and Stable Value. The rest are costly insurance company crap. I think I'm going to end up with a SCV Permanent Portfolio. The symmetry of it makes sense.. SCV and cash on the crap half, and bonds and gold on the Schwab half. They have trading restrictions, so I should not plan to be able to do any trend-following, this may be a buy-and-hold arrangement on the crap half.

Here's an example of the crap... 0.45% expense ratio on a bond fund! I refuse to own that bond fund. That's called eating your customers. 

[sophie]

Seems I'm a bit late to the discussion, but what's the return on your stable value fund?

If it's decent, like > 3%, there is an argument to be made for just going with stock index fund plus stable value fund and skip the bond fund, with allocation depending on your age/tolerance for risk.

If you're young and expect to hold the account for 30 years plus, I'd go with something like 60-70% stocks/30-40% stable value, set it to rebalance every year, and then walk away and never look at it again until you're close to retirement.

[ochotona]

Seems I'm a bit late to the discussion, but what's the return on your stable value fund?

If it's decent, like > 3%, there is an argument to be made for just going with stock index fund plus stable value fund and skip the bond fund, with allocation depending on your age/tolerance for risk.

If you're young and expect to hold the account for 30 years plus, I'd go with something like 60-70% stocks/30-40% stable value, set it to rebalance every year, and then walk away and never look at it again until you're close to retirement.

You're not late, I just zombified a dead thread. The Stable Value return is better than a 90 day T-Bill, at 0.33%. They invest in short-term obligations. It definitely falls into the cash category. The plan for this account is it will be open for no more than 10 years, then it will be closed and rolled into my large IRA when I retire, so the goal is slow, steady growth.