401(k) allocations

[Jones]

I have my money all over the place. Allocations are as follows:

Bond Market Index fund 5%
Balanced Fund 5%
S&P 500 Equity Index Fund 15%
S&P 400 midcap Index Fund 15%
Russell 2000 Index Fund 15%
International Index Fund 15%
Bright Horizon 2045 fund 20%
U.S. REIT Index Fund 10%


Take it for what its worth, but when I run prudential's personal performance information from 1/1/2010(earliest it will allow you too go) to present day I get an overall growth performance rate of 21.12%. I am not disappointed.

All my contributions has been to my ROTH 401k since July of last year.

The same date range gives me 33.8%. A young guy like you should be more aggressive.

 

[FAVREFAN]

I recently "hired" a financial advisor and he really likes our Bright Horizon funds. He called them the "401K for Dummies", which he meant in a positive way. Choose the fund which is closest to the year that you will be retiring and your 401k will be on auto-pilot. If you are an aggressive investor you can choose a BH fund with a date earlier than your projected retirement year and conversely you can choose a fund with a later date is you are more conservative.

My performance has been more predictable with far fewer fluctuations since I restructured my 401k to the BH 2020 (I retire in 2019).

So your financial planner is a dummy? He must be is he had you invest in the 401k for dummys fund. By the way you have it backwards on the conservative/aggressive.

 

[Brownslave688]

So your financial planner is a dummy? He must be is he had you invest in the 401k for dummys fund. By the way you have it backwards on the conservative/aggressive.

I kind of thought the same thing why see an "advisor" that just tells you to sign up for a fund that does everything automatically for you that an advisor should do. Sounds like a lazy advisor.

 

[FAVREFAN]

The same date range gives me 33.8%. A young guy like you should be more aggressive.

Pissing contest.....lol. I'm in at 27% Split between you 2. 38 yrs old/non-Roth.

 

[Benben]

I personally Love the REIT! I have been watching it closely for the past 4 years and it is a gem. It has out performed every other choice and thats including during the '08 meltdown! Even with the .10% expense ratio it shines.

GET OUT NOW! QE3 will DESTROY this allocation choice, WAY too heavy in the MReit sector. Here I often wondered where TWO, NLY, et al got its 45%+ instutional owned percentages from. Prudential needs a BDC allocation or maybe a MLP choice!!

 

[Jones]

I personally Love the REIT! I have been watching it closely for the past 4 years and it is a gem. It has out performed every other choice and thats including during the '08 meltdown! Even with the .10% expense ratio it shines.

GET OUT NOW! QE3 will DESTROY this allocation choice, WAY too heavy in the MReit sector. Here I often wondered where TWO, NLY, et al got its 45%+ instutional owned percentages from. Prudential needs a BDC allocation or maybe a MLP choice!!

Go ahead and stampede the herd, I'll pick up the pieces

 

[104Feeder]

The problem with targeted retirement funds such as Bright Horizon is that while they move your money to a more conservative position near the targeted date, they still leave you exposed in riskier areas such as stocks after that date so you might want to move it from those funds into other areas. People forget that you can't withdraw from your 401k penalty free until age 59 1/2 and this may not be the the same as your UPS retirement date. In many cases someone who started with UPS at age 18 can retire at 50 allowing for almost 10 more years of growth minimum. Also, you'd be better off delaying distributions from your 401k as long as possible.

A good source for free information to learn about your 401k and investing choices is Clark Howard: Save More, Spend Less and Avoid Rip-offs | www.clarkhoward.com

 

[Brownslave688]

Anyone else make a good call on Facebook? I knew I wanted to own it but also knew the IPO wasn't the way to go. Bought some at about $18 it's looking pretty good so far. If they aren't smart enough to make money off Facebook I don't know how they were smart enough to invent it in the first place.

 

[Benben]

The problem with targeted retirement funds such as Bright Horizon is that while they move your money to a more conservative position near the targeted date, they still leave you exposed in riskier areas such as stocks after that date so you might want to move it from those funds into other areas.

Bond yields are horrible. You still need a "return" on the monies or else you'd just end up depleating the 401K. Just don't need the 10%+ yearly returns. I read somewhere the target should be 4% yearly withdrawls. 4% yield is more than you are seeing from the "safer" choices.

 

[Benben]

Go ahead and stampede the herd, I'll pick up the pieces

the REIT choice is down over 3% last 3 months while the market is up well over 6% in the same time frame (Russel2000 and S&P500) Thats almost 10% difference. Those the "pieces" your talking about?

 

[Jones]

the REIT choice is down over 3% last 3 months while the market is up well over 6% in the same time frame (Russel2000 and S&P500) Thats almost 10% difference. Those the "pieces" your talking about?

Keep talking, you're doing great

 

[Catatonic]

Bond yields are horrible. You still need a "return" on the monies or else you'd just end up depleating the 401K. Just don't need the 10%+ yearly returns. I read somewhere the target should be 4% yearly withdrawls. 4% yield is more than you are seeing from the "safer" choices.

I have my 401k setting in money since May ... probably wait on Europe situation to resolve before I put this back in the market.
Bonds are a questionable approach for teh last year and I have moved 75% of my bond holdings (kept the Munies)
My outside investments are mostly UPS stock and a combination of other stocks that provide a consistent yield and meet the following requirements:

• Dividend yield above 4%
• Three-year beta versus the S&P 500 less than 0.85
• Market capitalization of $15 billion or greater
• S&P credit rating of BBB or higher

This is a dated article that talks about this approach:
Credit Suisse: 20 Dividend Stocks We Like - MarketBeat - WSJ

I own about 50% of the stocks discussed in this more recent article:
Credit Suisse: These Are The 20 Stocks That Are Better Than Bonds - Business Insider

This works for me as I enter retirement ... it may not be the best investment for you.

 

[Benben]

Hoaxster, thx for the links above. I use Seeking Alpha mostly but I'm going check out the Credit Suisse web site. I like your approach to retirement. Without being a Pro I think dividend investing is the way to go outside of a 401K. My mark has been a 7% yield but haven't been as concerned with mkt caps as I have been in the length of time the companies have been in bussiness. Too many of my co-workers either refuse to share their plans or actually do not have any plans past, "my pension."

I haven't touched Munies. I know they historically have been the safest of all investments but every week another town gets in the news about possibly going bankrupt...they just make me nervous.

My 401K (11% contribution, frame of refrence I am in my 7th year at UPS) is in 3 allocations: the S&P500, Russell2000 and the REIT fund. I have 5% going into the Roth, all Reit untill this week when I took a good look at the numbers following the Fed's anoucement. And I participate in the DESPP with the goal of at least 1 share per week minimum. TO THE POWERS THAT BE; PLEASE, PLEASE BRING BACK TO 10% DISCOUNT.

I recently opened up a Merrill Edge account because I got sick and tired of checking the family and the Kid's savings acounts just to see them earn $.06 intrest a month. Less than a dollar a year earnings? OUCH!! So far all my buys have been dividend stocks except one I thought might be a growth stock and was currently right at its 52week low (MRVL). First lesson learned- Div from a forgein stock gets smacked for a 25% tax right off the top, PTNR's $26 div becomes $19 and change. Not the 10% yield I was after! Second lesson learned- a stock at its 52week low point in a market thats up 30+% for the year is low for a reason!! We'll see how it does in another 6 months, it has a very high Beta.

I am 1/2 way though my 8th book on investing. Any good books you'd recommend?

Jones-the numbers look ugly to me. Just to add to the conversation, most the ratings groups have down graded NLY and other agency backed RIETS to underperform, holds and sells. I haven't found any pure, non-agency stocks and I think its just a matter of time untill the Hybrids get downgraded. NLY, TWO and ARR all decreased their dividends for the rest of 2012 and last week the govt. reported a sharp increase in prepayments of mortgages (to the tune of over a 50% increase.) So what exactly am I missing here?

 

[FAVREFAN]

The problem with targeted retirement funds such as Bright Horizon is that while they move your money to a more conservative position near the targeted date, they still leave you exposed in riskier areas such as stocks after that date so you might want to move it from those funds into other areas. People forget that you can't withdraw from your 401k penalty free until age 59 1/2 and this may not be the the same as your UPS retirement date. In many cases someone who started with UPS at age 18 can retire at 50 allowing for almost 10 more years of growth minimum. Also, you'd be better off delaying distributions from your 401k as long as possible.





Almost no-one seems to know that you can start taking distributions at 55 if you retire in that year or later from the company that offered the plan WITHOUT penalties. Look it up. It's true. So many people continue to work until 59 1/2 because they don't know this. As long as you.....
"• Are separated from service (through permanent layoff, termination, quitting or taking early retirement) in the year you turned 55 or later."
Retiring at 55

• One option for you to consider is to retire at the age of 55 and start taking distributions from your 401k. When you retire at the age of 55 and leave the company that administered your 401k plan, the distributions to your account will not have an early distribution penalty. This is an exception to the early distribution rule.

 

[UpstateNYUPSer(Ret)]

Favre, here is another option:

You also can avoid the penalty if you are younger than 59½, leave your employer, and take substantially equal periodic payments, based on life expectancy, beginning after separation from service and made at least annually based on the life or the life expectancy of the employee, or on the joint lives or life expectancies of the employee and his or her designated beneficiary. The payments must continue for at least five years or until you reach age 59½, whichever is the longer period. For more information and a complete list of exceptions, go to irs.gov (scroll to "Tax on early distributions").

This is commonly called the Rule of 72.

 

[Jones]

Jones-the numbers look ugly to me. Just to add to the conversation, most the ratings groups have down graded NLY and other agency backed RIETS to underperform, holds and sells. I haven't found any pure, non-agency stocks and I think its just a matter of time untill the Hybrids get downgraded. NLY, TWO and ARR all decreased their dividends for the rest of 2012 and last week the govt. reported a sharp increase in prepayments of mortgages (to the tune of over a 50% increase.) So what exactly am I missing here?

You don't lose anything until you sell. If you're getting set to retire in the next year and plan to start drawing on your 401k immediately then yes, I can see reducing your exposure to RIETS and any other sectors that look they will be under performing in the near term. That's not my situation.

 

[packageguy]

All of my money is going into the 401(k) Roth. 40% of it I am putting in the REIT index with the rest spread out, if property values don't go up the world is going to end anyways right?

I'm 37, married with 3 kids, anyone have a better suggestions?

You should sit down with a financial advisor, everybody has different goals, we have know right to tell you where to put your money. good luck