Comments on: Here’s the One Fund I’m Investing All My 401(k) Contributions in

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Sat, 30 Sep 2017 12:47:51 +0000

In reply to SMM. Like I said, target date funds aren't the worst investment choice one could possibly make, but there's certainly better alternatives if you do your research. Nice job moving into some simple index funds, that choice will benefit you for many years into the future :)

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Sat, 30 Sep 2017 12:46:36 +0000

In reply to Dylan | Trail to FI. Most people have no clue about the fees, and if they do they don't seem like a big deal, as you mentioned. 1% doesn't sound like much, but the key is the compounding over time. Like most people, if you don't touch your 401(k) contributions until 65 that 1% could easily become tens of thousands of dollars in fees over the years.

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Sat, 30 Sep 2017 12:44:11 +0000

In reply to Ed Mills. Thanks for the kind words, Ed! Anything over 1% just seems ridiculously high to me, especially with the way Vanguard and Schwab are both reducing fees more and more each year (some funds have expense ratios as low as .03%).

By: SMM

SMM — Fri, 29 Sep 2017 20:22:48 +0000

What a coincidence. I’m working on a very similar post (work in progress). I have been a victim of target funds for years – because I was too nervous trusting myself to my primarily retirement fund. But very recently I’ve moved away from it and, fortunately, my organization offers several vanguard index funds from small, mid, int’l and large cap. So I allocated my existing balance and all future contributions there. People should know how much they can save 🙂

By: Dylan | Trail to FI

Dylan | Trail to FI — Fri, 29 Sep 2017 14:37:05 +0000

Good recommendation. I think a lot of retirement plans take advantage of people’s ignorance of the effect of fees on their long-term balance. Honestly, $181 doesn’t sound like much compared to your contributions. But they don’t put into perspective the opportunity cost of those fees not compounding over decades. Total stock market funds are straightforward and simple – exactly what people want from target date funds.

By: Ed Mills

Ed Mills — Fri, 29 Sep 2017 12:44:18 +0000

Zach,
Smart choice in my opinion. A fee of 1.01% is too much, so you did the best you could with the S&P 500 index at 20 bips. As a teacher, my index fund choices are usually well over 100 bips once you add in the variable annuity insurance wrapper. The 403b market is beyond reform. Any way, great job! Ed