401k election questions

[bearers410]

Hello Reddit.

I’m looking for suggestion on how to better allocate my contributions to 401k considering retirement date in 30 years.
Here is what I can choose from:

Bond Investments Income FID INFL PR BD IDX
Bond Investments Income FID INVST GR BD
Bond Investments Income J H DEV WORLD BOND N
Bond Investments Income PGIM HIGH YIELD R6
Bond Investments Income PGIM TOTAL RTN BD R6
Short-Term Investments -- FID GOVT MMKT K6
Stock Investments Large Cap FID 500 INDEX
Stock Investments Large Cap FID BLUE CHIP GR
Stock Investments Large Cap FID TOTAL MKT IDX
Stock Investments Large Cap TRP VALUE I
Stock Investments Mid-Cap AM CENT MD CP VAL R6
Stock Investments Mid-Cap FID EXTD MKT IDX
Stock Investments Small Cap ABF SM CAP VALUE R6
Stock Investments Small Cap FID SM CAP IDX
Stock Investments Small Cap PNR SEL MD CP GR Y
Stock Investments International AF NEW PERSPECT R6
Stock Investments International FID INTL INDEX
Stock Investments International RBC EMRG MKTS EQ R6
Stock Investments International VANG INTL GROWTH ADM
Stock Investments Specialty DFA REAL EST SEC I
Stock Investments -- AM CENT SM CAP GR R6

Currently 95% goes to FID 500 INDEX and 5% to FID INFL PR BD IDX

Thank you!

 

[godisatulpa]

@bearers410 a few days ago, I made a chart for another question. it showed how from 2000-2016, the S&P 500 alone under-performed a 50/25/25 split of S&P 500, international and bonds.

https://imgur.com/a/4jz89kW

 

[elsamelodyxd]

@bearers410 What you have now seems fine to me. Just increase more into bonds (and maybe international) as you age.

Some people like keeping ~20% in international, but I’m not sure.

 

[bearers410]

@elsamelodyxd Thank you.

 

[balderas]

@bearers410 No bonds. You're young. All-in on growth funds.

Investments Large Cap FID 500 INDEX Stock Investments Large Cap FID BLUE CHIP GR Stock Investments Large Cap FID TOTAL MKT IDX Stock Investments Large Cap TRP VALUE I Stock

You'll probably be quite well on these alone. Consider a heavier allocation to international when global shenanigans settle down.

I'm not a professional. Just my two cents.

 

[godisatulpa]

@balderas

No bonds. You're young. All-in on growth funds.

FWIW Jack Bogle recommended a minimum of 20% bonds for all investors of all ages, and had a very good reason for doing so. bonds smooth out volatility with very slight reduction in long-term growth, and bonds can beat stocks for some very long periods of time. in the 2017 edition of The Little Book of Common Sense Investing Advice, he wrote:

In the 117 years since 1900, bonds have outpaced stocks in 42 years; in the 112 five-year periods, bonds have outpaced stocks 29 times; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times.

in fact, bonds beat the S&P 500 from 2000-2020. https://www.nytimes.com/2020/05/01/business/bonds-beat-stocks-over-20-years.html

Consider a heavier allocation to international when global shenanigans settle down.

VXUS beat VTI by over 3% last year, despite all the shenanigans. and it's beating VTI by over 1% so far this year.

I made a chart a few days ago, showing a 50/25/25 split of S&P 500/international/bonds beat the overall S&P 500 from 2000-2016.

https://imgur.com/a/4jz89kW

 

[bearers410]

@godisatulpa Thank you for the detailed answer

 

[bearers410]

@balderas Thank you. One question. What benefit you see in Total market index instead of FID 500 index?

 

[balderas]

@bearers410 Some extra diversification, but there is still a lot of overlap. Compare their graphs on Yahoo. They should be nearly identical.

I'm very heavy into the S&P500 index funds right now. I think the US is set to weather the downturn better than most other places.