I asked this before, but my company (Darden Restaurants) has changed some of the funds they offer, so I wanted to double check. Darden offers a variable match on the first 6% of income, which is the amount I contribute (this ends up being approx. $25 per week). I am 24 years old, and am willing to take on a good amount of risk since I have a long time before retirement, and understand that higher risk typically equals higher return in the long run.
Here are my fund options:
Vanguard Target Retirement Funds
Harbor Capital Appreciation (Instl)
Vanguard Total Bond Market Index #
Vanguard Extended Market / INV #
Vanguard Total Intl Stock Index Inv # +
Vanguard Institutional Index Fund #
Aston/Tamro Small Cap/I
RVST Stable Capital Fund II
Darden Company Stock Fund
PIMCO Total Return Fund (Inst)
Wellington Trust Mid Cap Opp Series III
American Funds EuroPacific Growth (R6) #
Davis New York Venture Fund (Y)
This is my current allocation:
Harbor Capital 30%
Wellington 30%
EuroPacific 30%
PIMCO 10%
I’ve noticed that this mix, over the past year or so, has consistently underperformed the S&P, which is why I’m asking y’all’s opinions 
I think I want more international exposure, but maybe you can shed some light.. How do y’all recommend I allocate, given the options?
Thanks!
Chris
So I should eliminate Large Cap funds altogether? How about this for a new mix:
Wellington 30%
Aston/TAMRO 30%
Europacific 30%
PIMCO 10%
So that would be 30% mid, 30% small, 30% international and 10% bond. Whenever I change my allocation, should I move the money already in the previous funds into the new ones? Or just leave them, and have future contributions go to the new mix? Thanks for all your help!! -C
allocate a small percentage into the bond fund allowing safety with diversification and the rest into International/small cap/mid cap accordingly. The way the market looks, it is on an up swing and the MF should produce good returns. 30/30/30/10
March 2nd, 2010 at 10:18 pm
allocate a small percentage into the bond fund allowing safety with diversification and the rest into International/small cap/mid cap accordingly. The way the market looks, it is on an up swing and the MF should produce good returns. 30/30/30/10
References :
Series 6/63 Business Banker
March 2nd, 2010 at 11:06 pm
Your portfolio is nearly 1/3 bonds, so that is a large part of why you are underperforming & the s&p500. But looks like you could use some mid/small caps. I would take 15% out of harbor & put in the Extended Market Index.
You are 35% international now, which seems plenty to me.
There’s nothing wrong with your 1st allocation, but just add some mid & small caps to it. Your aston small caps will get you the small’s, but it largely ignores mid caps. That’s why I used the extended market fund. That will get you mid caps, as well as small caps. At least that’s how I see it.
You certainly don’t want to eliminate large caps. Large caps are 66% of the market. Wellington will get you that, as well as your harbor fund. You just don’t want 100% of your portfolio in large caps. Be diversified: Large caps, mid caps, small caps, international, bonds & even money markets.
References :
March 2nd, 2010 at 11:44 pm
First of all, you deserve kudos for making your 401(k) a priority at your age. I can’t tell you how many people wait until their 30’s or 40’s, then realize that it’s too late – they’ll never be able to retire comfortably. Time is your best friend when it comes to investing – the sooner you begin, the more freedom you’ll have later on.
Second, when it comes to individual funds, studies have shown that which specific investments you choose has MUCH less impact on your returns than overall asset allocation (stocks vs. bonds) and your investing habits (how much you invest on a regular basis).
That said, I like your current allocation, with maybe a couple of small tweaks. First, you are young enough that you shouldn’t have to have any money in bonds. I’m almost 40, and I just started allocating about 10-15% to bonds. Unless the bonds help you sleep at night, you can afford to be more aggressive, and do 100% stocks until around your mid-30’s. The second tweak would be to switch the Europacific fund into the Vanguard Total International Index, for two reasons. First, the expenses are way lower with Vanguard, and second, the Vanguard fund will give you exposure to emerging markets like China, Brazil, India, etc. that are not in the Europacific portfolio.
Finally, think about increasing your contribution amount. The current 401(k) limit is $16,500 per year – that should be your ultimate goal. Kick it up 1-2% now, then every time you get a pay increase, put half of that increase into your 401(k). You’ll be a millionaire before you know it.
I hope that helps. Good luck!
References :
Former stock broker, MBA in Finance, and 20+ years investing experience