100% of 401k in Vanguard S&P index - thoughts?

[Anonymous]

My employer's plan has pretty crappy options (actively traded stock funds that underperform the market and have high expenses), except for Vanguard's S&P index. I am putting 100% of my contributions there. DW has good options, and she essentially follows the Boglehead 3-fund rule (I think Fidelity funds). We both max out. We have personal investments with Vanguard and put roughly 3k/month into targeted retirement funds and a couple sector funds.

In light of all that, what are your thoughts on 100% of my own 401k contributions going into an S&P fund?

[Anonymous]

How old are you? How many years until retirement? Are there any other passive options?

[Anonymous]

Too much home country bias. No small cap exposure.

[Anonymous]

I'd settle on your overall balance comfort level (say, 25% bonds or whatever). Then between all your retirement vehicles, I'd have 65% US Stocks, 10% Foreign Stocks, and 25% bonds - or whatever mix you want. The point is that across your funds, your overall mix is where you want it to be. I'm a big boglehead believer, by the way.

[Anonymous]

Anonymous wrote:I'd settle on your overall balance comfort level (say, 25% bonds or whatever). Then between all your retirement vehicles, I'd have 65% US Stocks, 10% Foreign Stocks, and 25% bonds - or whatever mix you want. The point is that across your funds, your overall mix is where you want it to be. I'm a big boglehead believer, by the way.

+1

I wouldn't worry about using S&P500 to represent the stock market, but you still want to make sure your total asset allocation is one you are comfortable with.

[Anonymous]

Agree with PPs. As long as your overall allocation is sound, you're wise to put everything you can into the lowest cost fund available.

[Anonymous]

Maybe you should think about your 401k asset allocation and your wife's allocation in aggregate. You 100% in the S&P may be fine, but overweight your wife's in small cap, International, etc.

[Anonymous]

We have 100% in the same fund. It is ok. We use non 401k assets to build our allocation. Look at the whole picture.

[Anonymous]

401k is a scam

[Anonymous]

Anonymous wrote:401k is a scam

Do you feel this way about IRAs too?

[Anonymous]

Anonymous wrote:401k is a scam

explain

[Anonymous]

Anonymous wrote:

Anonymous wrote:401k is a scam

explain

Not PP, but there are many plans where the investment options have ridiculous fees (all in excess of 2%) and the plan serves more to benefit the investment banker that sold the plan than it does the employees. May be small businesses, may be personal relationships between officers/business owners and the investment banker, may just be a decision maker that isn't knowledgeable, but in these situations where the employees are getting screwed, it does start to look like a scam.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:401k is a scam

explain

Not PP, but there are many plans where the investment options have ridiculous fees (all in excess of 2%) and the plan serves more to benefit the investment banker that sold the plan than it does the employees. May be small businesses, may be personal relationships between officers/business owners and the investment banker, may just be a decision maker that isn't knowledgeable, but in these situations where the employees are getting screwed, it does start to look like a scam.

Even if fees are in excess of 1% that means the company is skimming off about 25-30% of your nest egg for pretty much no added cost/value, and that doesn't even count whatever "401k administration" fees that the plan is paying and the employee almost never sees.

[Anonymous]

Anonymous wrote:Maybe you should think about your 401k asset allocation and your wife's allocation in aggregate. You 100% in the S&P may be fine, but overweight your wife's in small cap, International, etc.

This is what we do. My 401k is 100% in domestic stocks, and my husband's 401k is overly weighted to bonds and international stocks, but taken in aggregate our entire portfolio is allocated appropriately for our ages and risk tolerance. If you go on the Boglehead forums, it's what they recommend in the kind of situation that you describe.