Feedback on my pre-tax 401k allocation
Here is my current allocation on my pre-tax 401k allocation. Any feedback/recommendations would be greatly appreciated! 50% - FXAIX - Fidelity® 500 Index Fund (LARGE CAP) 30% - FSPSX - Fidelity® International Index Fund (INTERNATIONAL) 10% - PRDGX - T. Rowe Price Dividend Growth Fund (LARGE CAP) 5% - LSSIX - Loomis Sayles Small Cap Growth Fund Institutional Class (SMALL CAP ) 5% - ANFVX - Virtus NFJ Small-Cap Value Fund Class R6 (SMALL CAP) Age: 23 Current 401k balance: ~16k Base: 110k YOE: <1 (not including internships) NW:~80K LCOL Homeowner Currently maxing 401k contributions. My goal within the next year is to transition into Microsoft where I will get a TC boost and access to mega backdoor #personalfinance #investments #401k
I wouldn’t worry about mega back door until your Base is 3-4x
Hmm, I have a couple buddies maxing their mega backdoor with a base salary of ~150k. So what would you recommend instead?
Reviewed this just now. It looks like I have a similar portfolio. But I left out bonds as Im comfortable with the risk. Not sure if my ratio is good though
Yeah there’s certainly nothing wrong with it but also don’t get too caught up in over diversification. Like the other comment a simple three fund portfolio is just fine. Hell even just slapping it all in a total market fund at your age would be just as good really.
Got it! Yeah i just basically replaced a small allocation of bonds with small cap. Its good to hear that I cant go wrong with the total market fund. But do you think the 50% - 30% split is a decent ratio between US and international?
It certainly aligns with prevailing wisdom but it’s hard to know anymore. The last 10-15 years have just been strange times with monetary policy and as such we’ve seen US markets vastly outperform international and bonds returning basically nothing. It’s tough to say if this is a new paradigm or if things will be reverting more to the status quo.
Why don’t you follow the default set up? I
What is the default setup?
Didn’t your provider give you a default allocation before you decided to dive into it and change it?
Looks solid.
Thanks! Any recommendations on starting up on other investments given my circumstances?
My advice to my younger self would be, 1. Don’t dream to get rich fast by buying some random stock or coins. 2. Just save as much as possible and just buy index funds. The more the better, the earlier the better. 3. Always try to improve your TC.