Yellow's Green

The Adventures of Money Blog.

Monday, June 12, 2006

Retirement Portfolio

I can't tell you how stupidly sophisticated I feel. Stupid, because I don't feel 100% positive about my choices - I still feel like I need to learn a lot more. Sophisticated because I did it - research and all. I made the choices for allocating our upcoming 401k options, and I didn't just choose the no-brainer "Lifestyle Options."

This is gonna diversify our current portfolio nicely, I hope.

Here's what it's gonna look like:
2.86% Bonds PTRAX in 401k
2.86% Small-Growth GTSAX in 401k
14.25% Mid-Growth CVGRX in Erik's IRA
60% Large Blend/Growth
25.7% SAGYX in 401k
5.7% RAFCX in 401k
14.25% NBSRX in My IRA
14.3% 500 Index in 401k
20% Foreign/World
14.25% AEGFX in Erik's IRA
5.73% TEMWX in 401k

Erik's 401k is offered through John Hancock. They sent him home with a really nice booklet laying out different retirement profiles so you can help set your savings goal, based on the kind of lifestyle you think you'll want, and a handy dandy calculator for how much you need to save each month now based on your age.

What I didn't like is that in all the funds they have listed, they don't give the tickers anywhere. You are just supposed to trust the (slightly outdated) materials they give your for all the information on your fund options. It also wasn't easy to find listings for fees. I finally found the expense ratios listed, but it didn't list anything about front loads or differed loads. I also have no idea what John Hancock's overall fee will be, and I don't like that. But hey, 50% company match on the first 6% should NOT be passed up. This is one thing I didn't have to understand anything about funds or stocks to know: DO NOT PASS UP (legitimate) FREE MONEY! You can think of it as a raise. Sure, your take home will be less now, but so will your taxes AND you'll have more later. Join the 401k? Duh!

So, I did some research on Morningstar, Google, and elsewhere finding what I could and looking at what I understood about each fund. (First, I had to figure out what the real names of the funds were, as everything in the packet began with "John Hancock" but nothing in the listings did.)

The first three choices were easy, because they were made for us. I know, I know, everything you read says learn and make your OWN choices - but here's why we didn't. We received a Christmas gift of an initial contribution into a Roth IRA through a brokerage/financial planning firm. When that happens, you don't say "Oh thanks, but you know, I'm going to just do my own thing instead, ok?" So for now, we're keeping our IRAs with Remick & Bartolet until I'm confident enough in my investment understanding to say "let's fly solo!"

Our first investment, NSBRX, was half our choice. We told R&B that we wanted to put our money somewhere socially responsible. They, then, found a good fund with this mission. You have to be a paying member of Morningstar to get all the dirt on this fund, but kindly, Google has the vital information for free. Then, R&B chose and AEGFX for us - for diversification. OK, so our IRA's hold one socially responsible Large Blend fund, one mid-cap fund, and one foreign large blend fund. Not a bad start. Funny enough, AEGFX showed up in our list of options for the 401k.

One reason I didn't choose one of the "Lifestyle Funds" (pre-packaged portfolios) offered was that it wouldn't take into account the holdings in our IRAs. The other, bigger reason was that I'm not interested in paying an additional fee.

Ok, I think I'll post my reasoning for other choices later, on a new post. If any money/portfolio savvy readers out there have advice you'd like to scream at me ("What is she thinking?") comment away.



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