Hello, as the title reads, I have accumulated $20k and it has all been going to 1 investment within my 401k. I have it all going towards "JPMorgan Large Cap Growth R6".
Current stats:
Salary- $90k
Current Rate of Return: 17.52% annualized
MY Contribution: 6%
Company Contribution: 5%
Should I do that? Should I split it? –if so to what?
I am not fluent in retirement things, any advice is appreciated as I am only 21 🙂
21m, have all my funds in 1 401k investment. What should I do?
byu/thelanadelray ininvesting
Posted by thelanadelray
7 Comments
Congratulations. My only advice would be to try to find a lower cost fund. That fund appears to have a .44% expense ratio. Unfortunately, most company 401K plans tend to provide a somewhat limited selection of funds to choose from.
See what you your 401k offers investment wise. Rebalance your 401k to some good lower expense ratio funds, don’t do anything in bonds
Diversify for safety and growth!
> “JPMorgan Large Cap Growth R6”
This is an actively managed large cap growth fund. This means someone (or multiple someones) actively manages what companies are included in the fund, and they aim to include companies with large market capitalizations (overall value of the company, in short) that are “expected to grow at faster rates” than the general market.
These funds are worthy investments, but having 100% of your portfolio in one is probably riskier than the returns justify. These funds may outperform the market, but generally not by enough to make up for the times they underperform the market. They are also generally less diversified, this one having only ~70 companies in it.
If you are going to put 100% of your portfolio into one equity, it is probably safer to pick a broad market fund. If your 401k offers any sort of S&P tracking fund or total market tracking fund, I would switch your entire portfolio over to that.
So just to ask, who manages your 401K? Is it through Fidelity? If so, Fidelity offers the brokeragelink account(s) which (if your 401K plan allows), lets you invest like a traditional account, rather than doing these funds. I just swapped over to this earlier this year and have been making way more in returns like that.
Trying to summarize for the op.
So in one year your contribution and company match together is $10k, this fund based on what others mentioned will take up 0.44% of $10k as their expense for one year.
So after three years your contribution and company match plus returns comes out $34k.
During that three year period the fund would have pocketed approximately $170 using 0.44% expense ratio.
There are some funds with broad market index exposure and growth which charge approximately 0.03% as expenses ratio.
Had you chosen those funds the fee deducted would be approximately less than $15.
Someone said avoid bonds – may be because they have slower return / growth and higher expenses.
As is so often the case JLGMX lags the S&P500 by about 80% points over 10 years. If I were 21 I’d put my money into the cheapest S&P index fund I could find and leave it alone for 40 years.