New company I'm with has their 401k at Capital Group - American Funds. Can you guys help me with an allocation based on the limited investments available? The Growth and Growth-and-income options are as follows:
American Funds' New World Fund Prospectus Diamond Hill Large Cap Prospectus
T. Rowe Price Instl Large Cap Growth Prospectus Vanguard Mid Cap Index Prospectus Vanguard Small Cap Index Prospectus
Vanguard Total International Stock Index Prospectus
Vanguard Total Stock Market Index Prospectus
American Funds' Capital World Growth And Income Prospectus
American Funds' Fundamental Investors Prospectus
Plus a bunch of target date retirement funds with expense ratios around .9-1%. I'm 34 so I think that would land me around American Funds 2055 Target Date Retirement Fund® Prospectus
And then There are some bond related ones (I already have a significant amount of cash in moneymarkets/CDs. So don't want to go this route with my 401k)
Wish there was an easy S&P500 index. But alas. No dice. Might sit in on our next 401k meeting and hound the broker.
​
Thanks for any help

Hello Bogleheads,
I am looking for some much needed help on how to appropriately start planning and taking some actionable steps in my investment/retirement journey. This will be quite lengthy, and I greatly appreciate any help I receive!
As a bit of background, I have been working since age 17, now 24. I have what I feel to be a fairly considerable (for my age) amount of cash saved up (roughly $70,000) from working all through College and living at home with minimal expenses (outside of stupid impulse purchases, which I promise... I am working on!). I am now at the point where I recognize how stupid/foolish it has been to have kept such a large amount of cash basically under a virtual mattress, and I am looking at options, and came across the philosophy of this subreddit and it has resonated most with me.
In essence, I have done some reading, plan to continue reading, both the wiki, this sub, and Bogle's common sense book, but I want to start getting a list of action items together to really start planning and put my mind at ease, to make sure I'm not too late to start planning these critical things out.
My Current Situation:
As noted, I am 24 years old, with very little living expenses. I plan to have my student loans paid off by the end of this year. The salary at my current position is $60,000/year and we have a 401K Program which matches 4% so long as I contribute 5%. I'd like to start moving some of this large cash under the virtual mattress into places that will significantly help my future. I envision this being a combination of maxing out the 401K match through my employer and investment options through Vanguard as that seems to be the most praised option (IRA and Brokered Account).
Organization:
I have tried to organize this post into sections (Bold) with italicized questions at the end of each section, but I realize there is some scatter brain elements. Obviously if any of my thought process is flawed, or lacking, I'd appreciate any advice or insight. I have started reading a lot of articles on the wiki and posts here, I've taken notes and made a list of questions/areas I don't understand, which is what I am hoping to directly address with this post.
Initial Assumptions/Plan:

• I plan to keep roughly $15,000 in a savings account to serve as an "Emergency Fund"
• I plan to keep roughly $10,000-$15,000 in my checking account for immediate expenses
• I want to contribute at least the max to my 401K (5%, possible more) to get 4% from my employer
  • I'm currently contributing 6.67%
  • The 401K is provided by CapitalGroup American Funds (more on this later)
  • When I say "max", I mean to get the max match, but could do more if beneficial.
• After maxing out the 401K for match, I'd like to turn to other platforms (like Vanguard) or potentially more with American Funds (if they are a good option) to further expand and diversify my investments.
  • I've been looking at both "3-Fund Portfolio Options" and "Lazy Portfolio Options"
• Anything sort of left over after the 401K and outside investments, I'd like keep to consider as a down payment for a future home maybe next 5-7 years?

Questions Regarding the Initial Plan:

• Does this seem like a reasonable plan?
• Anything I am clearly missing or just making to slap yourself?

401K Concerns/Questions:
As noted my 401K is provided by American Funds, and I would like some help selecting where to balance or place my contributions. Currently I am contributing 100% to American Funds "The Growth Fund of America" this was done prior to any research or reading. My novice mind looked at their returns data and how long the fund had been around and selected it Monkey Brain Style. I now realize that this is likely very non-diverse, and I am open to balancing options or moving the balance.
Here is a link to our available investment options within the plan:
https://drive.google.com/file/d/1aNQI0SXNJw1LI01Ecz3FF5Y3iWE8dMk7/view?usp=sharing
My thoughts are to now switch from the current contribution to either one of the target retirement dates entirely or a combination of my current Growth Fund and the Retirement dates. I've read about some concerns regarding if the target dates have too high of expense ratios or whether they are actively or passively managed, which is why I am hoping for some help in selecting from the available list. Also to note, there's not a crazy amount currently invested in the 401K (currently $3,600) and I am contributing 6.67%.
Questions Regarding the 401K:

• Based on the available investment options, where should I switch my contributions?
• Does our plan seem like one where it makes sense to invest even more into? Or are the expenses too high to the point of looking elsewhere makes more sense?
• Would it make more sense to go all in on the target retirement date, say 2065, here for diversification and leave the more direct stock options for the future Vanguard Investments?

Turning to outside investment platforms:
As I understand the philosophy, at my current age I want to try my best to be putting away 15-20% of my salary towards retirement. I am currently putting 6.67% plus the 4% employer match (effectively 10% for simplicity sake). I am now trying to figure out where to put than next 5%+.
Vanguard seems to be the option most Bogleheads get behind based mainly on expense ratios from what I can tell from my initial research. This seems to be the option I am leaning towards, but I am not opposed to doing more with AmericanFunds if they are also a good option. I think its important to keep in mind my limited knowledge when selecting where to invest. I may be willing to cough up some additional expenses if it meant more hands off. On the flip side, if overall the goal is more passive management anyway, that seems hands off enough for me to get behind. I want simplicity with proven results, which is again why I've found it easy to follow this sub's philosophy.
Noted above, I've read about the "3-Fund Portfolio" and the "Lazy Portfolio" as they both seem to offer a simplistic common sense approach to investing. I am looking for recommendations in crafting a version of this with the remaining 5%+ I plan to invest of the remaining 15-20% of my salary.
It seems like this should be a combination of:

• U.S. Stocks (VTSAX per Bogleheads Wiki)
• International Stocks (VTIAX per wiki)
• Bonds? (VBTLX per wiki)

Questions Regarding Vanguard Options:

• Does this overall approach make the most sense from a diversification stand point?
• What is the stance on bonds currently (when considering my age)?
  • There is a note on the wiki indicating that the thoughts regarding bonds have changed and it may make sense to consider other options. (This was from 2016).
  • As I understand it, which may be very little, we are in a much different economic time compared to 2016 and those that advocate for more complex strategies/elimination of bonds are sorta eating their words now right? Or am I completely off base here?
  • At age 24 should I follow the "age in bonds rule"? Meaning 24% roughly should be invested in bonds? Or is that a figure of the past?
  • Any pointers here in the overall construction would be appreciated.

I promise I'm wrapping this extremely long winded post up soon.
Questions Regarding accounts/options (IRAs, Taxable Accounts, Etc.)
Finally, I am looking for some advice on distinguishing how to allocate the remainder (outside of the 401K) into various accounts, or investment products? My 401K is being contributed as "after-tax Roth contributions" currently.
Finally at the sort of end of the road (lot more research to do on my part), I read from the wiki that the "optimal combination" would be:

• Max out 401K match (covered above) 5% minimum of salary to get 4% match.
• Then contribute the max to a Roth IRA (according to Wiki). $6,500 for this year?
• Then save in a "taxable account" on top of that

Let's assume I keep my current 401K contribution percentage of 6.67% (Effectively 10% after the match) and I want to take another 7-10% of my salary to put towards the remaining 2 bullet points above (maxing out a Roth IRA and then saving in a taxable account) what would that look like?
Questions Regarding Various Accounts:

• From the "investment types" listed above (U.S. Stocks, International Stocks, and Bonds), which type of accounts should these "investment groups" go into?
  • For example, if I started a Roth IRA and contributed the max $6,500 for this year, should that all be in a certain investment type above? Or should the IRA have all of the investment types too?
• Would it make sense, considering my situation and sitting on the cash, to just take a lumpsum $6,500 and put it towards the Roth IRA I am planning to open and not contribute again until next year?
  • Then additionally, I would still fund 7-10% towards a "taxable account"?
• When speaking about a "taxable account" would this just be a brokered account for a mutual fund or ETF? I think this is where most of my confusion stems from. I understand the 401K and an IRA, but I am confused here. What are other examples? Or should I not really be concerned with anything outside of a broker account?
• Given that I'd want a more long-term hands off approach, with automatic deposits etc, would a Mutual Fund make more sense than an ETF?
  • Why should I consider a Mutual Fund over an ETF or vice versa?
• Does my current 401K contributions being Roth, have any impact or consideration when I am looking at starting a Roth IRA?

Conclusion:
Thanks again for any help in advance! I greatly appreciate it. I plan to continue reading and bettering myself, but I find it much easier to understand things when they are more of a conversation rather than reading walls of text. If there's a specific area of my long winded post that you'd like to tackle, rather than the entire thing, feel free! I tried my best to develop enough of an understanding to ask thoughtful questions here rather than vague items with little research done.

Hello,
I have approximately $70k in an American Funds 403(b) account. Account is from an employer that I left in mid-2022. Approximately 75% of that money is from after-tax (Roth) contributions I made over the course of my employment. The other 25% in there is from the employer's discretionary/profit-sharing plan (not a match). I spoke with American Funds' rollover folks last week and confirmed these employer contributions are pre-tax (although perhaps that's standard and wasn't worth verifying). In any event, the employer portion is fully vested.
My new employer does not currently have a great 403(b) option (nor is there any match or discretionary/profit sharing portion). Instead I chose to set up a new Roth IRA with Vanguard (which I have maxed out for 2022). I want to roll my American Funds money over to Vanguard and have clicked through the first few prompts on both websites to see what the process looks like. It looks like Vanguard will let me roll the Roth/Traditional accounts over separately, but American Funds' website only has options for rolling both amounts into (a) a Roth IRA or (b) An IRA or retirement plan at another company. There is technically a third option to roll the pre-tax amounts into a Traditional IRA, but that process (a) requires me to complete a paper form with my former employer (rather than going through the website); and (b) looks like it will result in both a traditional & Roth IRA being opened with American Funds (rather than being rolled over to Vanguard).
So, I am inclined to rollover both the pre and after-tax money into my Roth IRA at Vanguard using American Funds' website. Once I select that option, it gives me a warning about getting taxed on the pre-tax portion and gives me the option to withhold a percentage of the Traditional amount for federal and state taxes.
My questions (finally!):

1. I have seen a number of posts here asking about withholding the taxes in the traditional 401(k) Roth IRA context, and the general consensus seems to be "don't withhold or you'll get hit by a 10% penalty because it's considered an early withdrawal." Should I follow that advice given that my current account is a mix of pre/after tax assets?
2. If I do rollover both assets to my Roth IRA at Vanguard--and I don't withhold--how do I pay those taxes? I am assuming the answer is that American Funds will send me a 1099 and I'll pay when I file taxes, but I thought I'd double check.
3. Am I better off trying to split the rollover into two separate IRAs depending on asset type? Again, American Funds has this option but it appears to require both IRAs to remain with American Funds, rather than allowing for two separate accounts at Vanguard.
4. Does it matter if I get this done this calendar year vs. waiting until next year?
5. Are there other things I should be thinking about?

Possibly relevant things: 33M, Illinois resident, unmarried, income is $90k (although it's less than that this year due to gap between jobs/salary bump at new gig). Will likely continue to work at nonprofits/in government for the rest of my career, but expect salary to continue to grow given my background/line of work.

Hello, I am in my early 20s and I was thinking about s&p 500. I know that people like to invest in s&p 500 like every month, a few hundred dollars or something like that. But let's say that I have $75000, wouldn't it be better if I invest all of that now in the s&p 500?
I found this calculator online, let me give you the link:
https://americanfundsretirement.retire.americanfunds.com/tools/calculators/investment-calculator.htm
Let's say that "Starting amount" is $75000, "years to invest" is 20, "additional contribution" is 100$ per month and the "Hypothetical annual rate of return" is 8.00%.
According to that calculator the earnings in the 1st year is $6,051, 2nd year is $6,631, 3rd year is $7,258, etc. In the 5th year my balance would be $117,541.
So let's say that in the first 5 years I do not take any money from that, and starting from the 6th year I want to take $8000 every year. With $8000 a year I can live very well here and the balance in the s&p 500 will continue to increase even if I take $8000 every year.
Do you think that this is a good strategy? Is there any flaw in my calculation that I do not see? This is what I was planning to do as to have a passive income. I realise that annual return rate is not always 8.00%, annual rates vary over time but 8.00% is the average when looking in the past.
Of course beside this I still do want to work and have a salary. I do not base my entire existence on this but I was thinking that if I have $75000 it is good to invest in s&p 500 and to be able in a few years to withdraw every year like $8000.
What do you say about my plan? Is it good, is it bad? Do you recommend it? Any additional advice that you might want to share?
Thank you!

Našao sam ovaj sajt gde izračunava profitabilnost s&p 500. Ne mogu da stavim link sa podacima ali recimo da "starting amount" = $75000, "years to invest" = 20 godina i "hypothetical annual rate of return" = 8.00%.
Na sajtu piše da profit u prvoj godini je $6000, u drugoj godini je $6480, treća godina $6998, itd. Recimo da hoću svake godine da povučem 6000 dolara, da li se porez plaća na tih 6000 dolara i da li je porez 15% na tih 6000 dolara? Znam da za prodaju akcija ide porez 15%, da li je i ovde isto?
Drugo pitanje: Recimo da ništa ne izvučem i da odlučim tek pete godine da izvučem novac. Dakle u petoj godini "balance" je $110199, i recimo ja odlučim da izvučem 8000 dolara. Dakle sada mi je balance $102199. Pretpostavljam da "annual rate of return" od 8% se sada izračunava na tih $102199 što mi je ostalo, jel tako?
Treće pitanje: Da li preporučujete da investiram 75000 dolara u s&p 500 i da svake godine izvučem po malo para kao dodatak na moju platu? Ovo pitam više kao strategija. Dakle ulažem dosta para da bi "rate of return" bio velik i svake godine da izvučem po malo para.
Druga strategija koju ljudi koriste je da svakog meseca ili godine ulažu nešto para u s&p 500 i onda tek za 10 ili 20 godina povuku sav novac. Po meni ako ja sad imam tih 75000 dolara zar nije bolje sve da stavim u sp 500 i onda svake godine da uzmem onoliko para koliko bi mi trebalo kao dodatak na moju sadašnju zaradu da bih pristojnije živeo?
Izvinite ako su pitanja glupa ali hteo bih da vidim vaše mišljenje. Hvala!

I've been on a Target Date fund in my workplace account. I want to ditch it and set up my own thing. In my personal IRA, I'm invested in FSKAX (65%) and FTIHX (35%). However, I'm having a hard time creating that in this account, given the options and high fees.
The options are below. Note that I'm only contributing the minimum to meet match and contributing the rest into my Traditional IRA. The TDFs are .75% and only invest in International equities at 25%. One option I considered was going 1/3 each at BSPAX (S&P 500) /FCPAX (International) /BMGAX (Mid-Cap).
Thoughts please?
​
iShares MSCI EAFE International Index A
MDIIX
0.34%
iShares S&P 500 Index A
BSPAX
0.35%
Calvert Small Cap Value - A
CCVAX
1.22%
Columbia Dividend Income A
LBSAX
0.92%
T. Rowe Price Dividend Growth Adv
TADGX
0.90%
BlackRock Mid-Cap Growth Equity Inv A
BMGAX
1.09%
​
Calvert Equity A
CSIEX
0.94%
​
Federated Hermes Kaufmann Fund A
KAUAX
2.00%
​
Fidelity Advisor Growth Opportunities A
FAGAX
1.06%
​
Fidelity Advisor Int'l Capital App A
FCPAX
1.28%
​
Franklin Small Cap Growth A
FSGRX
1.04%
​
Hartford Core Equity R4
HGISX
0.78%
​
Invesco Emerging Markets All Cap A
GTDDX
1.39%
​
MFS Global Growth R3
MWOHX
1.36%
​
MFS International New Discovery R3
MIDHX
1.29%
​
MFS Massachusetts Investors Grth Stk R3
MIGHX
0.71%

I have been seeing various posts asking for help regarding ILPs, Whole Life Insurance, Endowment plans or other Investment/Savings plans.
So I decided to make a post about these plans.
The general consensus of this sub is that these plans are bad and should be avoided at all costs. If one happened to buy into these plans they should get out ASAP, even if at great cost. I generally agree with this sentiment.
I will go into more detail about these plans and do case studies based on previous posts on this sub.
Feel free to submit more case studies based on posts that I missed or your own personal situation.
Disclaimer: When I refer to "Stock Markets" I wil be referring to the US S&P 500 as it has the most detailed information I could find. I understand that the "Stock Market" is more than just the US and S&P500 but given its size and prevalence in the global stock market I decided it's use as an example acceptable

1. Why these plans are sub-optimal

While many of these plans boast certain benefits, they are plenty of possible counter-arguments
​

"Benefit"	Counter-Argument
Guaranteed Return of ~3%	Many of these plans have lock-periods of 20 years or more. However stock markets have never delivered negative returns over a 20 year period. CPF already provides guaranteed returns of 2.5% to 5%
Can act as an Emergency Fund (either now or in the future)	A personal Emergency Fund should already be set up before investing. Keeping an emergency fund with institutions that require applications to withdraw funds from kind of defeats the purpose. A good Emergency Fund should be one that is immediately accessible with minimal restrictions
It will not go down if the stock market crashes	These plans also invest in the stock market, but with their non-guaranteed and guaranteed returns they can control how much they pay back to keep themselves afloat at the policy holders expense. The stock market always recovers from a crash and eventually exceeds it. A portfolio can also be weighted so that it doesn't suffer too greatly from a crash.
The money in one's CPF has restrictions and faces policy risk	These plans have their own restrictions too. While they may not have policy risk in terms of government policy changes, companies can change policies too. Unlike a government, which is at least generally accountable to its people, a company is mainly accountable to its shareholders, not its customers. Additionally,the SG government is probably lot more stable and reliable than a single financial institution, in terms of chances of facing bankruptcy, liquidation, etc

​
​

Cons	Elaboration
Lock-In periods	If one needs to draw out the money early, a large amount will be charged as a "surrender fee". If a person invests for themselves, one can withdraw their own investments anytime with minimal fees.
Poor returns (3.25% to 4.75%)	As mentioned, even CPF can guarantee similar if not better returns for free. ETFs can also provide 7% over the long run. It may not seem like much but 2% makes a big difference over the long term (Experiment with it here). Additionally, these are only projected returns and many plans fall far short
Lock in Period + Low returns	This is one issue that comes up particularly because these two aspects overlap. Some might argue that "such plans act as a back-up in case one's investments don't work out". However, since these plans usually have some form of restriction requiring the money to be kept for at least 20 or more years. If a person were to invest in global, low cost index funds and keep investing for a similar period of time, they would have higher returns with minimal risk
Fees	Many of these plans are subject to various fees (Agent fees, Fund fees, Management fees etc), generally between 1-2%, if not more. These are huge compared to fees if one DIYs. Many Robos can provide investments with fees totaling less than 1%

​
The most optimal situation would be if one of these plan can guarantee ~3% after 10 years with minimal restrictions but none of these plans can do that
As such there is only one demographic who truly benefits from these plan.
Individuals who have no knowlege of personal finance with no intention to learn how to manage their own finances. Who would spend all their money if they were not forced to do otherwise.
(I know this sounds harsh but I honestly believe this is the case)
I'm rather certain anyone on this subreddit falls outside this demographic

2. Alternatives for the risk adverse

If one wants the convenience and automation these plans offer, Roboinvestors provide investment services with pretty solid returns and have portfolios that provide more stability if one is risk averse at a fraction of the costs
For those who want to be more hands on they can tailor their own portfolio with a 50/50 or even 40/60 stock-bond allocation will which will remain highly stable and still offer significant returns.
Example: If one bought an equal amount of VWRA and A35 right before the crash at~1000USD/1300SGD) (Assuming an exchange rate of 1 USD:1.3 SGD for simplicity)
​

Securities	Value on 21/02/2020	Value on 29/03/2020	Value 25/6/2021
VWRA	962.50 USD (11 Shares at 87.50USD)	732.38 USD (11 Shares at 66.58 USD)	1238.16 USD (11 Shares at 112.56 USD)
A35	1300 SGD (1077 Shares at 1.2070 SGD)	1308.56 SGD (1077 Shares at 1.2150 SGD)	1276.25 SGD (1077 Shares at 1.1850 SGD)
Total Portfolio Value	~2251.25 SGD	~2260.66 SGD	~2885.86 SGD ( +26.27 SGD of dividends)

​
​

3. Mindset - Sunk Cost Fallacy

Getting over Sunk Cost fallacy is necessary to make the correct decision.
If one has already bought into these plans and put money into it, one should be ready to let go of that money and consider it "lost".
It has already been put in and nothing can be done to undo it.
The most important thing is to look at the current situation objectively and avoid losing more money in the future.

4. Case Studies

I have included some recent posts involving such plans here as a case study
All OPs have given permission for their posts to be discussed here
Case Study 1 (Savings Plan)
​

• Total Amount invested: $2000
• Duration invested: 2 years
• Remaining duration: 23 years
• AIA Smart Rewards Saver (II).pdf)

By their own illustration.pdf) (Pg 3) if a person pays $71.12 per month for 25 years, their best projected scenario of 4.75% shows a $23,505 payout and their lower end estimate of 3.25% is $21,240.
Howeve, there is no actual guarantee that the person will receive $21,240.
The only guaranteed payout is $12,000
Over those 25 years, the holder would have put $21,336 into the plan.
So at the end of 25 years, one could actually receive less money than they put in.
​
Compared to a High Interest Savings Account/Money Market Funds
If an Emergency Fund is needed, one should open a savings account, ideally a high interest one from the list here by u/Vanilla-Interesting (Updated as of June 2021)
The interest rates may not be as high as the "projected returns" from such plans, but its purpose is to act as a reliable, accessible store of funds to tide one over without worrying about red tape, surrender fees or withdrawal limits.
The high interest rates are a nice bonus but not its main draw
Alternatively Money Market Funds such as EndowUs CashSmart and StashAway Simple, these plans invest the money in generally safe and stable funds and provide projected interest rates of between 0.7% - 2%
For reference AIA and other companies also invest the funds such plans, however, StashAway and EndowUs are more transparent, listing their holdings on their pages here and here
For MMFs, their worst case scenario falls just short of the best projected interest rates of the Savings Plans. The best case scenarios for MMFs far exceed those of Savings Plans and without their restricitons
​

	AIA Savings Plans	Money Market Fund
Best Case	$23,505 (4.75%)	$27,335.94 (2%)
Worst Case	S$21,240 (3.25)	$23,228.22 (0.7%)

As how 0.7% returns in a MMF exceed the returns of 3.25% of AIA Savings Plans, the answer is most likely from all the fees charged by the plan. Unable to confirm without actual policy documents
So Money Market Funds come with far more upsides and far fewer downsides
One might argue that it is a savings plan, so it is supposed to force the holder to save and not offer great returns
But it can't guarantee the amount returned is equal to the amount put in. This would be unacceptable from any bank account
And assuming OP needed the $2000 they put in for some emergency expense today, there is no guarantee they can get the all money out, making it useless as an emergency fund.
One might argue that if OP surrenders the plan now, they will lose $2000 as compared to riding the plan to maturity and not losing it
However, if OP is going to put $71.12 per month in aside and leave it untouhed for 23 years, they may as well invest it.
For the same action of not touching it for 23 years, they can potentially get a much higher return. And historically speaking, the stock market has never delivered negative returns over a 20 year period.
This Savings Plan can't even guarantee it will return the same amount of money put into it
​
​
Case Study 2 (Insurance Saving Plan)
​

• Total Amount invested: $4800
• Duration invested: 2 years
• Remaining duration: 8 years
• PruWealth II

If what OP says is true about " first 2/10 years will be taken by the insurance company " this plan is already off to a bad start
This is due to the effects of compound interest where the money that is deposited earliest has the potential to compound the most and is therefore the most valuable. By taking this money first, the company does not only take out 20% of the money deposited, but the money that has the most room to grow
But going back to their own brochure, in the scenario they give, the person deposits $5000/year for 10 years and then leaves it alone for 20-35 years
​
Compared to a Investing in Stock Markets directly

	After 20 years	After 35 years
PruWealth II - 4.75%	$136,343	$251,156
PruWealth II - 3.25%	$93,145	$152,279
100% S&P 500 - 7%	$267,008	$736,684
60/40 Stock/Bond portfolio - Worst Case Scenario (4.37%) Sep 2000 - Aug 2015	$143,431	$272,445
60/40 Stock/Bond portfolio - Best Case Scenario (18.21%) Aug 1982 - Jul 1997	$3,367,504	$41,411,544

Using 15 year rolling returns as it was the best data I could find.
Included Index funds at 7% as a baseline as the 60/40 Best Case Scenario was from 1982-1997, which may be too long ago to still be relevant
​
Even their own best case scenario is barely more than half what one can expect after 20 years of investing in Index Funds. After 35 years, Index Funds far surpass them.
Even the worst 15 year period of a 60/40 mix of Stocks/Bonds kept ahead of their own best case scenario
This plan has been replaced with a newer version PruWealth III , but it's pretty much the same thing
So, while OP may lose $4800, it is worth cancelling the plan as the future long term losses will far exceed that amount
About how the Worst Case scenario (4.37%) provides higher returns than PruWealth II (4.75%), I believe it is due to a mix of the first 2 years being taken as fees and additional fees by the company. Unable to confirm without actual policy documents
​
​
Case Study 3 (Retirement Plan)
​

• Total Amount invested: $6000
• Duration invested: 1 year
• Remaining duration: 19 years
• Aviva MyRetirement Choice

From OP's post the plan works like so

• Pay $500 a month for 20 years into the plan
• Let the plan "mature" for 5-10 years
• The plan will pay out $900 a month to OP between 60 - 80y/o

Since this plan is targeted at providing retirement income, I'll compare it to CPF
Compared to CPF
I will be assuming the money is placed in CPF-SA account with a 4% interest rate. Assuming the worst case scenario where there is no bonus interest of up to 2%
If the same amount of money had been placed in CPF SA, for the same duration, after the plan ends when the holder turns 81 y/o, there would be a remainder of $154,694. There are no mention of a payout
Not to mention CPF LIFE provides payouts for life
And while there is no mention of what would happen to the plan if the holder passes away, CPF LIFE states that premium balances will be paid to beneficiaries if the holder passes away
This is not even considering the tax relief from topping up one's CPF
The policy does include an additional payout upon Severe Disability, but the requirements are the same as CareShield Life , additionally one should already be covered by their own insurance or own funds at that point
One may argue that there is policy risk with putting said funds in CPF with the government
However, putting said funds with a single insurance company which may leave Singapore, close down or change policies over the course of 25 years has its own risks and restrictons too
And one may at least argue that the government is at least somewhat accountable to its citizens
If an insurance company really decides to alter the policy, the only possible actions one can take is attempt to lawyer up and attempt to solve it in court
And if a company does do that, they most likely would have their legal department prepared, with far greater resources, legal advice and time to drag out the issue
​
OP and some commenters did suggest it was a way to diversify or to hedge against against their investments dd not work out
However, giving the minimum duration of 25 years and maximum duration of 45 years, the global stock market will certainly go up in that time
As mentioned, the stock market has never delivered negative returns over a 20 year period
Using rolling returns of the S&P 500 (the best info I could find), the Annualized return over various periods are

	20 years	30 years	40 years
Best Case Scenario	13.2% (1980)	10.1% (1932)	8.8% (1933)
Worst Case Scenario	0.6% (1920)	4.3 (1965)	4.2% (1969)

​
And if the global economy was really in such a slump, I doubt that any portfolio manager can generate positive returns after all the fees charged by the company.
​
​
Case Study 4 (Endowment plan)
​

• Total Amount invested: $19,200
• Duration invested: 10 years
• Remaining duration: 2 years
• Maturity Duration: 12 years
• Surrender value: ~$10,000
• Guaranteed Sum: ~$30,000
• Non-guaranteed sum: ~$53,000
• AIA Smart Growth Plan

This case is a bit different as OP is already 10 years into a 12 year Endowment plan. After another 2 years of contributions and leaving it to mature for another 12 years the payout will be between $30K-$53K
If OP were to surrender the plan, they would only receive ~$10K
Assuming the ~$10K and all future contributions were invested in Index Funds at 7%, and left to mature for 12 years, OP would expect ~$31K in returns.
This is pretty similar to the guaranteed payout of the Endowment plan and the endowment plan may pay out more than that.
So in this case it may be worth it to keep the plan. Especially since OP mentions " monthly premium would only be less than 3% of my salary so I won’t be struggling to pay the premiums "
The only downside is that OP will be unable to tap into the money if they need it, but if they manage their other funds and finances well it shouldn't be an issue.
So in this case, keeping the plan may be the "least bad choice"
​

Additional Reading

Our Moderator u/kyith also made a post regarding such plans
He examined a few plans with varying results, the worst returned -11%, the best ~5% and most returned 3-4% over ~20 years
​

Possible ways out: Surrendering a plan to 3rd parties

This is something that I did not know about prior to writing this post.
It may be viable to some individuals, so I will mention it here
However there may be some restrictions.
Apparently, they require at 35% of the of the total premium to be paid already
So for those who just got into a plan, this may not be possible, but for those a ways in, it might be worth looking into
Please do your own Due Diligence as it is far beyond my circle of competence

Conclusion

Generally, if you're on this subreddit, you're probably better off doing your own saving, investment and retirement planning
These plans may have been acceptable 20 years ago when access to investments such SPY, IWDA, VWRA, EIMI was expensive and difficult
But today, with access and knowledge of financial planning,investments and investment tools so available, these plans are suboptimal at best and predatory at worst

Let me preface this by saying I haven't any sort of clue where to start on this because I have exactly 0% knowledge of retirement funds and how they work and don't have anyone available, and no money, to talk to someone who can point me in the right direction.
My employer offers a retirement plan through the company and I want to sign up this time and get that started ( I'm 30). I don't know where to start or what to do. I have a document that was emailed to us, but IDK if that's something I can add here, so if you want to see it, I might be able to post a link to a read-only?
Important info:

1. I live paycheck to paycheck, and while I'm working on changing finances, i need to work with that
2. title of the document: Qualified Default Investment Alternative Notice"
3. It's through American Funds? (americanfunds.com)
4. the default option for the plan is American Funds US GOVT Money Market R3
5. Investments NOT FDIC-insured, not deposits of or guaranteed by a bank.

​
My questions:

1. What is the simplest way to invest/begin my retirement plan that works within my financial constraints, but will actually do something for me?
2. is this all changeable if I become less/more financially stable?
3. What exactly is #4?
4. how do I know what choices to make to make the most out of retirement for me?
5. Resources on understanding this because I'm getting some anxiety because I don't have a plan for my future and really, really need to get started on that and I'm terrified.

Any amount of help pointing me in the right direction is INCREDIBLY appreciated.

Basic info: 2 physician couple with high incomes in HCOL/High tax state.
Effective tax will consistently be ~35% for the forseeable future (barring any significant changes to tax code) With marginal tax rates of 32% federal and 9.3% state.
I'm just becoming eligible for my group's retirement package which is unfortunately through American Funds which appears to largely be highway robbery with fees and has poor fund selection. To be fair I haven't seen exactly what is available to me through the group retirement but I'd suspect is is likely going to be similar.
My employer will contribute 5% regardless of my contribution but this will have a vesting period.
Other financial information: Wife maxing 401k and mega backdoor ROTH through her employer (56k total combined) and we both fully fund our backdoor ROTH IRAs in January every year.
My question is this: Given the selection of funds with American Funds is pretty poor with pretty insane expense ratios (as compared to our fidelity/vanguard accounts) does it make sense to maximize my 401k contribution with this employer? My initial thought is yes given these dollars are coming out of that marginal tax bracket. Anyone with maybe I shouldn't?
Additional question: If I were to start a side business and create a more favorable individual 401k am I able to roll my money into that while I'm still currently employed or is that an action that can only take place if/when I sever from my group?
Any other things I should be thinking about in this scenario?
Thanks!

I had about 8k in my previous employers 401k account w/ TransAmerica as I worked part time and thought it was a good idea to contribute.
I'm 29 now and have been working for a year for this small company (roughly 10 employees). After a year we could be introduced into their 401k plan with AmericanFunds. I enrolled and moved my funds from TransAmerica to AmericanFunds. Now I'm contributing 8 or 10% each paycheck to this new 401k. I've been reading how bad AmericanFunds is on this sub and was curious if I'm getting bent over. The guy said it was a very generous plan being offered by my company but a lot of the info gets lost as I read through it, and I'm trying to not be naive to the situation.
I'm pretty new to this sub but am trying to become more knowledgeable about these things. I'd appreciate it if someone could give it to me in layman's term based off the info in the photo, if possible. I apologize if this doesn't show the appropriate info needed.
Edit: https://imgur.com/ycbAo04
Here is the tab I have for "investment options" https://imgur.com/a/3Zh1C1l

Hello all, I am currently 18 years old and In college, I joined the military to pay for school while also keeping a constant flow of income, I also make money doing things like fixing phones, currently I have invested a couple hundred in a Growth Portfolio with Americanfunds.com, I am just wondering if I should be looking into other ways to invest to make the most out of my money, I am willing to put most of my income into a fund and let it grow and manage, any tips would be great!

Hello all, I am currently 18 years old and In college, I joined the military to pay for school while also keeping a constant flow of income, I also make money doing things like fixing phones, currently I have invested a couple hundred in a Growth Portfolio with Americanfunds.com, I am just wondering if I should be looking into other ways to invest to make the most out of my money, I am willing to put most of my income into a fund and let it grow and manage, any tips would be great!

https://www.americanfunds.com/advisolanding-pages/asrp/building-blocks.html?cid=sm_pd_li_dc-h_asr_as_96469020

Hey pf community!
I want to run this by you to get your opinion.
Me:

• 25 y/o @ $70k/year salary
• $20k in American Funds Balanced Fund (BALCX) mutual fund with a financial advisor https://www.americanfunds.com/individual/investments/fund/balcx
• $10k in checking account
• Currently paying off $20k left in student loans @4% int
• No other debt

I have been with my financial advisor for a little over 6 years now and over that period my annualized return is 8.75%. It is a 60/40 equity/bond asset mix that falls in the lower return, lower volatility quadrant. My expense ratio is 1.37% which (after some Googling and talking to my aunt who works for JP Chase) is a little bit above the average (0.5 - 1.0%) for actively managed mutual funds.
My question to you is would you recommend me making the switch to index funds? I have read through the side bar of the pf page and am doing more research on index funds as we speak. I enjoy learning about money/investments etc. but I do not want to be looking at stocks every week or even month to rebalance my portfolio. I was thinking about looking into a fund that mirrors the S&P.
Thank you for your feedback !

To provide some context on this, I finally asked my company for some of their retirement plan details after working with them for about 2 years.
I looked around for some information and what I should consider doing but wasn't too sure what I was looking at or what I should have been looking for.
I did run into this thread (https://www.reddit.com/personalfinance/comments/4lrx9e/american_funds_simple_ira_employer_match/) and found it very helpful for what I was looking for.
My biggest concern is that I kind of just jumped into this and wanted to get some advice on what to do. I understand that I should wait 2 years to move investments out of American Funds due to their 5.75% sales charges. Just trying to figure out what options would work out best for me right now and why (the why part of this would be more my understanding). I also had a question in regards to the difference between Class A and Class C, I was asked to select between the two but not too sure what their differences are.
Any advice would be appreciated!

• https://www.americanfunds.com/individual/pdf/editable/mfgefm-043_fundinfo.pdf - This is the link to the fund info I was provided with.

Ok small background of my family, currently in bs2 with around 20k left, down from 60k on January 1 is this year (really damn good to type that out). Married 34 with 3 kids 5, 3, 2. Me and my wife are discussing starting college funds, and opening a 529 I feel that with the right mix of index funds we would be fine, where she thinks hiring a financial advisor is a best idea. I’m not apposed to hiring Someone if it helps me in the long run, but I also don’t want to throw money at someone to do basically what I can do myself, I guess my question is those of you that have advisors do you feel they are worth it, and if you don’t mind could you give the % you made to compare it to the market in general. I did some searching and found that there are target funds for 529s, and they obviously change their holdings to conservative as they get older, these seem logical and I could very easily follow their holdings with index funds. https://www.americanfunds.com/individual/products/target-date-college-series.html
I also have a 401k through work with 180k in it that I allow fidelity to manage for a fee (.014), I just started paying them and I’m considering making a 3 fund portfolio of index funds. Any advice is appreciated. I feel I should add I’m not apposed to Dave’s advice of mutual funds with loads and so on, so long as after them I am still ahead of what I would be getting from the market in general. Thanks guys I appreciate the help.

Parents have $50k to play with outside retirement funds, that means that they already have SS and pension , have this extra 50k currently in Vanguard . They went to a couple if financial advisors and were told conflicting advice with the 50k. One said to put it into a managed fund, the other gave suggestions to invest in Vanguard Mutual Funds . What do you guys think?
edit : They were offered funds with American Funds like AGTHX , CFACK , AMECX IFACX ABALK, the cost would be around 5% just to join and then a yearly fee of around .8% I have never heard of any of these .

Take/leave what you will, but I personally think SWRs are not as clean and/or high as many apparently think. Anyway, found this article illuminating. Key takeaways (note: I have zero affiliation, found this on Bogleheads.org):

• Retirement “rules of thumb” can mislead young, high net worth clients about their ability to retire early.
• Adjustment assumptions question the 4% retirement withdrawal rate rule for most retirees.
• Analysis helps advisors give their young, high net worth clients more realistic and precise goals.

Link to full article - very interested to see what you all think of this.

I know many of us have seen the super long study suggesting that the 4% rule doesn't work well for REs. But it can be a hard to read article given how long and thorough it is. This is a more succinct article and I'd be interested to hear people's thoughts: https://www.americanfunds.com/ria/insights/can-i-retire-at-40.html?cid=sm_tw_50306

https://www.americanfunds.com/ria/insights/can-i-retire-at-40.html
These guys are not fans of the 4% rule... They recommend saving 36 times annual spending before FIREing at age 40. I'm all for conservative planning, but this is a bit extreme. Agree? Disagree?

Hey guys,
I am looking for some help setting up my 401K and am honestly clueless. I am 23 years old, I make 78K a year, and want to make sure I am being a responsible adult. So, I was told that I should put 10% into my 401k, my employer matches up to 6%. I want to make somewhat risky investments because I am really young and dont really know what I am doing so if I end up losing money I have many years to make it back.
Anyway, can anyone provide any guidance on if im investing in too many stocks or which ones I should invest in and the percentage I should put into each one?
Thanks!
(I really hope the excel to reddit chart generator I used worked)
Stock Options I can choose from: [fixing this table, it broke]
Stock Prices:

Investment Name Show Color Key	Share Price	Value Date
Wells Fargo Stable Return Fund N	$54.05	10/13/2017
American Century Infl-Adj Bond Instl	$11.65	10/13/2017
BlackRock High Yield Bond Inst	$7.85	10/13/2017
Dodge & Cox Income	$13.85	10/13/2017
Vanguard Total Bond Market Index I	$10.81	10/13/2017
American Funds American Balanced R6	$27.24	10/13/2017
Vanguard Instl Target Retirement Inc Fd	$21.42	10/13/2017
Vanguard Instl Target Retirement 2015 Fd	$22.06	10/13/2017
Vanguard Instl Target Retirement 2020 Fd	$22.46	10/13/2017
Vanguard Instl Target Retirement 2025 Fd	$22.72	10/13/2017
Vanguard Instl Target Retirement 2030 Fd	$22.90	10/13/2017
Vanguard Instl Target Retirement 2035 Fd	$23.08	10/13/2017
Vanguard Instl Target Retirement 2040 Fd	$23.26	10/13/2017
Vanguard Instl Target Retirement 2045 Fd	$23.40	10/13/2017
Vanguard Instl Target Retirement 2050 Fd	$23.41	10/13/2017
Vanguard Instl Target Retirement 2055 Fd	$23.44	10/13/2017
Vanguard Instl Target Retirement 2060 Fd	$23.42	10/13/2017
JPMCB Large Cap Growth Fund-CF	$29.52	10/13/2017
JPMorgan Mid Cap Value L	$39.81	10/13/2017
MFS Value R6	$40.47	10/13/2017
Nuveen Santa Barbara Dividend Growth I	$40.41	10/13/2017
Prudential Jennison Mid-Cap Growth Fd Z	$41.39	10/13/2017
Vanguard Institutional Index I	$232.71	10/13/2017
Vanguard Mid-Cap Index Inst	$40.72	10/13/2017
Vanguard Small Cap Value Index Inst	$30.95	10/13/2017
Vanguard Small-Cap Index Inst	$68.40	10/13/2017
Wasatch Core Growth Institutional	$68.62	10/13/2017
American Funds EuroPacific Growth R6	$56.95	10/13/2017
Invesco International Growth R5	$37.25	10/13/2017
Vanguard Developed Markets Index Admiral	$14.16	10/13/2017
Wells Fargo Emerg Mkts Eq I	$26.45	10/13/2017
Invesco Real Estate R5	$22.14	10/13/2017​

What I selected:

Investment Name	Asset Class	Current Elections	Current Balance
Money Market/Stable: most conservative
Wells Fargo Stable Return Fund N	Money Market/Stable Fund	10%	$0.00
Bond: conservative
American Century Infl-Adj Bond Instl	Bond Fund	10%	$0.00
Vanguard Total Bond Market Index I	Bond Fund	10%	$0.00
Target Maturity: moderate
Vanguard Instl Target Retirement 2060 Fd	Target Maturity	10%	$0.00
Domestic Stock: aggressive
JPMCB Large Cap Growth Fund-CF	Large Cap Stock Fund	10%	$0.00
JPMorgan Mid Cap Value L	Mid Cap Stock Fund	10%	$0.00
MFS Value R6	Large Cap Stock Fund	10%	$0.00
Nuveen Santa Barbara Dividend Growth I	Large Cap Stock Fund	10%	$0.00
Prudential Jennison Mid-Cap Growth Fd Z	Mid Cap Stock Fund	10%	$0.00
International Stock: aggressive
American Funds EuroPacific Growth R6	International Stock Fund	10%	$0.00​