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Kelsey is excited about investing along the efficient frontier, but it feels impossible with the lack of fund options in her employer-sponsored 401k. What\u2019s the best way to deal with this problem?<\/p>\n
Molly discovered that her rollover from a 401k to a traditional IRA hadn\u2019t been invested in mutual funds and was still in a money market fund. Manually calculating her net worth helped her identify this oversight, and she shares her experience with us.<\/p>\n
Former financial planner Joe Saul-Sehy and I tackle this in today\u2019s episode.<\/p>\n
Enjoy!<\/p>\n
P.S. Got a question? Leave it here<\/a>.<\/p>\n _______<\/p>\n Kelsey asks (at 01:56 minutes<\/strong>): How do you navigate the efficient frontier when you\u2019re constrained by employer fund options? My employer-sponsored 401ks have limited fund options that don\u2019t align perfectly with my desired asset allocation.<\/p>\n I\u2019ve identified my ideal allocation based on the efficient frontier and my risk tolerance, aiming for a mix of large-cap growth, mid-cap growth, mid-cap value, and small-cap growth index funds.<\/p>\n But here\u2019s where things get tricky:<\/p>\n Together, my 401ks make up about one-third of my portfolio. My husband and I also have Roth IRAs, HSAs, and a taxable brokerage account. Should I invest in the less-preferred small-cap growth fund (FOCSX) in my old 401k and use our other accounts to fill the rest of the allocation?<\/p>\n Or should I stick with a total stock market fund in the 401k and rework my asset allocation\u2014essentially going back to the efficient frontier with the requirement that 35 percent of my portfolio sits in a total stock market fund?<\/p>\n For additional context, I haven\u2019t rolled over my old 401k to a traditional IRA because I do a backdoor Roth IRA every year.<\/p>\n Molly asks (at 49:28 minutes<\/strong>): I was listening to your episode about 52 tweaks to make in the new year. The second tweak is calculating your net worth a couple of times a year. I want to point out another reason this is so helpful. You can catch some little mistakes you might not have been aware of.<\/p>\n For example, I have a few retirement accounts from work and a Roth IRA. I didn\u2019t realize until I was checking my net worth last year that when I rolled over money from an old employer 401k into a traditional IRA, the money hadn\u2019t been invested into mutual funds. It was still in a money market fund.<\/p>\n So I needed to put that into the right asset allocation. And somehow, I hadn\u2019t done that step until I did the net worth statement and realized that hadn\u2019t been done. So just another reason to do it manually once or twice a year. You never know what you\u2019re going to catch that you didn\u2019t see somehow.<\/p>\n Resources Mentioned:<\/strong><\/p>\n Watch this episode on Youtube<\/a><\/strong><\/p>\n Episode with Paul Merriman<\/a><\/strong><\/p>\n #570: The Compound Effect of 52 Tiny Financial Changes \u2013 Afford Anything<\/a> <\/strong><\/p>\n Portfolio Visualizer<\/a><\/strong><\/p>\n Thanks to our sponsors!<\/p>\n Trust & Will<\/strong><\/a> NetSuite<\/strong><\/a> <\/div>\n\n
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