If you work at Cadence Design Systems, Inc. and have access to the Cadence Design Systems Inc. 401(k) plan, you’re in better shape than many others out there. A solid lineup of Vanguard target date funds, broad-based index choices, and some solid active options make this plan pretty easy to work with — even if you’re not trying to micromanage every percentage point.
Still, a good plan doesn’t mean all participants will know exactly what to do with it. So let’s walk through it in a way that makes sense depending on how much time and effort you’re willing to spend.
If you’re just starting out or simply don’t want to mess with it
If you are just starting out and not familiar with 401(k) investments, or if you are just too overwhelmed with how things should work, or if you just simply don’t want to mess around — you can take the following approach: use Target Date Funds as your default investment choice. Fortunately, this plan offers an excellent suite of Vanguard Target Retirement Trusts, including:
- VANGUARD TARGET RETIREMENT 2020 TRUST
- VANGUARD TARGET RETIREMENT 2030 TRUST
- VANGUARD TARGET RETIREMENT 2040 TRUST
- VANGUARD TARGET RETIREMENT 2050 TRUST
- VANGUARD TARGET RETIREMENT 2060 TRUST
- VANGUARD TARGET RETIREMENT 2070 TRUST
- VANGUARD TARGET RETIREMENT INCOME TRUST
Each of these is a diversified mix of US stocks, international stocks, and bonds. The further the retirement date, the higher the stock allocation. They automatically rebalance over time. This is why they are widely seen as a “set-it-and-forget-it” solution for long-term investors. If you’re curious about how these work, there are plenty of overviews available, but the simplest explanation is this: they gradually shift from growth-focused to conservative as you near retirement. And they’re managed by Vanguard — which means they’re low cost, well constructed, and generally aligned with long-term investor interests.
If you want more control but don’t want to overthink it
For those who want a bit more control or who already understand the basics of investing, you might consider building your own allocation using a simple but structured approach. We like the RAID method — four steps to get a robust long-term portfolio.
Risk Assessment: First, figure out how much risk makes sense for you. Age, job security, income growth, and your stomach for market swings all matter. You can use this starting guide to decide how much of your portfolio should be in stocks vs bonds.
Asset Allocation: Next, decide how to split up that stock portion — between US stocks, international stocks, maybe REITs. Same for bonds. We like this template reference to get ideas based on different risk levels.
Investment Selections: Here’s where this plan shines. For example, let’s say you want a moderate 60/40 portfolio — that is, 60% in stocks and 40% in bonds. You could use the following allocation (because the plan doesn’t include REITs, we’ll skip that):
- 42% US Stocks — combine VANGUARD INSTITUTIONAL 500 INDEX TRUST, VANGUARD EXTENDED MARKET INDEX-INSTITUTIONAL FUND, and optionally DFA US SMALL CAP I FUND or HARTFORD MIDCAP HLS IA FUND
- 18% International Stocks — VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND I is your core holding here. You could also pair it with VANGUARD INTERNATIONAL GROWTH ADMIN FUND if you want a bit more tilt toward growth
- 40% Bonds — VANGUARD TOTAL BOND MARKET INDEX-INST is a perfectly acceptable core bond fund. Low-cost and broad-based.
Stick to the index funds where possible — lower cost means better long-term compounding. Once you’ve built it, don’t over-monitor. Check once a year. Rebalance if something gets out of line. That’s it.
For the more hands-on or risk-conscious investor
If you’re the kind of investor who’s checking your portfolio more often, or someone who wants to actively reduce risk during downturns — you might want to explore a tactical or risk-managed approach. These use data and signals to help shift your portfolio gradually into safer assets (bonds or cash) when markets become distressed. It’s not a perfect science, but it can help manage large losses.
MyPlanIQ offers a suite of premium tactical portfolios that overlay timing models on top of your existing plan — or build new portfolios altogether. They’re particularly useful if you’re close to retirement or just don’t want to ride out another 40% drawdown.
Cadence Design Systems Inc. 401(k) Investment Options Review
Let’s take a look at the full list of investment options available in the Cadence Design Systems Inc. 401(k) plan:
- T. ROWE PRICE STABLE VALUE COMMON TRUST FUND
- VANGUARD TARGET RETIREMENT 2020 TRUST
- VANGUARD TARGET RETIREMENT 2030 TRUST
- VANGUARD TARGET RETIREMENT 2040 TRUST
- VANGUARD TARGET RETIREMENT 2050 TRUST
- VANGUARD TARGET RETIREMENT 2060 TRUST
- VANGUARD TARGET RETIREMENT 2070 TRUST
- VANGUARD TARGET RETIREMENT INCOME TRUST
- VANGUARD INSTITUTIONAL 500 INDEX TRUST
- VANGUARD TREASURY MONEY MARKET INVESTMENT FUND
- DFA US SMALL CAP I FUND
- HARTFORD MIDCAP HLS IA FUND
- VANGUARD EXTENDED MARKET INDEX-INSTITUTIONAL FUND
- VANGUARD INTERNATIONAL GROWTH ADMIN FUND
- VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND I
- VANGUARD TOTAL BOND MARKET INDEX-INST
Index Funds: There are several excellent index fund choices — especially for core holdings. Vanguard’s Institutional 500 Index, Total Bond Market, Extended Market, and Total International Stock Index are all top-tier low-cost options. That’s a big plus.
Asset Class Coverage: This plan covers US large cap, mid/small cap, international stocks, and bonds. There’s no dedicated REIT or emerging market fund, but that’s not a deal breaker. Coverage is broad enough for most long-term portfolios.
Active Funds: There are a few active choices worth noting. DFA US SMALL CAP I FUND and HARTFORD MIDCAP HLS IA FUND can complement index holdings. On the bond side, VANGUARD TOTAL BOND MARKET INDEX-INSTis solid — though no actively managed bond fund from PIMCO or DoubleLine, etc., is included. That’s not ideal but also not uncommon.
Overall, the Cadence Design Systems Inc. 401(k) is strong. Low-cost core options. Good coverage. Solid target dates. Whether you’re just starting out or looking to go deeper, it gives you the tools to do both.