Fidelity Investing Given New Minimums

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Fidelity Investing Given New Minimums

Postby ImprezaRacer13 » Wed Dec 19, 2012 2:23 pm

Hi again, been a while. My taxable, 403(b) and Roth IRA are with Fidelity for the sake of ease and I've been waiting until reaching the Spartan fund minimums which would have taken a few more months. Now that they have lowered their minimums for the Spartans (Investor - $2,500, Advantage - $10,000), I can finally achieve the Three Fund Portfolio I've been desiring.

Here's the current situation:

Age: 25
EF: 3 months
Debt: ~10,000 on car @ 3.9%, a few hundred on credit card for glasses and groceries, will be paid off soon.
Tax Filing: Single
Tax Rate: 15% Federal, 0% State
State: NH (but will file in MA in 2013 due to recent move)
Desired AA: 80% Stock, 20% Bond
Desired Intl: 30%

Taxable: 34%
15% FBGRX - Blue Chip Growth 0.90%
9% FLPSX - Low-Priced Stock 0.88% --> 100% to Spartan Global ex-US Index Investor Class
10% FSRRX - Strategic Real Return 0.76% --> 100% to Spartan Global ex-US Index Investor Class

Roth IRA: 29%
2% ACWX - iShares MSCI ACWI Ex-US Index 0.35% --> 100% to Spartan Total Market Index Investor Class
11% AGG - iShares Core Total US Bond Market 0.08%
8% FNMIX - Fidelity New Markets Income 0.87%
2% IVV - iShares Core S&P 500 0.07% --> 100% to Spartan Total Market Index Investor Class
1% IWM - iShares TR Russell 2000 Index 0.23% --> 100% to Spartan Total Market Index Investor Class
3% PM - Phillip Morris Intl --> 100% to Spartan Total Market Index Investor Class

403(b): 36%
24% FSTVX - Spartan Total Market Index Advantage 0.07%
11% FSGDX - Spartan Global ex-US Index Advantage 0.28% --> 100% to Spartan Total Market Index Advantage

Contributions:
TBD - Just moved to an apartment going from $0/mo rent to $1000. January 2nd, job transferring to new company and will receive a ~40% raise.
~$9,000 from rollover of 403(b) and State Retirement funds (3 years) into TIRA. I will not receive matching at new employer until after a year of service.

Questions/Comments:
With the lowering of Spartan fund minimum investments, I'd like to finally make the switch to the Three Fund Portfolio but am wondering when the best time would be. January of this year, I sold off a good chunk of my taxable portfolio to pay off student loans - dumb idea in retrospect, but it was the option that made sense to me at the time since they were both over 6%. I'd like to put all international into the taxable account, keep the bonds in the Roth, and put TSM in TIRA (403b for now). At the moment, FSRRX in the taxable is at a loss (~4%) so I could sell that holding to at least get the minimum for Global ex-US Investor class, as well as counter a small bit of the capital gains from January. Selling either FBGRX or FLPSX will accrue more taxes (though the vast majority LTCG). Since I'm under the 25% bracket, should I sell these prior to higher salary?

In the Roth, I'd like to sell the IVV, IWM, ACWX and put to AGG. I can't seem to let go of FNMIX since it's performed very well, and I'll think about selling PM, but my AA doesn't require the entire Roth IRA in bonds at the moment.

As for the 403(b), when the 90-day holding period of the FSGDX is up, I'll transfer that to FSTVX. Any new contributions will go toward FSTVX.

Update 1:
Since there's no guarantee that I can max my Roth IRA contributions for this year as well as next year, would you recommend moving some of the taxable to Roth up to the maximum? YTD I've been able to contribute $3k to the Roth and the minimum allowed to 403(b).

Thanks =]
Last edited by ImprezaRacer13 on Fri Dec 21, 2012 12:50 pm, edited 4 times in total.
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Re: Fidelity Investing Given New Minimums

Postby Noobvestor » Wed Dec 19, 2012 2:27 pm

With the lowering of Spartan fund minimum investments, I'd like to finally make the switch to the Three Fund Portfolio but am wondering when the best time would be. January of this year, I sold off a good chunk of my taxable portfolio to pay off student loans - dumb idea in retrospect, but it was the option that made sense to me at the time since they were both over 6%. I'd like to put all international into the taxable account, keep the bonds in the Roth, and put TSM in TIRA (403b for now). At the moment, FSRRX in the taxable is at a loss (~4%) so I could sell that holding to at least get the minimum for Global ex-US Investor class, as well as counter a small bit of the capital gains from January. Selling either FBGRX or FLPSX will accrue more taxes. Since I'm under the 25% bracket, should I sell these prior to higher salary?
In the Roth, I'd like to sell the IVV, IWM, ACWX and put to AGG. I can't seem to let go of FNMIX since it's performed very well, and I'll think about selling PM, but my AA doesn't require the entire Roth IRA in bonds at the moment.


If it has performed well, reversion to the mean suggests now is as good a time as any to sell it, not hang onto it, if it's not part of your long-term allocation goal.

Anyway, I would just bite the bullet and make the switches you need to make in taxable and otherwise - as you note, your salary will probably go up. Your taxes may go up too. I did something similar a few years back (selling at slight gains to simplify) and have zero regrets.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: Fidelity Investing Given New Minimums

Postby ImprezaRacer13 » Wed Dec 19, 2012 3:15 pm

Thank you for the insight. =]
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Re: Fidelity Investing Given New Minimums

Postby Noobvestor » Wed Dec 19, 2012 7:13 pm

ImprezaRacer13 wrote:Thank you for the insight. =]


Sure thing. It is easily given now, though when I was in a similar boat, it took me a while (and some helpful posters on this board!) to drill it into my head that it really IS that easy :D
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: Fidelity Investing Given New Minimums

Postby ImprezaRacer13 » Thu Dec 20, 2012 2:29 pm

I've got another question that I've listed under "Update 1." Thanks!
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Re: Fidelity Investing Given New Minimums

Postby Noobvestor » Thu Dec 20, 2012 6:55 pm

ImprezaRacer13 wrote:I've got another question that I've listed under "Update 1." Thanks!


I'm not quite sure I follow the question, but on the topic of Roths in general: I personally think people should max these out whenever possible, even if they are in a higher tax bracket. My reasoning: (1) our tax rates are below historic averages currently, and thus could go up across the board, and (2) Roths will never be as big as other tax-deferred quantities for most investors, so having as much as possible in a Roth diversifies the tax rate uncertainty of deferred-tax vehicles.
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Re: Fidelity Investing Given New Minimums

Postby ImprezaRacer13 » Fri Dec 21, 2012 12:41 pm

Sorry if the question was a little vague, it sounded better in my head. However, your advice on maxing Roth IRA should answer my question. So far I've:
1. Transferred all of the 403(b)'s Spartan Global ex-US Index Advantage holdings to Spartan Total Market Index Advantage
2. Transferred all of Strategic Real Return and Low-Priced Stock in the taxable to Spartan Global ex-US Index Investor Class (vast majority long-term gains)
3. Transferred all of the iShares MSCI ACWI Ex-US Index, iShares Core S&P 500, iShares TR Russell 2000 Index and Phillip Morris to Spartan Total Market Index Investor Class in the Roth IRA.

To be completed:
1. Fill in the allocation requirment for Spartan Global ex-US Index Investor Class in the taxable. When I complete this, I will have $~1,000 left in the taxable account. If I put this towards the Global, I will be over my AA's requirement. With this amount, I will be unable to open a Spartan Total Market Index Investor Class holding (min. $2,500).
2. Take that extra amount in the taxable and put into Roth IRA. If I need to rebalance toward Global, I can put some of another asset toward the iShares MSCI ACWI Ex-US Index in the Roth. However, if I have the Traditional IRA set up when this type of rebalance is necessary, I can purchase that in there instead of the Roth.
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