rat108m wrote:Im 28 years old and I have a fidelity roth ira worth around $33,000. I have all my money in a fidelity target fund and im not that happy with it, but i dont know where to move my money to? I need help. I've heard good things about index funds or fidelity spartan index funds? Does this sound like a good move for me or should i invest in more traditional mutual funds? Pls advise...
Stick with the Fidelity target fund until you can give some really good, specific reason to change. Boring, I know, but there it is. Please be more specific about why you're "not that happy with it."
I am assuming you are talking about one of the Fidelity Freedom funds, possibly Freedom 2045?
There's no magic, no miracles, and no reason to make any big change in a big hurry. Vanguard doesn't have any magic shields against the Uncomfortably Steep Fiscal Hill; whatever happens, a Vanguard year-2045 target fund will react about the same way as a Fidelity year-2045 target fund. Index funds are great but they're not all that
great, they're just a way to save some money on costs and free yourself from superstitious nonsense about actively managed funds.
The most important question is not "what brand name" or "what fund flavor," it's your asset allocation: % stocks, % everything else. Which Freedom Fund is it, and do you know what percentage you have in stocks? If it's Freedom 2045, be aware that, basically, your retirement money is in "stocks," 85% stocks, and whatever "stocks" do, your fund is going to mirror that.
Stocks are stocks. Any portfolio with, let's say, 85% stocks in it is going to have its ups and downs, and they will be large. You can either grit your teeth and ride out the fluctuations, which is sooner said than done by the way, or you can ease down on your percentage of stocks slowly and gradually. As J. P. Morgan supposedly replied when someone said he was losing sleep over his stock investments, "sell down to your sleeping point."
According to the standard thinking here, which I agree with
, yes, you can save a bit on costs and take control of your portfolio and get rid of a lot of silly nonsense in the Freedom funds by replacing it with a three-fund portfolio
consisting of Fidelity Spartan Total Market Index Fund (FSTMX), Fidelity Spartan Global Ex-US (FSGUX), and FIdelity Spartan U. S. Bond Index (FBIDX). If you mix these three to get the same proportions of domestic stock, international stock, and bonds as your current Freedom Fund, then, in my opinion, you will have made a small
improvement without changing your strategy.
Since I'm a Vanguard fan, sure, in my personal opinion you could make another improvement--a very small improvement but still an improvement--by moving to Vanguard and using the corresponding trio of Vanguard funds, because with $33,000 total you should be able to get lower-priced Admiral shares for some of those funds. But none of that is very important.
In your situation, I might consider changing my holdings at Fidelity, but I would not leave Fidelity as a brokerage unless
you were unhappy with something else
about Fidelity besides their Freedom Fund. The big brokers and mutual fund houses, e.g. Vanguard, Fidelity, Schwab are all pretty much the same, just like big supermarkets. Someone may swear by Albertson's or shop only at Kroger's but you can assemble a meal in either place, and if you can afford to shop at one you can afford to shop at the other.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.