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Please review my 401k

Posted: Thu Jan 31, 2013 1:26 pm
by mojave
I have learned so much since I joined, however there is so much more that I don't know or understand. I would like your feedback on my 401k. I recently increased my contributions and it is at 12%. My company matches 50% up to 6%, which is what I had my contribution at until recently. I've been working for 5 1/2 years and only had $13,000. Since I increased my contributions in December I am at $15.3k. It has gone up $2k since November. I'm a little upset that I didn't contribute more as realistically, I could have over $25k now but it is what it is.

I have the Fidelity FID Freedom K 2050 plan. Right now it is 90% stocks which I think might be a little too high. I am 27. I believe this is an "active fund" (correct? Still learning) because it has two managers. I have not rebalanced or changed anything in this fund because, even now, that is way beyond my knowledge. I don't know if I need to or not.

Anyway here is how it breaks out

Domestic Equity Funds
62.70%


Equity Funds 53.59%

Fidelity Growth Company Fund - Class F 8.44%
Fidelity Series All-Sector Equity Fund - Class F 8.21%
Fidelity Series Large Cap Value Fund - Class F 7.07%
Fidelity Blue Chip Growth Fund - Class F 5.65%
Fidelity Series Stock Selector Large Cap Value Fund - Class F 4.98%
Fidelity Series Equity-Income Fund - Class F 4.95%
Fidelity Series Opportunistic Insights Fund - Class F 3.68%
Fidelity Series Small Cap Opportunities Fund - Class F 2.12%
Fidelity Series 100 Index Fund 1.92%
Fidelity Series Mega Cap Fund - Class F 1.84%
Fidelity Small Cap Value Fund - Class F 1.26%
Fidelity Disciplined Equity Fund - Class F 1.22%
Fidelity Small Cap Growth Fund - Class F 1.18%
Fidelity Series Real Estate Equity Fund - Class F 0.67%
Fidelity Series Intrinsic Opportunities Fund - Class F 0.39%

Commodity Funds 9.11%

Fidelity Series Commodity Strategy Fund - Class F 9.11%

International Equity Funds 24.01%

Fidelity Series International Value Fund - Class F 8.56%
Fidelity Series International Growth Fund - Class F 8.24%
Fidelity Series Emerging Markets Fund - Class F 5.51%
Fidelity Series International Small Cap Fund - Class F 1.70%

Bond Funds 13.24%

Investment Grade Bond Funds 3.16%

Fidelity Series Investment Grade Bond Fund - Class F 3.16%

Inflation-Protected Bond Funds 0.00%

High Yield Bond Funds 9.16%

Fidelity Series High Income Fund - Class F 9.16%

Floating Rate Funds 0.08%

Fidelity Series Floating Rate High Income Fund - Class F 0.08%

Emerging Markets Debt Funds 0.79%

Fidelity Series Emerging Markets Debt Fund - Class F 0.79%

Real Estate Debt Funds 0.05%
Fidelity Series Real Estate Income Fund - Class F 0.05%

Short-Term Funds & Net Other Assets 0.05%



Anything concerning? Alarming? Thank you for your help.

Re: Please review my 401k

Posted: Thu Jan 31, 2013 2:38 pm
by linuxuser
Are those what is contained in that fund?

The more important question is what are the other choices in your 401K and the associated expense ratios.

Re: Please review my 401k

Posted: Thu Jan 31, 2013 2:51 pm
by damjam
mojave wrote: Real Estate Debt Funds 0.05%
Fidelity Series Real Estate Income Fund - Class F 0.05%
I assume the percentages are the portion of the fund allotted to these assets, not the expense ratios.
If so, what possible impact could .05% of anything have on the return of the fund?

I'm not a big fan of the Fidelity Freedom funds for this reason. Just silly asset allocation if you ask me. It wont necessarily hurt you, but how much can it help?

I concur with linixuser, post your other choices with expense ratios. We might be able to do better.

Re: Please review my 401k

Posted: Thu Jan 31, 2013 2:51 pm
by mojave
linuxuser wrote:Are those what is contained in that fund?

The more important question is what are the other choices in your 401K and the associated expense ratios.
Yes, sorry, that is what is contained in the fund.

I don't know if I have other choices in the 401k - poked around and the only choice I have is to switch to a different fund, I don't think I can pick and choose (if that was what you were asking). Or at least not that I can easily find.

The expense ratio is .64% and it says it is below the 20th percentile to other similar funds.

Re: Please review my 401k

Posted: Thu Jan 31, 2013 2:53 pm
by mojave
damjam wrote:
mojave wrote: Real Estate Debt Funds 0.05%
Fidelity Series Real Estate Income Fund - Class F 0.05%
I assume the percentages are the portion of the fund allotted to these assets, not the expense ratios.
If so, what possible impact could .05% of anything have on the return of the fund?

I'm not a big fan of the Fidelity Freedom funds for this reason. Just silly asset allocation if you ask me. It wont necessarily hurt you, but how much can it help?
I thought that was weird too. Yes, you are correct in what the percentages are. I'm sorry, I didn't explain that well enough.

Re: Please review my 401k

Posted: Thu Jan 31, 2013 2:54 pm
by linuxuser
mojave wrote:
linuxuser wrote:Are those what is contained in that fund?

The more important question is what are the other choices in your 401K and the associated expense ratios.
Yes, sorry, that is what is contained in the fund.

I don't know if I have other choices in the 401k - poked around and the only choice I have is to switch to a different fund, I don't think I can pick and choose (if that was what you were asking). Or at least not that I can easily find.

The expense ratio is .64% and it says it is below the 20th percentile to other similar funds.
Ask your HR department instead of "poking around" or your company's intranet if there is one.

Re: Please review my 401k

Posted: Thu Jan 31, 2013 3:00 pm
by mojave
It looks like I can't pick and choose but I'm asking HR (and they probably will answer with a question or direct me to a document that I don't understand). I found this:

Investment options are chosen by the Investment Committee. Currently (as of January 1, 2003) you may choose among twelve Fidelity investment funds as follows:

Fidelity Retirement Money Market
Fidelity Managed Income Portfolio
Fidelity Intermediate Bond Fund
Fidelity Puritan Fund
Fidelity Asset Manager
Fidelity Growth and Income Portfolio
Spartan U.S. Equity Index Fund
Fidelity Asset Manager: Growth
Fidelity Magellan Fund
Fidelity Growth Company Fund
Fidelity Diversified International Fund
*Fidelity Low-Priced Stock Fund

Re: Please review my 401k

Posted: Thu Jan 31, 2013 3:16 pm
by damjam
mojave wrote:It looks like I can't pick and choose but I'm asking HR (and they probably will answer with a question or direct me to a document that I don't understand). I found this:

Investment options are chosen by the Investment Committee. Currently (as of January 1, 2003) you may choose among twelve Fidelity investment funds as follows:

Fidelity Retirement Money Market
Fidelity Managed Income Portfolio
Fidelity Intermediate Bond Fund
Fidelity Puritan Fund
Fidelity Asset Manager
Fidelity Growth and Income Portfolio
Spartan U.S. Equity Index Fund
Fidelity Asset Manager: Growth
Fidelity Magellan Fund
Fidelity Growth Company Fund
Fidelity Diversified International Fund
*Fidelity Low-Priced Stock Fund
I don't see Fidelity FID Freedom K 2050 on this list. It obviously must be one of your choices since you are in it.

In your original post you said "Right now it is 90% stocks which I think might be a little too high."

If you want to keep it simple you should be able to choose a different Fidelity FID Freedom fund ( like different year say: Fidelity FID Freedom K 2020) that has a lower allocation to stock.

Re: Please review my 401k

Posted: Thu Jan 31, 2013 4:56 pm
by pingo
On the subject of whether or not to like the Fidelity Freedom K Funds: sure they are too complicated on the inside and some think they house a lot of Fidelity's "dogs", but I don't see important differences between the very simple, low cost index Freedom Funds and the others:

Fidelity Advisor Freedom 2035 Fund (FATHX.lw) ER 1.02% <--23 funds (per M*) or more.
Fidelity Freedom K 2035 Fund (FKTHX) ER 0.62% <--26 funds!
Fidelity Freedom Index 2035 Fund (FIHFX) ER 0.19% <--5 index funds
Image

Despite the striking differences in the underlying fund selection of each Freedom Fund that I charted (i.e. 26 funds vs. 5 index funds), there is no difference in total bond weights or total U.S. and foreign weights. As such, they behave exactly the same. You could do far worse than investing in your 401k Freedom Fund.

Notice that I used the 2035 funds because they have at least 20% bonds (although M* shows almost 30% total bonds and cash which can't reconcile with Fidelity's information.) This forum regularly recommends that one invest in a lifecycle fund (like your Freedom series) based on willingness, need and tolerance for risk. I wouldn't invest in the 2050 fund with it's 90%-ish stocks without being willing to stomach up to a 40% drop in value during the next crisis (there's always one around the bend...) Not that 90% stocks is inherently bad. It's whether or not you can stay the course.

Your costs and the stock-bond relationship produce the largest impact on portfolio behavior and performance. Fund selection does not.

Rick Ferri's research for The Power of Passive Investing and John Bogle's Cost Matters Hypothesis, as he cleverly calls it, suggests that over decades the lower cost index Freedom Funds will most likely to win in the end, but you don't have them in your plan and we cannot know if we can structure something like it for you until we can see the correct 401k information (don't feel bad, we know you're working on it) and until we can see it in the context of any other investment accounts, as recommended in Laura's tips for Asking Portfolio Questions.

But I'd say your okay with a Freedom Fund for the time being, if not indefinitely.

Re: Please review my 401k

Posted: Fri Feb 01, 2013 10:04 am
by mojave
Thank you pingo, that was the type of explanation I was hoping for :happy I feel much better now.

I'm ok with the 2050 at the moment - we are hoping to expand our family in a year or two in which I will be home. Then I will change it over to something less risky. Right now I'm trying to accumulate as much as I can - if for some reason I did lose half of it that would be really upsetting but wouldn't put me out on the streets. It's something we could recover from - I don't have that much.