Need direction on managing portfolio

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Need direction on managing portfolio

Post by Rahm » Sat Feb 25, 2017 10:56 am

Hi All,

This is an edited version of my first post. The questions are also updated.

Emergency funds: 6 months of expenses
Debt: $0.00.
Tax Filing Status: Single
Tax Rate: 25% Federal, 4% State (as calculated from my tax returns)
State of Residence: NJ
Age: 32 ((approximative))
Income: $92k ((optional))

Desired Asset allocation: 100% stocks / 0% bonds (I have been advised against this, but haven't taken any action yet -- mainly procrastination)

Desired International allocation: perhaps not more than <10% bonds

Current retirement assets $32-33k in 401k, $5.5k in Roth IRA (I'm only mentioning about the assets in retirement accounts)

Size of the portfolio: low-to-mid five-figures

Breakdown within each asset class: 95.13% large caps, 3.48% mid caps, 1.39% small-caps

Taxable
None (I hope not :wink: )


His 401k Company match? Yes (6%)

93.09% FID BLUE CHIP GR K (FBGKX) (0.7%)
3.47% VANG MIDCAP IDX ADM (VIMAX) (0.08%)
2.18% FID 500 INDEX PR (FUSVX) (0.045%))
1.26% JPM US SMALL CO L (JUSSX) (0.91%)

His Roth IRA at Fidelity
Not allocated yet. Deposited $5.5k last week.

New annual Contributions
$15k his 401k + $6k his employer
$5.5k his Roth IRA

Available funds

Funds available in his 401(k)
FID 500 INDEX PR (FUSVX) (0.045%)
FID BLUE CHIP GR K (FBGKX) (0.7%)
FID CONTRAFUND K (FCNKX) (0.61%)
PUTN EQUITY INCOME Y (PEIYX) (0.71%)
TRP DIV GROWTH (PRDGX) (0.64%)
FID LOW PRICED STK K (FLPKX) (0.78%)
VANG MIDCAP IDX ADM (VIMAX) (0.08%)
JPM US SMALL CO L (JUSSX) (0.91%)
DODGE & COX INTL STK (DODFX) (0.64%)
FID FREEDOM K 2005 (FFKVX) (0.49%)
FID FREEDOM K 2010 (FFKCX) (0.53%)
FID FREEDOM K 2015 (FKVFX) (0.56%)
FID FREEDOM K 2020 (FFKDX) (0.58%)
FID FREEDOM K 2025 (FKTWX) (0.61%)
FID FREEDOM K 2030 (FFKEX) (0.65%)
FID FREEDOM K 2035 (FKTHX) (0.67%)
FID FREEDOM K 2040 (FFKFX) (0.67%)
FID FREEDOM K 2045 (FFKGX) (0.67%)
FID FREEDOM K 2050 (FFKHX) (0.67%)
FID FREEDOM K 2055 (FDENX) (0.67%)
FID FREEDOM K 2060 (FDKNX) (0.67%)
FID FREEDOM K INCOME (FFKAX) (0.44%)
FID PURITAN K (FPUKX) (0.46%)
MIP CL 1 (7-day yield: 1.17%) 0.77%
FID HIGH INCOME (SPHIX) (0.73%)
METWEST TOT RTN BD I (MWTIX) (0.44%)
FMMT RETIRE GOV II (FRTXX) (7-day yield: 0.2%) (0.42%)


Questions:

1. Still not sure if I should re-allocate the funds in FBGKX fund to some Freedom fund, or to the FUSVX fund ? Recently, FBGKX seems to be growing better, so I am a bit unsure if this is the time to jump out, or wait a bit longer and then re-adjust the portfolio ?

2. What to buy within the Roth IRA account. I am confused between the mutual funds and the ETFs. I am considering either of the following ETFs (IVW, IUSG, ITOT, IVV, IVE, IUSV -- plz suggest if there are any better than these) and mutual funds (FSUIX, FSUEX, FLCDX -- again, plz suggest if you know of any better funds).

Looking forward to any advice !

Thanks
Rahm
Last edited by Rahm on Sat Mar 18, 2017 10:23 pm, edited 2 times in total.

mhalley
Posts: 4869
Joined: Tue Nov 20, 2007 6:02 am

Re: Need direction on managing portfolio

Post by mhalley » Sat Feb 25, 2017 12:55 pm

You can't put any money for 2016 in the 401k, but you could put money into an Ira up until tax day. The usual recommendation is to try to max out all retirement accounts if you can afford it, with a minimum of 15% going toward retirement, so you are doing fine % wise.
The usual rule of thumb goes something like:
401k to match
Max Roth
Max 401k
Taxable investing
As to the investments your best bets would be the s&p 500, mid cap index, dodge and cox if u want international, and probably met west for bonds.
Something like
S&p 500 50%
Midcap 10%
Dodfx 15
Met west 25%
Is the cash considered your emergency fund? If so, keep it safe, not invested. If it is to be invested, the 3 fund portfolio would be fine. What is the yield on the stable value fund?
I know you are young, but 100% stocks is very high, so I put down a 75/25 stock/bond allocation. You could go to 90/10, it depends on what lets you sleep at night.

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Sat Feb 25, 2017 4:05 pm

mhalley wrote:You can't put any money for 2016 in the 401k, but you could put money into an Ira up until tax day. The usual recommendation is to try to max out all retirement accounts if you can afford it, with a minimum of 15% going toward retirement, so you are doing fine % wise.
The usual rule of thumb goes something like:
401k to match
Max Roth
Max 401k
Taxable investing
As to the investments your best bets would be the s&p 500, mid cap index, dodge and cox if u want international, and probably met west for bonds.
Something like
S&p 500 50%
Midcap 10%
Dodfx 15
Met west 25%
Is the cash considered your emergency fund? If so, keep it safe, not invested. If it is to be invested, the 3 fund portfolio would be fine. What is the yield on the stable value fund?
I know you are young, but 100% stocks is very high, so I put down a 75/25 stock/bond allocation. You could go to 90/10, it depends on what lets you sleep at night.



Thank you so much for the reply.

So, if I understand correctly, I should put only 6% into the 401k (which is matched by my employer), then start adding to the roth IRA (up to $5500), and finally if I can afford still, I should start increasing the contribution towards 401k (beyond the matched 6%). Please correct me if I'm misinterpreting.

Also, I'm not sure what you refer to as Taxable investing (after the "Max 401k") in your reply, and how to do that.

Also, if I understand correctly, you suggest that I should pick FUSVX, instead of the FBGXK (I assume because of lower expense ratio)?

I'm not planning on keeping much of the emergency fund, as I have close-family to fall-back on if, God forbid, something bad happens, although, I wish and I hope that it won't. So, I usually prefer to keep a small amount (~$5-10k)for my back-up plan (not ~6 months salary, as some people prefer).

I'm not completely sure which one is the stable value fund, so I am copying below the yield for a few of the assets that I am guessing you refer to,

Name Asset Class Category 1 Year 3 Year 5 Year 10 Year/LOF*
FID FREEDOM K INCOME (FFKAX) Blended Investment* N/A 7.78% 3.33% 3.78% 5.35%
FID PURITAN K (FPUKX) Blended Investment* N/A 12.07% 7.02% 9.87% 6.15%
MIP CL 1 7 day yield as of 01/31/2017 1.13% Bond Investments Stable Value 1.25% 1.14% 1.12% 1.77%
FID HIGH INCOME (SPHIX) Bond Investments Income 19.49% 4.01% 6.02% 6.71%
METWEST TOT RTN BD I (MWTIX) Bond Investments Income 1.52% 2.49% 3.79% 5.92%


Thanks again for the advice.

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Mon Feb 27, 2017 2:54 am

mhalley wrote:You can't put any money for 2016 in the 401k, but you could put money into an Ira up until tax day. The usual recommendation is to try to max out all retirement accounts if you can afford it, with a minimum of 15% going toward retirement, so you are doing fine % wise.
The usual rule of thumb goes something like:
401k to match
Max Roth
Max 401k
Taxable investing
As to the investments your best bets would be the s&p 500, mid cap index, dodge and cox if u want international, and probably met west for bonds.
Something like
S&p 500 50%
Midcap 10%
Dodfx 15
Met west 25%
Is the cash considered your emergency fund? If so, keep it safe, not invested. If it is to be invested, the 3 fund portfolio would be fine. What is the yield on the stable value fund?
I know you are young, but 100% stocks is very high, so I put down a 75/25 stock/bond allocation. You could go to 90/10, it depends on what lets you sleep at night.


Hi mhalley,

Could you please explain to a layman like me about the 3 fund portfolio that you mentioned in the reply. Thanks again for the advice. And, also, I'll appreciate if you could plz let me know if the rule of thumb that you wrote in your previous reply is to be followed in-order ? Means, in future, should i try to max the Roth account for the year ($5500) before maxing-out the 401k ($18000) ?

I think, I'll switch to 90/10 stock/bond portfolio. I'm sure there must be a good reason for it when majority of the wise people advise so !

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Mon Feb 27, 2017 3:38 am

Sorry, plz ignore the question about three-fund portfolio. Didn't know it was a very common term used among bogleheads ...

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Sat Mar 18, 2017 8:36 am

Hi All,
I have another question, if you don't mind. I have opened a Roth IRA account (with Fidelity -- sorry, I just felt it'd be convenient to have 401k and Roth IRA at the same place). Should I choose a mutual fund or an ETF ?

User avatar
BeBH65
Posts: 817
Joined: Sat Jul 04, 2015 7:28 am

Re: Need direction on managing portfolio

Post by BeBH65 » Sat Mar 18, 2017 12:33 pm

Hi Rahm,


We need a bit more info to give you good advise.
Please have a look at Asking_portfolio_questions and update your opening post with the additional info.

The wiki also has a good article on the 3 fund portfolio.

Regards,
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

pkcrafter
Posts: 11758
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Need direction on managing portfolio

Post by pkcrafter » Sat Mar 18, 2017 1:35 pm

Fidelity index funds are good and have very low costs, but min. investment is $2500. So, one thing you can do is use a Fidelity Freedom Index fund with a suitable asset allocation. The freedom funds are low cost and contain U.S., international, and bonds. I'm not so sure the majority of posters here would recommend 90% equity. I think it's more like 80% equity for young investors, but it's something you should decide for yourself. How do you feel about your investments going down by 40%, even though it's temporary? Some here suggest a lower equity allocation for new investors, at least until you have experienced a hard fall.

Freedom Index Funds - Choose by allocation, not by date.

https://search.fidelity.com/search/getS ... viv_Pu53KD

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Sat Mar 18, 2017 10:24 pm

BeBH65 wrote:Hi Rahm,


We need a bit more info to give you good advise.
Please have a look at Asking_portfolio_questions and update your opening post with the additional info.

The wiki also has a good article on the 3 fund portfolio.

Regards,


Hi BeBH65,

Thanks for the link. I have updated my first post according to the guidelines. Thanks for the suggestion.

Best,
Rahm

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Sat Mar 18, 2017 10:29 pm

pkcrafter wrote:Fidelity index funds are good and have very low costs, but min. investment is $2500. So, one thing you can do is use a Fidelity Freedom Index fund with a suitable asset allocation. The freedom funds are low cost and contain U.S., international, and bonds. I'm not so sure the majority of posters here would recommend 90% equity. I think it's more like 80% equity for young investors, but it's something you should decide for yourself. How do you feel about your investments going down by 40%, even though it's temporary? Some here suggest a lower equity allocation for new investors, at least until you have experienced a hard fall.

Freedom Index Funds - Choose by allocation, not by date.

https://search.fidelity.com/search/getS ... viv_Pu53KD

Paul


Hi Paul,

Thanks for the advise. In general, I do agree with everyone's opinion that there should be some amount in bonds. However, I do feel that I can take risk at this point, and I hope I can take the temporary losses without going completely crazy :happy . I have had significant losses in the past, although not in the 401k or stock/mutual fund type transactions.

I tried the link that you copied for the allocation-based fidelity freedom index funds. It doesn't seem to work, at least on my computer.

Thanks again for your help.

Best,
Rahm

pkcrafter
Posts: 11758
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Need direction on managing portfolio

Post by pkcrafter » Sat Mar 18, 2017 11:22 pm

Rahm, I tested the link when I wrote it, but now it doesn't work--"search is temporarily unavailable". Seems Fidelity is doing some maintenance.

I don't know why, but Fidelity makes it very difficult to find their Freedom Index Funds. Maybe this one will work.

https://search.fidelity.com/search/getS ... e=o-NavBar

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Mon Mar 20, 2017 12:50 am

pkcrafter wrote:Rahm, I tested the link when I wrote it, but now it doesn't work--"search is temporarily unavailable". Seems Fidelity is doing some maintenance.

I don't know why, but Fidelity makes it very difficult to find their Freedom Index Funds. Maybe this one will work.

https://search.fidelity.com/search/getS ... e=o-NavBar

Paul


Hi Paul,

This does direct me to a list of all the mutual funds offered by Fidelity, but still can't find the one that you were referring to.
Any thoughts on the choice among the ones that I added in my 'edited' version of original post ?

Thanks
Rahm

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Mon Mar 20, 2017 1:09 am

I am copying the questions below for convenience.

Questions:

1. Still not sure if I should re-allocate the funds in FBGKX fund to some Freedom fund, or to the FUSVX fund ? Recently, FBGKX seems to be growing better, so I am a bit unsure if this is the time to jump out, or wait a bit longer and then re-adjust the portfolio ?

2. What to buy within the Roth IRA account. I am confused between the mutual funds and the ETFs. I am considering either of the following ETFs (IVW, IUSG, ITOT, IVV, IVE, IUSV -- plz suggest if there are any better than these) and mutual funds (FSUIX, FNCMX, FUSEX, FLCDX -- again, plz suggest if you know of any better funds).

Thanks

Best,
Rahm

User avatar
BeBH65
Posts: 817
Joined: Sat Jul 04, 2015 7:28 am

Re: Need direction on managing portfolio

Post by BeBH65 » Mon Mar 20, 2017 5:03 am

Hello Rahm,

Rahm wrote:Desired Asset allocation: 100% stocks / 0% bonds (I have been advised against this, but haven't taken any action yet -- mainly procrastination)
Indeed on this forum many advocate some bonds 10%, 20%, other are happy with the full volatility of 100% equity
Desired International allocation: perhaps not more than <10% bonds
the amount of international equity that is advocated on this forum varies from 0% to 50%. Have a look at other threads to take a decision
Current retirement assets $32-33k in 401k, $5.5k in Roth IRA (I'm only mentioning about the assets in retirement accounts)

Size of the portfolio: low-to-mid five-figures

Breakdown within each asset class: 95.13% large caps, 3.48% mid caps, 1.39% small-caps

Taxable
None (I hope not :wink: )


His 401k Company match? Yes (6%)

93.09% FID BLUE CHIP GR K (FBGKX) (0.7%) this seems to be a fund with a high ER. Does the risk adjusted return justified this Expense Ratio? will these koind of assets continue to outperform the total market?
3.47% VANG MIDCAP IDX ADM (VIMAX) (0.08%)
2.18% FID 500 INDEX PR (FUSVX) (0.045%)) Good fund
1.26% JPM US SMALL CO L (JUSSX) (0.91%) Again a fund with a high ER. Also the allocation is minimal, anything below 5% is generally considered not to make nay difference.

His Roth IRA at Fidelity
Not allocated yet. Deposited $5.5k last week. Is this your 2016 allocation, or the 2017 one?

New annual Contributions
$15k his 401k + $6k his employer
$5.5k his Roth IRA

Available funds

Funds available in his 401(k)
FID 500 INDEX PR (FUSVX) (0.045%) Good
FID BLUE CHIP GR K (FBGKX) (0.7%)
FID CONTRAFUND K (FCNKX) (0.61%)
PUTN EQUITY INCOME Y (PEIYX) (0.71%)
TRP DIV GROWTH (PRDGX) (0.64%)
FID LOW PRICED STK K (FLPKX) (0.78%)
VANG MIDCAP IDX ADM (VIMAX) (0.08%) Good
JPM US SMALL CO L (JUSSX) (0.91%)
DODGE & COX INTL STK (DODFX) (0.64%)
FID FREEDOM K 2005 (FFKVX) (0.49%) These target date funds could also be a good alterntive for you; select the one with the AA closest to what you want.
FID FREEDOM K 2010 (FFKCX) (0.53%)
...
FID FREEDOM K 2060 (FDKNX) (0.67%)
FID FREEDOM K INCOME (FFKAX) (0.44%)
FID PURITAN K (FPUKX) (0.46%)
MIP CL 1 (7-day yield: 1.17%) 0.77% From your other posts, I understand that this would be stable value fund. You could use this for your bond allocation if needed
FID HIGH INCOME (SPHIX) (0.73%)
METWEST TOT RTN BD I (MWTIX) (0.44%)
FMMT RETIRE GOV II (FRTXX) (7-day yield: 0.2%) (0.42%)


Questions:

1. Still not sure if I should re-allocate the funds in FBGKX fund to some Freedom fund, or to the FUSVX fund ? Recently, FBGKX seems to be growing better, so I am a bit unsure if this is the time to jump out, or wait a bit longer and then re-adjust the portfolio ?

2. What to buy within the Roth IRA account. I am confused between the mutual funds and the ETFs. I am considering either of the following ETFs (IVW, IUSG, ITOT, IVV, IVE, IUSV -- plz suggest if there are any better than these) and mutual funds (FSUIX, FSUEX, FLCDX -- again, plz suggest if you know of any better funds).
Please have a look at the Fidelity funds that are mentioned in the 3-fund wiki page. Maybe you can use the bond and the international fund in your IRA. The choice between ETF and Mutual fund is a personal one: our wiki has an articla "Mutual vs ETF". Mutual funds seem easier in many ways.


Thanks
Rahm
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Mon Mar 20, 2017 5:53 am

BeBH65 wrote:Hello Rahm,

Rahm wrote:Desired Asset allocation: 100% stocks / 0% bonds (I have been advised against this, but haven't taken any action yet -- mainly procrastination)
Indeed on this forum many advocate some bonds 10%, 20%, other are happy with the full volatility of 100% equity
Desired International allocation: perhaps not more than <10% bonds
the amount of international equity that is advocated on this forum varies from 0% to 50%. Have a look at other threads to take a decision
Current retirement assets $32-33k in 401k, $5.5k in Roth IRA (I'm only mentioning about the assets in retirement accounts)

Size of the portfolio: low-to-mid five-figures

Breakdown within each asset class: 95.13% large caps, 3.48% mid caps, 1.39% small-caps

Taxable
None (I hope not :wink: )


His 401k Company match? Yes (6%)

93.09% FID BLUE CHIP GR K (FBGKX) (0.7%) this seems to be a fund with a high ER. Does the risk adjusted return justified this Expense Ratio? will these koind of assets continue to outperform the total market?
3.47% VANG MIDCAP IDX ADM (VIMAX) (0.08%)
2.18% FID 500 INDEX PR (FUSVX) (0.045%)) Good fund
1.26% JPM US SMALL CO L (JUSSX) (0.91%) Again a fund with a high ER. Also the allocation is minimal, anything below 5% is generally considered not to make nay difference.

His Roth IRA at Fidelity
Not allocated yet. Deposited $5.5k last week. Is this your 2016 allocation, or the 2017 one?

New annual Contributions
$15k his 401k + $6k his employer
$5.5k his Roth IRA

Available funds

Funds available in his 401(k)
FID 500 INDEX PR (FUSVX) (0.045%) Good
FID BLUE CHIP GR K (FBGKX) (0.7%)
FID CONTRAFUND K (FCNKX) (0.61%)
PUTN EQUITY INCOME Y (PEIYX) (0.71%)
TRP DIV GROWTH (PRDGX) (0.64%)
FID LOW PRICED STK K (FLPKX) (0.78%)
VANG MIDCAP IDX ADM (VIMAX) (0.08%) Good
JPM US SMALL CO L (JUSSX) (0.91%)
DODGE & COX INTL STK (DODFX) (0.64%)
FID FREEDOM K 2005 (FFKVX) (0.49%)
FID FREEDOM K 2010 (FFKCX) (0.53%)
FID FREEDOM K 2015 (FKVFX) (0.56%)
FID FREEDOM K 2020 (FFKDX) (0.58%)
FID FREEDOM K 2025 (FKTWX) (0.61%)
FID FREEDOM K 2030 (FFKEX) (0.65%)
FID FREEDOM K 2035 (FKTHX) (0.67%)
FID FREEDOM K 2040 (FFKFX) (0.67%)
FID FREEDOM K 2045 (FFKGX) (0.67%)
FID FREEDOM K 2050 (FFKHX) (0.67%)
FID FREEDOM K 2055 (FDENX) (0.67%)
FID FREEDOM K 2060 (FDKNX) (0.67%)
FID FREEDOM K INCOME (FFKAX) (0.44%)
FID PURITAN K (FPUKX) (0.46%)
MIP CL 1 (7-day yield: 1.17%) 0.77% From your ohter posts, I understand that this would be stable value fund. You could use this for your bond allocation if needed
FID HIGH INCOME (SPHIX) (0.73%)
METWEST TOT RTN BD I (MWTIX) (0.44%)
FMMT RETIRE GOV II (FRTXX) (7-day yield: 0.2%) (0.42%)


Questions:

1. Still not sure if I should re-allocate the funds in FBGKX fund to some Freedom fund, or to the FUSVX fund ? Recently, FBGKX seems to be growing better, so I am a bit unsure if this is the time to jump out, or wait a bit longer and then re-adjust the portfolio ?

2. What to buy within the Roth IRA account. I am confused between the mutual funds and the ETFs. I am considering either of the following ETFs (IVW, IUSG, ITOT, IVV, IVE, IUSV -- plz suggest if there are any better than these) and mutual funds (FSUIX, FSUEX, FLCDX -- again, plz suggest if you know of any better funds).
Please have a look at the Fidelity funds that are mentioned in the 3-fund wiki page. Maybe you can use the bond and the international fund in your IRA. The choice between ETF and Mutual fund is a personal one: our wiki has an articla "Mutual vs ETF". Mutual funds seem easier in many ways.


Thanks
Rahm



Thank you, BeBH65, so much. I appreciate it.

You are correct regarding the high ER of FBGKX. I had chosen this fund at the beginning when I had no idea about the impact of ER. Over the past 2 years (since I started contributing to the 401k), FBGKX has certainly 'under'-performed the FUSVX (0.045% ER). My overall gains (not per-annum gains) have been less than 4%, where the market has seen so much gains over the past few years.

Therefore, I would like to transfer the amount to the low ER FUSVX and VIMAX (ER 0.08%), but I think that the YTD performance of FBGKX has been quite better than FUSVX (I think ~11% vs ~6%). Therefore, I am getting a bit greedy and I am confused whether it's best to pay the higher ER a bit longer and hopefully offset the past mistake, or it's just best to jump right away. Please tell me if this is a totally flawed plan.

Regarding the MIP bond case, btw, I have no idea what is a 7-day yield.I had just copied from the account. If I didn't misinterpret the numbers, it's performance has been reasonably good in the past.

For the IRA, the contribution that I had mentioned above was for the year 2016. I will still have to make the 2017 contribution. But, I think I'll do it after April.

I can skip the ETFs for now. I will, therefore, have to choose among the following mutual funds: FUSEX (Fidelity500 index fund, ER 0.09%), FSTMX (Total market index fund, ER 0.09%), FNCMX (NASDAQ composite index fund, ER 0.3%), FSUIX (large cap growth index fund, ER 0.21%), FLCDX (large cap value index fund, ER 0.21%), FRXIX (Real estate index fund, ER 0.23%), . Any suggestion among these funds ?

For now, I am willing to take extra risk and be stupid (although, I don't doubt that I might end-up learning a lesson the hard way), and I can choose to buy the bonds with the 2017 IRA contribution.

User avatar
BL
Posts: 7119
Joined: Sun Mar 01, 2009 2:28 pm

Re: Need direction on managing portfolio

Post by BL » Mon Mar 20, 2017 7:15 am

Here are the suggested 3-fund portfolio from fidelity. In 401k, you will have to work with what you have available (from Wiki page: https://www.bogleheads.org/wiki/Three-fund_portfolio)

Fidelity With Fidelity, for example, you could construct a three-fund portfolio using: [note 3]
Fidelity Total Market Index Fund Investor Class (FSTMX) or Premium Class (FSTVX)
Fidelity Total International Index Fund Investor Class (FTIGX) or Premium Class (FTIPX)
Fidelity U. S. Bond Index Fund Investor Class (FBIDX) or Premium Class (FSITX)


Costs matter, and this is the one thing you can control.

The link to Fidelity Freedom INDEX Funds is hard to come by at fidelity, but can be Googled.
Here is a tiny url that should work:
http://tinyurl.com/lw52cv8
or preview the tiny url at:
http://preview.tinyurl.com/lw52cv8
or go to the Finance Buff website and click on the red link there:
https://thefinancebuff.com/fidelity-freedom-index-funds.html
Look for the lower ER (0.15%) to be sure you have it.
(Vanguard is so much nicer and practically all of their funds are low ER. That is the only place I use.)

TFB also has a page of recommended Fidelity index funds that you might like, although there could be some added since he wrote this:
https://thefinancebuff.com/best-index-funds-and-etfs-at-fidelity.html

User avatar
BeBH65
Posts: 817
Joined: Sat Jul 04, 2015 7:28 am

Re: Need direction on managing portfolio

Post by BeBH65 » Mon Mar 20, 2017 8:22 am

Rahm wrote:Thank you, BeBH65, so much. I appreciate it.

You are correct regarding the high ER of FBGKX. I had chosen this fund at the beginning when I had no idea about the impact of ER. Over the past 2 years (since I started contributing to the 401k), FBGKX has certainly 'under'-performed the FUSVX (0.045% ER). My overall gains (not per-annum gains) have been less than 4%, where the market has seen so much gains over the past few years.

Therefore, I would like to transfer the amount to the low ER FUSVX and VIMAX (ER 0.08%), but I think that the YTD performance of FBGKX has been quite better than FUSVX (I think ~11% vs ~6%). Therefore, I am getting a bit greedy and I am confused whether it's best to pay the higher ER a bit longer and hopefully offset the past mistake, or it's just best to jump right away. Please tell me if this is a totally flawed plan.
I would call this "market timing", something that is frowned upon in this forum. :-). Generally we consider that once a decision is taken then it should be implemented ASAP. Remember stocks can drop in a short time. More volatile stocks would drop more. up to you to decide.

Regarding the MIP bond case, btw, I have no idea what is a 7-day yield.I had just copied from the account. If I didn't misinterpret the numbers, it's performance has been reasonably good in the past.

For the IRA, the contribution that I had mentioned above was for the year 2016. I will still have to make the 2017 contribution. But, I think I'll do it after April.

I can skip the ETFs for now. I will, therefore, have to choose among the following mutual funds:
FUSEX (Fidelity500 index fund, ER 0.09%), Very diversified fund, with low ER
FSTMX (Total market index fund, ER 0.09%), Even more diversified fund, with low ER -- my favorite
FNCMX (NASDAQ composite index fund, ER 0.3%), less diversified fund, I think only 100 stocks
FSUIX (large cap growth index fund, ER 0.21%), less diversified fund,
FLCDX (large cap value index fund, ER 0.21%), less diversified fund, some people believe in tilting to Value, some say all the benefit has already been exploited
FRXIX (Real estate index fund, ER 0.23%), REIT is included in the other funds, some people believe in tilting to REIT, some say all the benefit has already been exploited.

Have a look at the following wiki-pages: Three-fund_portfolio with Fidelity funds.

If you do not want bonds or international, then I would go for FSTMX.
.
Any suggestion among these funds ?

For now, I am willing to take extra risk and be stupid (although, I don't doubt that I might end-up learning a lesson the hard way), and I can choose to buy the bonds with the 2017 IRA contribution.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Mon Mar 20, 2017 9:20 am

This is amazing, I've got such insightful advises. In the IRA, I'll just pick the total index fund, and maybe the NASDAQ fund at some point.

For the 401k, I'll give myself precisely one more month and then do the re-adjustment. I think I'll go with what was suggested above. But, I don't think I'll exceed 10% in bonds at this point, and may possibly go with a 100% equity portfolio (in lower ER funds) (because 10% of my portfolio is not much anyways!).

Thank you so much again for the very helpful advises. I truly appreciate the time and thought.

Rahm

Rahm
Posts: 12
Joined: Sat Feb 25, 2017 2:21 am

Re: Need direction on managing portfolio

Post by Rahm » Mon Mar 20, 2017 9:35 am

BL wrote:Here are the suggested 3-fund portfolio from fidelity. In 401k, you will have to work with what you have available (from Wiki page: https://www.bogleheads.org/wiki/Three-fund_portfolio)

Fidelity With Fidelity, for example, you could construct a three-fund portfolio using: [note 3]
Fidelity Total Market Index Fund Investor Class (FSTMX) or Premium Class (FSTVX)
Fidelity Total International Index Fund Investor Class (FTIGX) or Premium Class (FTIPX)
Fidelity U. S. Bond Index Fund Investor Class (FBIDX) or Premium Class (FSITX)


Costs matter, and this is the one thing you can control.

The link to Fidelity Freedom INDEX Funds is hard to come by at fidelity, but can be Googled.
Here is a tiny url that should work:
http://tinyurl.com/lw52cv8
or preview the tiny url at:
http://preview.tinyurl.com/lw52cv8
or go to the Finance Buff website and click on the red link there:
https://thefinancebuff.com/fidelity-freedom-index-funds.html
Look for the lower ER (0.15%) to be sure you have it.
(Vanguard is so much nicer and practically all of their funds are low ER. That is the only place I use.)

TFB also has a page of recommended Fidelity index funds that you might like, although there could be some added since he wrote this:
https://thefinancebuff.com/best-index-funds-and-etfs-at-fidelity.html


Just wanted to share the link I found at Fidelity website. I think this might be of some help to anyone looking to find the Fidelity funds at the same webpage and categorized according to their type.

https://www.fidelity.com/mutual-funds/f ... s/overview

pkcrafter
Posts: 11758
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Need direction on managing portfolio

Post by pkcrafter » Mon Mar 20, 2017 9:46 am

Rahm, the second link I provided does show Freedom Index funds. Scroll down the page. You can't get 100%k stock from them by definition, but you can get 90/10 with freedom index 2060. I'm suggesting this as a possibility until you can get enough in the Roth to use individual funds. $2500 is the min. The TR Index funds are nice because you don't have to manually rebalance them.

Here's Freedom 2060 (FDKLX). It does have more international than you want, so maybe not a good option.

https://fundresearch.fidelity.com/mutua ... /315793695

You still may be able to use individual funds in the Roth because you should view all accounts as part of one portfolio. You might put total international in the Roth since you don't appear to have an option in the 401k.

You can simulate total market with your S&P500 option in the 401k and Fidelity Extended Market Index, FSEMX in the Roth. 80% S&P500 and 20% extended market would equal total market. You could also slightly tilt this to mid/small with 25% extended market.

The only fund you really need in the 401k right now is S&P500, but you could also use Vanguard mid cap index. If you do that, then you would want Fidelity small cap index in the Roth. The whole point here is 1. If you can't yet make your target AA, then start with a Freedom index fund in the Roth. 2. If you can make your target, then use individual funds in the Roth combined with S&P500 in 401k.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Post Reply