Low cost index funds/Fidelity

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neveragain
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Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 8:13 pm

What are some of the lowest cost index funds to invest in at Fidelity? And generally what is a good price for an index fund?

shariron
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Re: Low cost index funds/Fidelity

Post by shariron » Sat Jul 15, 2017 8:47 pm

Fidelity low cost index funds:
https://www.bogleheads.org/wiki/Fidelity
You can open an account online, via mail, or via phone & pay nothing but the cost of the fund's shares

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TD2626
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Re: Low cost index funds/Fidelity

Post by TD2626 » Sat Jul 15, 2017 8:56 pm

A "good expense ratio" depends on what the fund is - for example, international costs more than domestic, etc.

Fidelity's main index funds (their closest equivalents to Vanguard's total bond, total stock, etc) are generally competitive with Vanguard and Schwab on cost.

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 9:43 pm

TD2626 wrote:A "good expense ratio" depends on what the fund is - for example, international costs more than domestic, etc.
.
I didn't know that. I'd like to have 10% of my portfolio in international index funds.

I am interested in Fidelity index fund with a 0.050% expense ratio. Is this good (low price) and is expense ratio the only consideration?

radiowave
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Re: Low cost index funds/Fidelity

Post by radiowave » Sat Jul 15, 2017 10:00 pm

neveragain wrote:What are some of the lowest cost index funds to invest in at Fidelity? And generally what is a good price for an index fund?
FSTVX Fidelity Total Market Index Fund - Premium Class ER 0.045%
FSIVX Fidelity International Index Fund - Premium Class ER 0.08%
FSITX Fidelity U.S. Bond Index Fund - Premium Class ER 0.05%
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 10:10 pm

Those are on my list.

Does anyone have more than one index fund in their IRA? Or is that really necessary? I think I don't want any mutual funds anymore. For my IRA, I will stick with index funds and bond funds. Maybe a 70/30 mix.

mcraepat9
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Re: Low cost index funds/Fidelity

Post by mcraepat9 » Sat Jul 15, 2017 10:13 pm

neveragain wrote:Those are on my list.

Does anyone have more than one index fund in their IRA? Or is that really necessary? I think I don't want any mutual funds anymore. For my IRA, I will stick with index funds and bond funds. Maybe a 70/30 mix.
1. The asset allocation you set for yourself should be across all your accounts (401k, IRA, taxable). Whether you need more than one fund in there depends on your asset allocation and investment options in your 401k.
2. What is wrong with mutual funds? The three funds listed above are stock/bond index mutual funds.
Amateur investors are not cool-headed logicians.

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 10:25 pm

I honestly don't understand the difference between mutual funds and index funds. I'm pretty ignorant that is why I got in with Edward Jones. Just being honest here.

gkaplan
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Re: Low cost index funds/Fidelity

Post by gkaplan » Sat Jul 15, 2017 10:34 pm

neveragain wrote:I honestly don't understand the difference between mutual funds and index funds. I'm pretty ignorant that is why I got in with Edward Jones. Just being honest here.
Index funds are mutual funds. Mutual funds aren't necessarily index funds.
Gordon

2pedals
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Re: Low cost index funds/Fidelity

Post by 2pedals » Sat Jul 15, 2017 10:40 pm

neveragain wrote:
TD2626 wrote:A "good expense ratio" depends on what the fund is - for example, international costs more than domestic, etc.
.
I didn't know that. I'd like to have 10% of my portfolio in international index funds.

I am interested in Fidelity index fund with a 0.050% expense ratio. Is this good (low price) and is expense ratio the only consideration?
An ER less than 0.10% is very good. Any fund with an ER less than 0.10% is a candidate for consideration. Say you have $10,000 and you invested it management takes less than 0.001 times every year (or < $10 / year). Most well run US total stock market funds are less 0.10%. For example if you have Fidelity Total Market Index Fund - Investor Class (for initial investments < 10,000) your cost is 0.09%. Say you invest 5,000 cost is 5000*.0009 = $4.5/year. Say you invest in the Fidelity Total Market Index Fund - Premium Class (for investments > 10,000) your cost is 0.045%. Say you invest 50,000 your cost is 50,000 * .00045 = $22.50/year. So if think 0.045% versus 0.035% makes much difference, not really, 50,000 * .00035 = $17.50/year. So with that $5.00 you might be able to get a happy meal with that.
Last edited by 2pedals on Sun Jul 16, 2017 8:42 am, edited 2 times in total.

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 10:43 pm

gkaplan wrote:
neveragain wrote:I honestly don't understand the difference between mutual funds and index funds. I'm pretty ignorant that is why I got in with Edward Jones. Just being honest here.
Index funds are mutual funds. Mutual funds aren't necessarily index funds.

Ok. Thanks.

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 10:46 pm

2pedals wrote:
neveragain wrote:
TD2626 wrote:A "good expense ratio" depends on what the fund is - for example, international costs more than domestic, etc.
.
I didn't know that. I'd like to have 10% of my portfolio in international index funds.

I am interested in Fidelity index fund with a 0.050% expense ratio. Is this good (low price) and is expense ratio the only consideration?
An ER less than 0.10% is very good. Any fund with an ER less than 0.10 is a candidate for consideration. Say you have $10,000 and you invested it management takes less than 0.001 every year (or < $10 / year). Most well run US total stock market funds are less 0.10%. For example if you have Fidelity Total Market Index Fund - Investor Class (for initial investments < 10,000) your cost is 0.09%. Say you invest 5,000 cost is 5000*.0009 = $4.5/year. Say you invest in the Fidelity Total Market Index Fund - Premium Class (for investments > 10,000) your cost is 0.045%. Say you invest 50,000 your cost is 50,000 * .00045 = $22.50/year. So if think 0.045% versus 0.035% makes much difference, not really, 50,000 * .00035 = $17.50/year. So with that $5.00 you might be able to get a happy meal with that.
OK. The Bogle book recommends lowest possible funds. I don't want anymore high expense ratios or loading fees. All of the Fidelity funds I'm looking at have lower than 0.10% expense ratios. I've heard Fidelity can sometimes push more expensive funds so I plan to say 'No' to those.

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Taco Knight
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Re: Low cost index funds/Fidelity

Post by Taco Knight » Sat Jul 15, 2017 10:46 pm

neveragain wrote:I honestly don't understand the difference between mutual funds and index funds. I'm pretty ignorant that is why I got in with Edward Jones. Just being honest here.
While gkaplan is correct, a good way to think about it is that "mutual funds" as a term is generally a managed account, even if not actively managed, the stocks were all chosen for an express purpose. Either thematically or for diversification, risk management/hedging, or just the 20 or 100 or 38 equities some finance dude or dudess decided on at that moment.

Index funds, are by necessity, a broad stroke collection of all the stocks of chosen class. I.e. total market, total international, total Europe, total mid cap, etc.

They're both "funds" of course, meaning you're not buying individual shares of each stock, but shares of a fund which itself owns the actual stocks, and in proportion. So you might own 100 shares of an index fund and get 1 or 2 shares of say Google, but have 1/8 or 1/16 of some other S&P500s and tiny fractions of small firms.

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 10:51 pm

Taco Knight wrote:
neveragain wrote:I honestly don't understand the difference between mutual funds and index funds. I'm pretty ignorant that is why I got in with Edward Jones. Just being honest here.
While gkaplan is correct, a good way to think about it is that "mutual funds" as a term is generally a managed account, even if not actively managed, the stocks were all chosen for an express purpose. Either thematically or for diversification, risk management/hedging, or just the 20 or 100 or 38 equities some finance dude or dudess decided on at that moment.
.
OK. I got it confused with actively managed funds, which is what I don't want anymore.

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Sat Jul 15, 2017 10:54 pm

The expense ratios in my EJ IRA are much higher. Here's what I have:

GTDYX 1.17%

JHBIX .56%

JYHIX .71%

PRTXX .44%

Way higher than the Fidelity index funds I'm looking at now.

Also, those funds are just a small sample of what's in the IRAs. EJ likes to diversify a lot but put you in tons of different funds which I do not feel are necessary.

DippityDoo
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Re: Low cost index funds/Fidelity

Post by DippityDoo » Sun Jul 16, 2017 1:00 am

neveragain wrote: is expense ratio the only consideration?
No, not in my opinion. I'm willing to pay a little higher expense ratio for a target date fund that gets more conservative over time (more bonds, fewer stocks) than having to tinker with it myself with multiple funds with slightly lower ERs. For example, FQIFX (or a different target date index fund...be sure you search for "freedom index fund" not simply "freedom fund" if you're interested) has an allocation close to your desired 70/30. But it has a higher international stock investment than you're looking for. Still, it's an example of the kind of fund I'd buy with a higher ER for the sake of simplicity and reduced likelihood of errors due to tinkering on my own. It's the only kind of managed fund I'm likely to buy and it's a much lower ER than anything I had at EJ.

FQIFX (.15 ER)
https://fundresearch.fidelity.com/mutua ... /315793604

Another is FFNOX, Fidelity's 4-in-one index fund, but again it has a higher international investment than you desire. It's another example of the type of fund I'm willing to pay more for in order to keep things simple. It can be paired with a bond fund to increase overall bond allocation and make a simple 2 fund portfolio.

FFNOX (.11 ER)
https://fundresearch.fidelity.com/mutua ... /31634R109

Hope you're soon free of EJ's high fees and high ER funds! :happy

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oldcomputerguy
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Re: Low cost index funds/Fidelity

Post by oldcomputerguy » Sun Jul 16, 2017 5:32 am

neveragain wrote:I honestly don't understand the difference between mutual funds and index funds. I'm pretty ignorant that is why I got in with Edward Jones. Just being honest here.
You're not alone in being confused over this.

(*me slips into pedantic mode*)

Very simply put, there are basically two types of "funds" (i.e. collective investment vehicles): mutual funds and exchange-traded funds ("ETFs"). They are structured differently, and have different trading characteristics.

In a mutual fund, you hand your money to the mutual fund company, and they hand you shares of the fund. This is not done on the stock exchange, you're dealing directly with the fund company. With an ETF, it's a bit more complicated, but I like to think of an ETF as being a company that invests in underlying investments and holds them itself, with the shares of stock of that company traded on the stock market like any other stock (which is where the "exchange-traded" in the name comes from).

With a mutual fund, you're more closely invested in the actual underlying shares, so the price of a share of the mutual fund is pretty much directly controlled by the daily prices of the fund's holdings. That's why the price of a mutual fund share is updated only after the market closes; until the prices of the underlying shares are known, it's impossible to calculate the price of a share of the fund. With ETFs, given that you're dealing with shares of the "holding company" rather than with the fund's underlying shares, there's a disconnect that makes the shares to an extent independent of the prices of the underlying securities, so the price can update throughout the day like any other stock, and can vary slightly (or not so slightly) from the value of the underlying shares. Shares of an ETF which are valued more highly than the underlying stock shares are said to be trading at a "premium", while those trading at a price lower than the underlying shares are said to be trading at a "discount".

The above refers just to the organization and trading characteristics of the funds. Another distinction between investment funds (both mutual funds and exchange-traded funds) is the nature of their holdings.

Each type of fund (mutual fund and exchange-traded fund) trades in securities described in the Prospectus. Basically the Prospectus describes what the fund is allowed to invest in. The term "index fund" just means that the fund invests mainly (or solely) in securities that are included in some defined list (or "index"), such as the S&P 500, the Russell 1000, the MSCI Europe/Asia/Far-East ("EAFE"), and so on. Funds which are not "index" funds invest in securities chosen by their fund manager, which means that the fund shareholders have to pay the fund manager to pick and choose investments for them. This drives up the cost of owning the fund.

Given this, it's possible to have both mutual funds and ETFs that are not "index funds", and it's possible to have both mutual funds and ETFs that are "index funds".

Hope this helps.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

pkcrafter
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Re: Low cost index funds/Fidelity

Post by pkcrafter » Sun Jul 16, 2017 8:53 am

neveragain, are you planning to move out of EJ?

Fidelity is a good choice, but they might suggest you use their management or higher cost funds, but you don't have to. The index funds are excellent.

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.

epictetus
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Re: Low cost index funds/Fidelity

Post by epictetus » Sun Jul 16, 2017 2:26 pm

here is a link to the info page on this site re: using Boglehead approach with Fidelity index funds:

https://www.bogleheads.org/wiki/Fidelity

if you stick with the index funds you will be fine at Fidelity.

any reason you are moving to Fidelity from EJ instead of to Vanguard?
Focus on what you can control

neveragain
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Re: Low cost index funds/Fidelity

Post by neveragain » Mon Jul 17, 2017 10:55 pm

pkcrafter wrote:neveragain, are you planning to move out of EJ?

Fidelity is a good choice, but they might suggest you use their management or higher cost funds, but you don't have to. The index funds are excellent.

Paul
I went to Fidelity today. The person was informative and helpful. No sales pitches. I started the process to transfer my IRA out of Edward Jones, into Fidelity. I must say,so far I have been very impressed with Fidelity's customer service! I don't think I could ever go back to Vanguard now or any other.

pkcrafter
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Re: Low cost index funds/Fidelity

Post by pkcrafter » Mon Jul 17, 2017 11:09 pm

Glad to see things are working out for you. You are on the right track.

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.

DippityDoo
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Re: Low cost index funds/Fidelity

Post by DippityDoo » Mon Jul 17, 2017 11:16 pm

Congrats, neveragain! My experience of Fidelity was the same. I hope you'll update regarding your fund choices.

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