Reconsidering my 401k Bond options - thoughts?

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victw
Posts: 72
Joined: Sat Feb 20, 2016 4:07 pm

Reconsidering my 401k Bond options - thoughts?

Post by victw » Sat Oct 07, 2017 3:03 pm

Hi all,

My latest employers 401k options are ok. Not great. I was not enthused with by bond/fixed income options so for the last few years I have elected to make my contributions equity only into the Fidelity Contrafund(FCNTX -50%) and a combination of Fidelity 500 Index(FUSVX) and Fidelity Extended(FSEXV.)

I have a rollover from previous employers that I then use to regular move from Fidelity Total Market (FSITX) to Fidelity US Bond (FSITX.)
Current bond allocation is 24% and I usually move a little extra as the market has done well lately and we are increasing our fixed income allocation - with a possible early retirement in 2-4 years.

Here's the thing - I'm looking regularly and my 401k contributions happen twice a month. So I've got my hand in the pot at least twice a month. I'm appreciating the thoughts that it is not benign to be so involved and with the groups help I'd like to reconsider my 401 bond/fixed income options. I could then set the contribution allocation and be a little less involved.

The last column for each is the fee.
MIP CL 1 09/07/1989 7 day yield as of 09/30/2017 1.31% Bond Investments Stable Value 0.77%
FIDELITY GOVT INCOME (FGOVX) 04/04/1979 Bond Investments Income 0.45%
PIMCO TOT RETURN ADM (PTRAX) 05/11/1987 Bond Investments Income 0.76%
FID GOVT MMKT (SPAXX) 02/05/1990 7 day yield as of 09/30/2017 0.67% Short-Term Investments N/A 0.42%

Any thoughts on the above. I've been interested in the stable value fund - but the .77% fee seems high.

Just to be clear - I'm not a panic mover. Past experience tells me that my big behavioral concerns are the
1) The market tanking and I check out.
2) I don't sell my losers - yep I bought some Chipotle when it hit the news. Just a tiny percentage of my overall portfolio.
3) I'm concerned about selling the winners too soon - in this case that means moving to bonds too fast.

I'm rereading some of the recommended books on behavioral economics. Particularly with the idea in mind of how the dangers might shift when moving from the accumulating to decumulating stages of life. A separate topic - but related.

Thanks.
Vic

Edited - because I wasn't done - and hit submit rather than preview.

livesoft
Posts: 62776
Joined: Thu Mar 01, 2007 8:00 pm

Re: Reconsidering my 401k Bond options - thoughts?

Post by livesoft » Sat Oct 07, 2017 3:08 pm

The 1.31% yield of the SV fund is after the 0.77% expenses.

I don't think i would use any of those fixed income options in your 401(k) plan myself.

Can you automate exchanges in your rollover IRA so that things do what you want, but without you being involved?

More specifically automate this:
401(k) contrib to S&P500 and Extended Market
Rollover exchange: Total Market to FSITX in some amount (24% of 401(k) contrib?) or other fraction of your 401(k) contrib that you have worked out.
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Valuethinker
Posts: 36317
Joined: Fri May 11, 2007 11:07 am

Re: Reconsidering my 401k Bond options - thoughts?

Post by Valuethinker » Sat Oct 07, 2017 3:18 pm

victw wrote:
Sat Oct 07, 2017 3:03 pm
Hi all,

My latest employers 401k options are ok. Not great. I was not enthused with by bond/fixed income options so for the last few years I have elected to make my contributions equity only into the Fidelity Contrafund(FCNTX -50%) and a combination of Fidelity 500 Index(FUSVX) and Fidelity Extended(FSEXV.)

I have a rollover from previous employers that I then use to regular move from Fidelity Total Market (FSITX) to Fidelity US Bond (FSITX.)
Current bond allocation is 24% and I usually move a little extra as the market has done well lately and we are increasing our fixed income allocation - with a possible early retirement in 2-4 years.

Here's the thing - I'm looking regularly and my 401k contributions happen twice a month. So I've got my hand in the pot at least twice a month. I'm appreciating the thoughts that it is not benign to be so involved and with the groups help I'd like to reconsider my 401 bond/fixed income options. I could then set the contribution allocation and be a little less involved.

The last column for each is the fee.
MIP CL 1 09/07/1989 7 day yield as of 09/30/2017 1.31% Bond Investments Stable Value 0.77%
FIDELITY GOVT INCOME (FGOVX) 04/04/1979 Bond Investments Income 0.45%
PIMCO TOT RETURN ADM (PTRAX) 05/11/1987 Bond Investments Income 0.76%
FID GOVT MMKT (SPAXX) 02/05/1990 7 day yield as of 09/30/2017 0.67% Short-Term Investments N/A 0.42%

Any thoughts on the above. I've been interested in the stable value fund - but the .77% fee seems high.

Just to be clear - I'm not a panic mover. Past experience tells me that my big behavioral concerns are the
1) The market tanking and I check out.
2) I don't sell my losers - yep I bought some Chipotle when it hit the news. Just a tiny percentage of my overall portfolio.
3) I'm concerned about selling the winners too soon - in this case that means moving to bonds too fast.

I'm rereading some of the recommended books on behavioral economics. Particularly with the idea in mind of how the dangers might shift when moving from the accumulating to decumulating stages of life. A separate topic - but related.

Thanks.
Vic

Edited - because I wasn't done - and hit submit rather than preview.
Assuming that there is nothing else you could do I suggest Fidelity Government income and be done with it?

Unless very big risks are taken one govt bond fund will perform much like another. And will have very much better performance than stocks in a bear market. See nisiprius posts on choosing a bond fund. The real choice is bonds v equities and secondarily us govt bond v others NOT which bond fund.

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