Got a little carried away, now stuck...

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jzco
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Got a little carried away, now stuck...

Post by jzco » Fri Dec 08, 2017 12:09 am

Hey Bogleheads. I was doing alright in my Fidelity 401K with the Total Market Index fund, US Bond Index fund, and Total International Index Fund. Since things were going well, I thought, why not take some out of bonds and buy some emerging markets. Then why not buy a Small Cap Index? Why not buy a REIT? Why not try a little Fidelity 4 in 1 fund? So yes, now I have a 7 fund portfolio, all premium class where applicable. I am maxed out for the year on my 401K, so I am trying to figure out what to do after some of my redemption periods have ended. I am honestly thinking about putting 90% in the Fidelity 4 in 1 (why not?) and 10 percent in emerging markets to bolster the low international exposure of the 4 in 1. I know there is a low allocation to bonds in the 4 in 1, but I am not worried about it as I am 35 right now and plan to balance bonds in a couple years. Any thoughts on what to do? Try the 4 in 1? Go back to my 3 fund and take 10% out for emerging markets or small cap? Something else? Thanks.

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Watty
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Re: Got a little carried away, now stuck...

Post by Watty » Fri Dec 08, 2017 12:13 am

Do you have a target date fund with a reasonable expense ratio? If so then why not use that?

jzco
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Joined: Tue May 23, 2017 11:46 pm

Re: Got a little carried away, now stuck...

Post by jzco » Fri Dec 08, 2017 12:21 am

Yes, I use Brokerage Link, so I am not limited to the funds my work has selected. I don't use target funds because I save more than most my age and would prefer to carry more risk for now.

Edit: I should add that my IRA is the Fidelity 2050 fund.

mhalley
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Re: Got a little carried away, now stuck...

Post by mhalley » Fri Dec 08, 2017 12:44 am

Either of the two portfolios is fine, what is not fine is constantly changing the portfolio. I suggest you decide what you want your portfolio to be, then write out an IPS and stick with it.


https://www.bogleheads.org/wiki/Investm ... _statement

Also, you might consider the fidelity 2050 INDEX fund.


https://fundresearch.fidelity.com/mutua ... /315793869

ccieemeritus
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Re: Got a little carried away, now stuck...

Post by ccieemeritus » Fri Dec 08, 2017 1:03 am

To plagiarize someone else on this forum:

“Don’t just do something. Stand there!”

Sometimes it’s hard leaving well enough alone. One way I avoid messing with my portfolios is by reading/posting on Bogleheads instead.

jzco
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Joined: Tue May 23, 2017 11:46 pm

Re: Got a little carried away, now stuck...

Post by jzco » Fri Dec 08, 2017 3:39 am

Haha, I like that, CC. Thanks for the help guys. After looking into it more, maybe it is the right move to just dump everything in 2050. It is just so bleh owning only one fund. But, I guess the shiny new object is what got me into the position I am in now, so probably best to just put it in 2050 and not bother it.

chevca
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Re: Got a little carried away, now stuck...

Post by chevca » Fri Dec 08, 2017 7:32 am

jzco wrote:
Fri Dec 08, 2017 12:09 am
Any thoughts on what to do?
Come up with a plan you will stick with and not tinker. :happy

I went through similar phases when I first got into this stuff... small cap tilt, or not... international, or not... how much in bonds... and so on. I made many changes back and forth in my Roth IRA and 457b. Now I'm about as simple as it gets... think Balanced Index Fund. Not that you need to be that simple, that's just me. But, pick something you will be satisfied with and leave it be.

ddurrett896
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Re: Got a little carried away, now stuck...

Post by ddurrett896 » Fri Dec 08, 2017 8:04 am

jzco wrote:
Fri Dec 08, 2017 12:21 am
I don't use target funds because I save more than most my age and would prefer to carry more risk for now.

Edit: I should add that my IRA is the Fidelity 2050 fund.
If you want more risk, select a target date fund further out.

The problem with adding a little here and a little there, turning a 3 fund into a 4+ fund is that the little you invest really makes no difference at the end of the day. It complicates things and just another fund to grab your attention.

My opinion, expense is top priority. If you have a low expense target date fund, go for it. If you don't, select the stock/bonds that are low expense and buy the remaining in an IRA.

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Watty
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Re: Got a little carried away, now stuck...

Post by Watty » Fri Dec 08, 2017 9:38 am

jzco wrote:
Fri Dec 08, 2017 12:21 am
Yes, I use Brokerage Link, so I am not limited to the funds my work has selected. I don't use target funds because I save more than most my age and would prefer to carry more risk for now.
Few active mutual fund managers can beat a portfolio of a few simple index funds over the long term, and if they do then there is a good chance that it was just by random good luck. They usually have some sort of finance degree from a top university, can work full time managing the fund, have a staff of highly qualified people to help them, and will hear of any developments as they happen, not when they read a news article about days or weeks after it happened.

Beating a target date fund will be a lot harder than it sounds. I am skeptical that even things that you can read about like having small cap value tilt will work out well since that are so widely know now.

You also will not know how well you are doing for 20 years or more since there is a lot of luck involved with shorter term performance.

One compromise might be to put 90 or 95 percent of your retirement money into a target date fund and then pick one other index fund to put the rest of your money in. That way if you do badly it will not hurt you too much.

Just FYI, at Fidelity they have their target date actively managed "Freedom funds" but they also have lower cost "Freedom Index funds" . They sometimes pretty hide the lower cost version on their web site to you have to look for those. :annoyed

dbr
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Re: Got a little carried away, now stuck...

Post by dbr » Fri Dec 08, 2017 10:27 am

Go back to the three fund you started with and stop trying to mess with it. Next sit back and contemplate what is causing you to keep adding funds. A portfolio is supposed to be designed to a purpose and not be a collection of funds. Don't read books where they present "recipes" of more and more funds for the more and more "sophisticated" investor. The three fund portfolio is the most sophisticate one out there.

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Tyler Aspect
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Re: Got a little carried away, now stuck...

Post by Tyler Aspect » Fri Dec 08, 2017 12:32 pm

Three fund portfolio is tried and true approach to retirement investing. You will just have to resist the temptation to bounce all over the place.

Often one of these neat ideas will be the most popular at their return ceiling. By the time you jump in they could be ready to drop to the average range. For example, I bought some REIT early this year. It bounced quite a bit up and down every month, and I ended up selling it off for no gains.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

PVW
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Re: Got a little carried away, now stuck...

Post by PVW » Fri Dec 08, 2017 12:52 pm

Step away from the computer and develop a plan.
https://www.bogleheads.org/wiki/Investm ... _statement

It is easy to get trapped into thinking that investing is so important that it needs constant tending. Generally the opposite is true.

mega317
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Re: Got a little carried away, now stuck...

Post by mega317 » Fri Dec 08, 2017 11:01 pm

jzco wrote:
Fri Dec 08, 2017 3:39 am
It is just so bleh owning only one fund.
I suggest you really examine why you feel that way.

Owning one fund sounds wonderful to me. I don't do it, mostly for tax reasons, but I plan to move that way in retirement.

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