Dividing investments across Fidelity/Vanguard

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krishnam
Posts: 13
Joined: Tue Jul 10, 2018 9:12 am

Dividing investments across Fidelity/Vanguard

Post by krishnam » Wed Jul 11, 2018 9:03 pm

After reading about the three-fund portfolio strategy and asset allocation by effective tax management, I want to make sure whether my understanding of the suggested approach for investment is correct. Let us say there is totally 100K in assets distributed across Fidelity IRA (60K) and Vanguard taxable brokerage account (40K). If I decide on an asset allocation of 80% stocks and 20% bonds, then we have the following:

Total Stock Market Index Fund (64%): 64K
Intl. Total Stock Market Index (16%): 16K
US Bonds Index Fund (20%) : 20K

Based on this, I arrived at the following fund allocations:

Fidelity (IRA):
FSITX (Fidelity US Bond Index Premium): 20K
FSTVX (Fidelity Total Market Index Premium): 40K

Vanguard:
VTIAX (Vanguard Total International Stock Index Fund Admiral Shares): 16K
VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares): 24K

Is the above selection process reasonable?

My funds are randomly distributed across 10-12 funds currently. If I go with the above choice, is it recommended that the re-allocations happen within a short time interval (a day or two)? Or is it better to stretch the process out by periodically moving out funds every month/quarter?

mhalley
Posts: 6318
Joined: Tue Nov 20, 2007 6:02 am

Re: Dividing investments across Fidelity/Vanguard

Post by mhalley » Wed Jul 11, 2018 9:06 pm

Move to your desired portfolio and asset allocation all at once. Nothing is gained by waiting and you are most likely paying higher expenses. This is different than the invest now vs dollar cost averaging question as you are already invested.

krishnam
Posts: 13
Joined: Tue Jul 10, 2018 9:12 am

Re: Dividing investments across Fidelity/Vanguard

Post by krishnam » Wed Jul 11, 2018 9:55 pm

Thanks. Any comments on the selection of funds given above?

Traveller
Posts: 706
Joined: Sat Jun 25, 2011 10:47 am

Re: Dividing investments across Fidelity/Vanguard

Post by Traveller » Wed Jul 11, 2018 10:05 pm

Looks very reasonable to me. :beer

I agree with the prior comment that it's ideal to make the exchanges and be done with it, with the one added consideration of tax impact in your taxable account. Be sure you understand the consequences come tax time.

RickBoglehead
Posts: 1239
Joined: Wed Feb 14, 2018 9:10 am

Re: Dividing investments across Fidelity/Vanguard

Post by RickBoglehead » Thu Jul 12, 2018 7:02 am

I used to own FSITX thinking it the "same" as VBTLX. Then I realized it wasn't.

FSITX : expense ratio of 0.045%
VBTLX: expense ratio of 0.050%

So you should go with the Fidelity fund, right?


As of 6/30, 1, 3, 5, and 10 yr performance: -0.62% 1.63% 2.19% 3.55%

Vanguard: -0.53%, 1.67%, 2.20%, and 3.66%.

Guess lower expense ratio isn't everything. Compare all funds carefully. I am over 99% at Vanguard now.

krishnam
Posts: 13
Joined: Tue Jul 10, 2018 9:12 am

Re: Dividing investments across Fidelity/Vanguard

Post by krishnam » Thu Jul 12, 2018 9:14 am

My choice for FSITX over VBTLX was due to tax-efficiency. I have a Fidelity IRA account vs Vanguard taxable brokerage account and the bond funds are better in a tax efficient account and I can't buy VBTLX from the IRA account. Also, in other posts, the suggestion was to not look at performance numbers. To resolve this, I could obviously rollover my Fidelity IRA to a Vanguard IRA? But is it worth the effort as past performance necessary does not indicate the future performance?

Jack FFR1846
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Joined: Tue Dec 31, 2013 7:05 am

Re: Dividing investments across Fidelity/Vanguard

Post by Jack FFR1846 » Thu Jul 12, 2018 9:22 am

If it were me, I'd buy all 3 funds in the IRA and only total stock in taxable (which is actually what I do).

Any rebalancing is done within the IRA. If the taxable account gets too big, reconsider.
Bogle: Smart Beta is stupid

krishnam
Posts: 13
Joined: Tue Jul 10, 2018 9:12 am

Re: Dividing investments across Fidelity/Vanguard

Post by krishnam » Thu Jul 12, 2018 9:31 am

Jack FFR1846 wrote:
Thu Jul 12, 2018 9:22 am
If it were me, I'd buy all 3 funds in the IRA and only total stock in taxable (which is actually what I do).
This doesn't seem to be consistent with tax-efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... t_accounts

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