Paralysis by analysis

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cap999
Posts: 2
Joined: Thu Nov 01, 2018 8:58 am

Paralysis by analysis

Post by cap999 » Thu Nov 01, 2018 1:25 pm

Hi and greetings. Been reading and lurking for awhile and could use some guidance. I'm in the process of simplifying my portfolio. I set most of this up many years ago and I'm a "maybe look once a year" type of investor. Gained some knowledge from this awesome site, and got rid of some high expense ratio, actively managed funds and I'm TRYING to get down to a 3 or 4 funds portfolio. Just turned 50 and steer toward and aggressive mix.

I'm like a stick in the mud in that every time I try to get down to 3 or 4 index funds I start taking a deep dive, looking at past performance, current market conditions and... I walk away from it. I'm trying to be a perfectionist which is definitely not the right approach. Challenges that I'm looking to address:
- Sitting on the cash in the IRA due to getting rid of some funds. How best to put that to work?
- I'm stuck on how best to split things up? Mirror 3 or 4 index funds in the 3 accounts or split the weighting between them? I've got the most flexibility with the IRA in that I'm not limited to fund offerings like I am with the 401k. The 401k has 27 offerings (listed below).
- Swapping out funds that have treated me well (think Contra and OTC) with index funds. I get stuck on the performance versus expense ratio play...

Retirement portfolio at Fidelity looks like this... Any and all advice, thoughts, critiques are appreciated.

ROTH % of total Expense Ratio
DVY ISHARES SELECT DIVIDEND ETF  0.14% 0.390%
ILF ISHARES LATIN AMERICA 40 ETF  0.15% 0.480%

ROLLOVER IRA % of total Expense Ratio
FDRXX FIDELITY GOVERNMENT CASH RESERVES  7.29% 0
FLPSX FIDELITY LOW PRICED STOCK  2.66% 0.680%
FOCPX FIDELITY OTC PORT  3.35% 0.810%
FUSVX FIDELITY 500 INDEX PREMIUM CLASS  6.11% 0.015%
FZROX FIDELITY ZERO TOTAL MARKET INDEX  2.69% 0.000%


401K % of total Expense Ratio
FCNTX FID CONTRAFUND 15.24% 0.74%
FSTVX FID TOT MKT IDX PR  38.64% 0.02%
FSPSX FID INTL INDEX IPR 7.80% 0.02%
FXNAX FID US BOND IDX 15.95% 0.04%

The 401k has 27 fund offerings.

 FID CONTRAFUND (FCNTX)
 FID TOT MKT IDX IPR (FSKAX)
MFS VALUE R6 (MEIKX)
FID EXT MKT IDX IPR (FSMAX)
HARTFORD MIDCAP R5 (HFMTX)
TRP MID CAP VALUE (TRMCX)
TCHSTN SMALL CO Y (SIGWX)
FID DIVERSIFD INTL K (FDIKX)
 FID INTL INDEX IPR (FSPSX)
 FID BALANCED (FBALX)
VANG TARGET RET 2015 (VTXVX)
VANG TARGET RET 2020 (VTWNX)
VANG TARGET RET 2025 (VTTVX)
VANG TARGET RET 2030 (VTHRX)
VANG TARGET RET 2035 (VTTHX)
VANG TARGET RET 2040 (VFORX)
VANG TARGET RET 2045 (VTIVX)
VANG TARGET RET 2050 (VFIFX)
VANG TARGET RET 2055 (VFFVX)
VANG TARGET RET 2060 (VTTSX)
VANG TARGET RET 2065 (VLXVX)
VANG TARGET RET INC (VTINX)
MIP CL 109/07/19897 day yield as of 10/31/2018  
 FID US BOND IDX IPR (FXNAX)
TMPL GLOBAL BOND ADV (TGBAX)
VANG INFL PROT ADM (VAIPX)

Woodshark
Posts: 413
Joined: Fri Jan 07, 2011 4:09 pm

Re: Paralysis by analysis

Post by Woodshark » Thu Nov 01, 2018 5:40 pm

I can't give you specific advice but remember the saying "Perfect is the enemy of good". You generally do more damage trying to chase the perfect porfolio that include the current "Perfect funds" than if you just choose a classic three fund portfolio with an asset allowcation that works for you and stick with it.

jebmke
Posts: 8459
Joined: Thu Apr 05, 2007 2:44 pm

Re: Paralysis by analysis

Post by jebmke » Thu Nov 01, 2018 5:46 pm

FSTVX FID TOT MKT IDX PR 38.64% 0.02%
FSPSX FID INTL INDEX IPR 7.80% 0.02%
FXNAX FID US BOND IDX 15.95% 0.04%
why not just use these three; ignore historical performance unless you have a time machine and can go back and invest in the winners.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Duckie
Posts: 6067
Joined: Thu Mar 08, 2007 2:55 pm

Re: Paralysis by analysis

Post by Duckie » Thu Nov 01, 2018 6:01 pm

cap999, welcome to the forum.
cap999 wrote:Sitting on the cash in the IRA due to getting rid of some funds. How best to put that to work?
See below.
I'm stuck on how best to split things up? Mirror 3 or 4 index funds in the 3 accounts or split the weighting between them?
Don't mirror. Pick the best options in each account and avoid bonds in the Roth IRA.
Swapping out funds that have treated me well (think Contra and OTC) with index funds. I get stuck on the performance versus expense ratio play...
Quit looking at the performance. Quit playing.
The 401k has 27 fund offerings.
The best options are:
  • FID TOT MKT IDX IPR (FSKAX) -- Complete US stocks
  • FID INTL INDEX IPR (FSPSX) -- Developed markets, 75% of international stocks
  • FID US BOND IDX IPR (FXNAX) -- US bonds
Any and all advice, thoughts, critiques are appreciated.
You are age 50 with a current AA of roughly 69% US stocks, 8% international stocks, and 23% bonds/cash. The following example has an AA of 50% US stocks, 20% international stocks, and 30% bonds. You could have:

401k at Fidelity-- 78%
48% (FSKAX) Fidelity Total Market Index Fund (0.02%)
30% (FXNAX) Fidelity U.S. Bond Index Fund (0.04%)

Rollover IRA at Fidelity -- 22%
2% (FSKAX) Fidelity Total Market Index Fund (0.015%)
20% (FTIHX) Fidelity Total International Index Fund (0.06%)

Roth IRA at Fidelity -- <1%
<1% (FSKAX) Fidelity Total Market Index Fund (0.015%)

My comments:
  • This puts all the bonds in the 401k because it's pre-tax and there's room.
  • This puts all the international in the Rollover IRA because the 401k has limited international options. At some point if the 401k and Roth IRA grow but the Rollover IRA does not you'll need to add international to the 401k and maybe Roth IRA.
  • This fills in the rest with US stocks.
Something to think about.

cap999
Posts: 2
Joined: Thu Nov 01, 2018 8:58 am

Re: Paralysis by analysis

Post by cap999 » Fri Nov 02, 2018 2:46 pm

All great points. Thank you. The perfectionist in me is definitely in the way.

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