Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
LostSneakers
Posts: 3
Joined: Thu Dec 06, 2018 1:04 pm

Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by LostSneakers » Thu Dec 06, 2018 1:51 pm

I've had a Roth IRA with Vanguard for a few years and want to transfer all my money from a Fidelity Roth IRA into it. I've been reading articles about which Vanguard funds are the best to invest in because I figured I'd pick some new ones when transferring the money over. The only suggestion I've seen that seems to make sense is to invest in Total Bond Market (VBMFX) (I'm 30, and see suggestions that my portfolio should be 10-30% bonds). Otherwise I'm just agonizing over each fund and getting anxious (money matters are super stressful to me since I've never had a lot of it).

My current allocation is below. I was figuring I'd just add the Total Bond Market and distribute the rest among my current funds. Does this seem okay, or do you guys have suggestions for a new fund I should add? (Or other suggestions?)

Vanguard Small Cap Index Fund (NAESX) 9.78%
Vanguard 500 Index Fund (VFINX) 23.67%
Vanguard Health Care Fund (VGHCX) 15.52 %
Vanguard Total International Stock Index Fund (VGTSX) 10.03%
Vanguard Mid-Cap Growth Fund (VMGRX) 17.25%
Vanguard US Growth Fund (VWUSX) 23.28%

Thank you for any input! I greatly appreciate it since I feel like I always do the wrong thing no matter how much I try to research.

megabad
Posts: 828
Joined: Fri Jun 01, 2018 4:00 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by megabad » Thu Dec 06, 2018 2:23 pm

LostSneakers wrote:
Thu Dec 06, 2018 1:51 pm
I've had a Roth IRA with Vanguard for a few years and want to transfer all my money from a Fidelity Roth IRA into it. I've been reading articles about which Vanguard funds are the best to invest in because I figured I'd pick some new ones when transferring the money over. The only suggestion I've seen that seems to make sense is to invest in Total Bond Market (VBMFX) (I'm 30, and see suggestions that my portfolio should be 10-30% bonds). Otherwise I'm just agonizing over each fund and getting anxious (money matters are super stressful to me since I've never had a lot of it).

My current allocation is below. I was figuring I'd just add the Total Bond Market and distribute the rest among my current funds. Does this seem okay, or do you guys have suggestions for a new fund I should add? (Or other suggestions?)

Vanguard Small Cap Index Fund (NAESX) 9.78%
Vanguard 500 Index Fund (VFINX) 23.67%
Vanguard Health Care Fund (VGHCX) 15.52 %
Vanguard Total International Stock Index Fund (VGTSX) 10.03%
Vanguard Mid-Cap Growth Fund (VMGRX) 17.25%
Vanguard US Growth Fund (VWUSX) 23.28%

Thank you for any input! I greatly appreciate it since I feel like I always do the wrong thing no matter how much I try to research.
Welcome! What do you think about your portfolio? Are you happy with it?

I see that you have chosen several active funds and have a strong growth tilt? Was this your intent? Active funds will typically charge somewhat higher expense ratios than index funds (but Vanguard's active funds can still be fairly low expense). Is this extra expense worth it for you? I personally lean more toward index funds (as does much of the forum as this is a core philosophy here) but this is a decision that you will need to make for yourself.

Is this your only investment account? If not, posting more about your situation might help get a clear picture (for you and for any forum tipsters). An accepted format is discussed here: viewtopic.php?f=1&t=6212

User avatar
FiveK
Posts: 5864
Joined: Sun Mar 16, 2014 2:43 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by FiveK » Fri Dec 07, 2018 6:29 am

LostSneakers wrote:
Thu Dec 06, 2018 1:51 pm
Otherwise I'm just agonizing over each fund and getting anxious (money matters are super stressful to me since I've never had a lot of it).
In that case, simplicity may be your friend.

E.g., pick the one fund among the Vanguard LifeStrategy Funds that best matches your desired asset allocation and be done.

LostSneakers
Posts: 3
Joined: Thu Dec 06, 2018 1:04 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by LostSneakers » Fri Dec 07, 2018 6:02 pm

megabad wrote:
Thu Dec 06, 2018 2:23 pm

Welcome! What do you think about your portfolio? Are you happy with it?

I see that you have chosen several active funds and have a strong growth tilt? Was this your intent? Active funds will typically charge somewhat higher expense ratios than index funds (but Vanguard's active funds can still be fairly low expense). Is this extra expense worth it for you? I personally lean more toward index funds (as does much of the forum as this is a core philosophy here) but this is a decision that you will need to make for yourself.

Is this your only investment account? If not, posting more about your situation might help get a clear picture (for you and for any forum tipsters). An accepted format is discussed here: viewtopic.php?f=1&t=6212
The Vanguard Roth IRA and the Fidelity Roth IRA are my only investment accounts.

I really don't know enough about investing to tell if I should be happy with my portfolio or if it's actually really bad. :/ I have reasons for picking each fund, but I not sure if they make sense. Like, I'm under the impression that it's good to have some high-cap and mid-cap funds, so I got the 500 Index and the Mid-Cap Growth fund. Small-cap funds are risky but can have good returns, so I got the Small Cap fund and just put less money in it. I read that you should have a bit of international stocks for times when the US market drops, so I put a little in the Total International Stock index. I got the Health Care fund because I have various medical conditions myself and it seems like health care stocks can only go up. I got US Growth because, sometime around the end of last year, my brother told me it tripled his investment (of course the day after I bought it there was a huge drop in the stock market).

I do like index funds and have read about how they perform well over time, which is why I have some. I see that Admiral funds are now available at a lower starting minimum, so I assume it would be better to switch my funds to their Admiral equivalents (like, there's a Mid-Cap Growth Index Fund Admiral)? I wanted the Health Care and Technology index funds, but the minimum investments were $100k!

As far as growth tilt, I googled it and that's a bit over my head.
FiveK wrote:
Fri Dec 07, 2018 6:29 am
LostSneakers wrote:
Thu Dec 06, 2018 1:51 pm
Otherwise I'm just agonizing over each fund and getting anxious (money matters are super stressful to me since I've never had a lot of it).
In that case, simplicity may be your friend.

E.g., pick the one fund among the Vanguard LifeStrategy Funds that best matches your desired asset allocation and be done.
Is the LifeStrategy fund like the target retirement funds? I had read somewhere that the target retirement funds have a much lower return than if you pick some good funds yourself. (I actually had the Fidelity target retirement fund for two years and it really didn't seem like it did well at all compared to my Vanguard account.)

User avatar
FiveK
Posts: 5864
Joined: Sun Mar 16, 2014 2:43 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by FiveK » Fri Dec 07, 2018 6:14 pm

LostSneakers wrote:
Fri Dec 07, 2018 6:02 pm
FiveK wrote:
Fri Dec 07, 2018 6:29 am
LostSneakers wrote:
Thu Dec 06, 2018 1:51 pm
Otherwise I'm just agonizing over each fund and getting anxious (money matters are super stressful to me since I've never had a lot of it).
In that case, simplicity may be your friend.

E.g., pick the one fund among the Vanguard LifeStrategy Funds that best matches your desired asset allocation and be done.
Is the LifeStrategy fund like the target retirement funds?
Somewhat. Follow those links to see for yourself.
I had read somewhere that the target retirement funds have a much lower return than if you pick some good funds yourself.
Sure. And the target retirement funds have a much higher return than if you pick some bad funds yourself.
(I actually had the Fidelity target retirement fund for two years and it really didn't seem like it did well at all compared to my Vanguard account.)
Perhaps three things:
1) Two years is too short for a good comparison. See Callan periodic table of investment returns - Bogleheads.
2) Apples vs. oranges. What funds were in the TRF vs. what funds were in the Vanguard account?
3) Vanguard's Life Strategy and TRFs will have a slightly lower return compared with you buying the underlying funds yourself. That is the small price you pay for letting them to all the rebalancing, etc.

User avatar
BL
Posts: 8458
Joined: Sun Mar 01, 2009 2:28 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by BL » Fri Dec 07, 2018 6:56 pm

Here is a great little PDF to get you started. The 3-fund portfolio (search for page in Wiki) is the investment of choice for many Bogleheads.
https://www.etf.com/docs/IfYouCan.pdf

The V. Life Strategy and Target date funds are similar to the 3-fund, with the addition of an international bond. F. has two target date groups, only one is index funds, so you may have looked at unrelated (and more expensive) Target fund.

Total Stock Market
total International Stock Market
Total bond Market

the above are all you need: low-ER, diversified, simple.
I am not saying you have bad funds, as most V. funds are fairly low-cost and decent funds.

pkcrafter
Posts: 13137
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by pkcrafter » Fri Dec 07, 2018 7:37 pm

Otherwise I'm just agonizing over each fund and getting anxious (money matters are super stressful to me since I've never had a lot of it).
This statement does not encourage/suggest 80% stocks, at least not for now.

Take a look at these allocations and max loss.

https://personal.vanguard.com/us/insigh ... llocations


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.

drzzzzz
Posts: 274
Joined: Sat Sep 22, 2012 9:56 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by drzzzzz » Fri Dec 07, 2018 8:10 pm

I don't think your choices are bad and cover the span of the market with a tilt toward healthcare, but what you might want to also consider is how you would react if your account drops by 30 or 50 % since you have all stock funds listed and you give the impression that either money is tighter or you are anxious about the account choices. You might want to add some bonds or a cash money market account (which is at least now paying more than 2%). You are young so you can easily tolerate a drop in your account, but try to decide how that would make you feel and possibly diversify with bonds/cash which will help cushion the eventual market fall; of course bonds/cash also mean that your account won't grow as quickly when the markets are going up, but you might sleep better at night. At some point, the market will drop, this could be the start of it or could be next year or the year after, but it will happen.

LostSneakers
Posts: 3
Joined: Thu Dec 06, 2018 1:04 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by LostSneakers » Sun Dec 09, 2018 2:51 pm

FiveK wrote:
Fri Dec 07, 2018 6:14 pm
LostSneakers wrote:
Fri Dec 07, 2018 6:02 pm

Is the LifeStrategy fund like the target retirement funds?
Somewhat. Follow those links to see for yourself.
I had read somewhere that the target retirement funds have a much lower return than if you pick some good funds yourself.
Sure. And the target retirement funds have a much higher return than if you pick some bad funds yourself.
(I actually had the Fidelity target retirement fund for two years and it really didn't seem like it did well at all compared to my Vanguard account.)
Perhaps three things:
1) Two years is too short for a good comparison. See Callan periodic table of investment returns - Bogleheads.
2) Apples vs. oranges. What funds were in the TRF vs. what funds were in the Vanguard account?
3) Vanguard's Life Strategy and TRFs will have a slightly lower return compared with you buying the underlying funds yourself. That is the small price you pay for letting them to all the rebalancing, etc.
I understand that the Life Strategy funds are logical for people who are anxious about making their own fund choices. At the same time, it's a huge change from what I was doing (aside from the two years I had a TRF with Fidelity) so putting all my money into one fund seems scary right now.

The Fidelity account is 40% of my total retirement savings. Would it make sense to just put all that in the Life Strategy Growth fund? Or would that be stupid since there would be overlap? It has the Total International Stock Index, which I already have, and the Total Stock Market Index, which I assume is equivalent to the Small-Cap, Mid-Cap and US-Growth (large-cap) I have, so it seems like the only major difference is adding bonds.

pkcrafter wrote:
Fri Dec 07, 2018 7:37 pm
Otherwise I'm just agonizing over each fund and getting anxious (money matters are super stressful to me since I've never had a lot of it).
This statement does not encourage/suggest 80% stocks, at least not for now.

Take a look at these allocations and max loss.

https://personal.vanguard.com/us/insigh ... llocations

Paul
The "growth" portfolios with the high stock percentages had the highest max losses, but they also had the highest annual return. Higher annual return would be more important for me right now since I still have at least 35 years left before retirement, wouldn't it? I had a bond fund for about a year, then got rid of it because my brother told me it was stupid to have bonds when I have so many years left in the market. It makes me wonder if adding a bond fund again is a bad idea.

drzzzzz wrote:
Fri Dec 07, 2018 8:10 pm
I don't think your choices are bad and cover the span of the market with a tilt toward healthcare, but what you might want to also consider is how you would react if your account drops by 30 or 50 % since you have all stock funds listed and you give the impression that either money is tighter or you are anxious about the account choices. You might want to add some bonds or a cash money market account (which is at least now paying more than 2%). You are young so you can easily tolerate a drop in your account, but try to decide how that would make you feel and possibly diversify with bonds/cash which will help cushion the eventual market fall; of course bonds/cash also mean that your account won't grow as quickly when the markets are going up, but you might sleep better at night. At some point, the market will drop, this could be the start of it or could be next year or the year after, but it will happen.
If my account dropped by 30 or 50%, I would freak out because that's a huge amount of money gone, but I'd leave it alone because the market will always go back up, won't it? Like, the people who didn't make any changes during the stock market crash in 2008 are probably doing okay again by now?

I mainly get a lot of anxiety over it at the end of the year since that's when I invest more money and have to decide where to put the money. I'm not checking it regularly.

Since I don't have a lot of money, aren't stocks more important than bonds because they'll earn me more money for the future?
BL wrote:
Fri Dec 07, 2018 6:56 pm
Here is a great little PDF to get you started. The 3-fund portfolio (search for page in Wiki) is the investment of choice for many Bogleheads.
https://www.etf.com/docs/IfYouCan.pdf

The V. Life Strategy and Target date funds are similar to the 3-fund, with the addition of an international bond. F. has two target date groups, only one is index funds, so you may have looked at unrelated (and more expensive) Target fund.

Total Stock Market
total International Stock Market
Total bond Market

the above are all you need: low-ER, diversified, simple.
I am not saying you have bad funds, as most V. funds are fairly low-cost and decent funds.
I read the PDF. Good to know I should still get social security even if it's only about 3/4 the promised amount. Thought I was only going to get a little bit or none at all. Sad to think about how inflation will eat into my retirement and means I have to increase my savings amount every year to keep up. :/ I don't expect to ever have a job where I'm getting raises so that seems hard.

User avatar
FiveK
Posts: 5864
Joined: Sun Mar 16, 2014 2:43 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by FiveK » Sun Dec 09, 2018 3:10 pm

LostSneakers wrote:
Sun Dec 09, 2018 2:51 pm
I understand that the Life Strategy funds are logical for people who are anxious about making their own fund choices. At the same time, it's a huge change from what I was doing (aside from the two years I had a TRF with Fidelity) so putting all my money into one fund seems scary right now.
It should be scary if "one fund" were the same as "one stock".

Fortunately, a Life Strategy fund is a catch-all for
- the multiple funds held by the Life Strategy fund, which in turn each hold
- hundreds or thousands of individual stocks or bonds.

The knee-jerk first glance fright at "all my money into one..." is understandable. Considering the actual situation, however, is the "fund of funds" option more attractive?

radiowave
Posts: 1887
Joined: Thu Apr 30, 2015 5:01 pm

Re: Transferring Fidelity IRA to Vanguard IRA -- Does Current Allocation Seem Okay?

Post by radiowave » Sun Dec 09, 2018 3:18 pm

OP welcome to the forum.

To be honest, for a Roth IRA, I would simply use the Vanguard Total Stock fund, VTSAX and let it ride. You haven't mentioned if you have a tax-deferred account, e.g. traditional IRA or 401k, etc. That would be the better place to hold bonds.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

Post Reply