One Fidelity Fund Only - Possible?

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TImeshare Queen
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Joined: Fri May 22, 2020 2:55 pm

One Fidelity Fund Only - Possible?

Post by TImeshare Queen » Fri May 22, 2020 5:03 pm

Retirement couple in late 60s luckily in great financial position with about $2M in investments, nice pensions that exceed our expenses, no mortgage or loans, and an unlimited LT care insurance policy. We do not anticipate ever needing our savings to meet our living expenses and have decided to start gifting each of our 2 daughters $15K annually so they will have use to the funds now. No grand kids in sight!

I have a limited knowledge of investing and don't enjoy the ups and downs of stock market investments. Didn't help that the oil stocks I owned took a big hit even though they were suppose to safe dividend paying stocks according to my broker and were not offset by gains in the few other stocks that I do own. Also, I have no interest in spending time on investment research or monitoring. I have about $450K of cash funds that I need to invest in something right now.

My hubby is exactly the opposite and loves researching stocks and investing, but not good at it IMHO, as he lost the $250K inheritance from his parents in the stock market. Of course, it is a sore subject between us, but he is going to do whatever he wants with his $600K in traditional and roth IRA accts.

Honestly, I have no interest in financial investment and prefer to just put my money in one Fidelity Mutual Fund and forget about it. Which is what I did over 20+ yrs ago by purchasing Fidelity Contrafund (FCNTX) - which has doubled the value and now I have $200K in the fund. Probably not great annual return over the years, but I am okay with a net $100K increase. I have spent the last few weeks refreshing myself on AA and other financial matters and feel a bit overwhelmed and mostly indecisive. After reading about AA and looking at the average rates of returns at various AA levels - I think that a balanced porfolio of 50% stock, 40% bonds, and 10% ST is what I want. Also, I am not particularly keen about allocating a portion to foreign equities - is this really necessary?

I was looking at Fidelity Balanced Fund and Puritan Fund - but these are both at 50 to 70% equity allocation. Both of these funds are well regarded with the biggest stated negative is their lack of foreign equities - which is maybe good since I am not keen on them anyway - but then what do I know. Our assigned Fidelity rep recommended Asset Manager 50% (FASMX) as the best way to achieve this objective. I would appreciate any comments or thoughts on FASMX - good for a lazy, uninterested person like myself. As previously stated, about $450K cash to invest - of which about half is in a Roth acct. Any other suggestions that would require only minimal oversight on my part?

retired@50
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Re: One Fidelity Fund Only - Possible?

Post by retired@50 » Fri May 22, 2020 6:29 pm

I'd suggest you use low-expense ratio, broadly diversified stock and bond index funds. Select a mixture to suit yourself.

FSKAX for the US Stock market

FXNAX for the US Bond market

Money market funds aren't paying much now.

Regards,

Edited to add: If you go with the Fidelity Rep's choice of FASMX (expense ratio of .66%) using the $450,000 amount you mentioned you'd pay $2,970 per year in expense ratio costs.

If you use a 50% FSKAX Stock (expense ratio of .015%) / 50% FXNAX Bond (expense ratio .025%) mixture you'd pay $33.75 + $56.25 for a total of $90 per year in expense ratio costs.
Last edited by retired@50 on Fri May 22, 2020 6:41 pm, edited 1 time in total.
This is one person's opinion. Nothing more.

cegibbs
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Re: One Fidelity Fund Only - Possible?

Post by cegibbs » Fri May 22, 2020 6:40 pm

I wouldn’t own a Fidelity actively managed fund because they tend to change Portfolio Managers very frequently. That said, Fidelity is a great custodian with excellent customer service. Given your desire to be roughly 50/50, I much prefer an equal split/combination of VWELX and VWINX. Much lower expenses as compared with the Fidelity funds and both are run by Wellington Management which is a very solid actively managed fund shop.

epictetus
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Re: One Fidelity Fund Only - Possible?

Post by epictetus » Fri May 22, 2020 6:49 pm

there are Fidelity Freedom Index Funds (different than the Fidelity Freedom Funds) that are funds that include stocks, bonds, etc., in one fund. if you found one that fit your desired allocation that might be something to consider. the expense ratios will be much lower than the Puritan or Balanced fund.
Focus on what you can control

Ferdinand2014
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Re: One Fidelity Fund Only - Possible?

Post by Ferdinand2014 » Fri May 22, 2020 7:00 pm

TImeshare Queen wrote:
Fri May 22, 2020 5:03 pm
Retirement couple in late 60s luckily in great financial position with about $2M in investments, nice pensions that exceed our expenses, no mortgage or loans, and an unlimited LT care insurance policy. We do not anticipate ever needing our savings to meet our living expenses and have decided to start gifting each of our 2 daughters $15K annually so they will have use to the funds now. No grand kids in sight!

I have a limited knowledge of investing and don't enjoy the ups and downs of stock market investments. Didn't help that the oil stocks I owned took a big hit even though they were suppose to safe dividend paying stocks according to my broker and were not offset by gains in the few other stocks that I do own. Also, I have no interest in spending time on investment research or monitoring. I have about $450K of cash funds that I need to invest in something right now.

My hubby is exactly the opposite and loves researching stocks and investing, but not good at it IMHO, as he lost the $250K inheritance from his parents in the stock market. Of course, it is a sore subject between us, but he is going to do whatever he wants with his $600K in traditional and roth IRA accts.

Honestly, I have no interest in financial investment and prefer to just put my money in one Fidelity Mutual Fund and forget about it. Which is what I did over 20+ yrs ago by purchasing Fidelity Contrafund (FCNTX) - which has doubled the value and now I have $200K in the fund. Probably not great annual return over the years, but I am okay with a net $100K increase. I have spent the last few weeks refreshing myself on AA and other financial matters and feel a bit overwhelmed and mostly indecisive. After reading about AA and looking at the average rates of returns at various AA levels - I think that a balanced porfolio of 50% stock, 40% bonds, and 10% ST is what I want. Also, I am not particularly keen about allocating a portion to foreign equities - is this really necessary?

I was looking at Fidelity Balanced Fund and Puritan Fund - but these are both at 50 to 70% equity allocation. Both of these funds are well regarded with the biggest stated negative is their lack of foreign equities - which is maybe good since I am not keen on them anyway - but then what do I know. Our assigned Fidelity rep recommended Asset Manager 50% (FASMX) as the best way to achieve this objective. I would appreciate any comments or thoughts on FASMX - good for a lazy, uninterested person like myself. As previously stated, about $450K cash to invest - of which about half is in a Roth acct. Any other suggestions that would require only minimal oversight on my part?
Your intuition is very good and correct on keeping it simple and not stock picking. Stock picking is a losers game.

FPIFX Fidelity Freedom Index 2020 Fund expense ratio .12 one and done fund. Gradually becomes more conservative over the next 10 years.

https://fundresearch.fidelity.com/mutua ... =sq-NavBar

49% equities U.S. and International
43% bonds Total U.S., Long term treasuries and inflation protected bonds
8% cash

If it were me I would do the following if I wanted your stated asset allocation:
50% FXAIX (Fidelity 500 index) Expense ratio 0.015
40% FXNAX (Fidelity total bond index) expense ratio 0.03
10% FUMBX (Fidelity short term US treasury’s) expense ratio 0.03

I would not consider FASMX Expense ratio .66 (20 X more expensive than the 3 funds I mentioned above) for me as its expense ratio is high and the bond quality is lower. It’s actually not that bad of a fund, but you can do better. Also, expensive in taxable account given bonds and high turnover.

What I actually do - money where my mouth is - 100% FXAIX and enough cash to cover 3 years expenses.

In my opinion, for what it’s worth, foreign stocks are not needed. I do not own any except the small number included in the S&P 500. A contentious subject around these parts though.

Also, if you plan on gifting now or later, 100% FXAIX might have tax advantages on death - step up, and you pay taxes on dividends/ capital gains rate ( usually 15%) instead of income tax rate with bonds depending on account. Of course higher ups and downs are expected in 100% stocks.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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arcticpineapplecorp.
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Re: One Fidelity Fund Only - Possible?

Post by arcticpineapplecorp. » Fri May 22, 2020 7:24 pm

TImeshare Queen wrote:
Fri May 22, 2020 5:03 pm
I have a limited knowledge of investing and don't enjoy the ups and downs of stock market investments. Didn't help that the oil stocks I owned took a big hit even though they were suppose to safe dividend paying stocks according to my broker and were not offset by gains in the few other stocks that I do own. Also, I have no interest in spending time on investment research or monitoring. I have about $450K of cash funds that I need to invest in something right now.
Congratulations. It seems you've done well, despite some foibles along the way.

First off, never listen to a broker. Their job is to make you broker.
Secondly, this is a very valuable lesson (and for many on this forum who love high paying dividend stocks). People think because they pay high dividends they are safe. But they are stocks. And stocks are not safe. To think anything that's a stock is safe, just because it pays dividends or it's "blue chip" is a myth. Bonds and other fixed income (savings/CDs) are for safety. And as such things that are safe don't offer much growth. Stocks are for growth and therefore by definition are risky.
TImeshare Queen wrote:
Fri May 22, 2020 5:03 pm
My hubby is exactly the opposite and loves researching stocks and investing, but not good at it IMHO, as he lost the $250K inheritance from his parents in the stock market. Of course, it is a sore subject between us, but he is going to do whatever he wants with his $600K in traditional and roth IRA accts.
Does the $600k affect anything in terms of future living ability? Because if he does with the $600k what he did to the $250k inheritance, will you still be ok?
TImeshare Queen wrote:
Fri May 22, 2020 5:03 pm
Honestly, I have no interest in financial investment and prefer to just put my money in one Fidelity Mutual Fund and forget about it. Which is what I did over 20+ yrs ago by purchasing Fidelity Contrafund (FCNTX) - which has doubled the value and now I have $200K in the fund. Probably not great annual return over the years, but I am okay with a net $100K increase. I have spent the last few weeks refreshing myself on AA and other financial matters and feel a bit overwhelmed and mostly indecisive. After reading about AA and looking at the average rates of returns at various AA levels - I think that a balanced porfolio of 50% stock, 40% bonds, and 10% ST is what I want. Also, I am not particularly keen about allocating a portion to foreign equities - is this really necessary?
are you sure you've only doubled your money in the past 20 years with contrafund? Because if I look at what happened to $10,000 invested once on 1/1/2000 to now, it'd be worth five times (not twice) the amount, $52,144.22 (Blue line at link below is total stock market index fund and orange line is contrafund):

source: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

are foreign investments necessary? No, but if you had owned them between 2000-2009 you wouldn't have experienced a "lost decade" that you would have holding U.S. only. Something to consider. Blue line on link below is total US stock and orange line is total international. Orange did better than Blue.

source: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
TImeshare Queen wrote:
Fri May 22, 2020 5:03 pm
I would appreciate any comments or thoughts on FASMX - good for a lazy, uninterested person like myself. As previously stated, about $450K cash to invest - of which about half is in a Roth acct. Any other suggestions that would require only minimal oversight on my part?
as was suggested the target date retirement INDEX fund is a good recommendation. But be careful with Fidelity. They have Freedom Funds and Freedom Index Funds. They're not the same. The first is more expensive. You want the one that says "Index" in it. FPIFX as was mentioned by Ferdinand 2014 is a good choice. It does have international investments. But sometimes they help your portfolio too. See here: https://www.bogleheads.org/wiki/Domestic/International
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

peterwantstosave
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Re: One Fidelity Fund Only - Possible?

Post by peterwantstosave » Sat May 23, 2020 7:19 am

I would use Fidelity Freedom® Index 2020 Fund - Investor Class (FPIFX).

That's all you need.

Fidelity's other recommendations serve their interests, not yours.

Hope this helps, Peter

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JoMoney
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Re: One Fidelity Fund Only - Possible?

Post by JoMoney » Sat May 23, 2020 8:22 am

Personally, I use FXAIX (Fidelity 500 index) and cash in my bank account/U.S. savings bonds.

Edit to add:
I don't use it, it does have "international" stock index allocation, but I do think the
Fidelity® Four-in-One Index Fund (.013 ER)
https://fundresearch.fidelity.com/mutua ... /31634R109
Is worth mentioning.... just increase your other cash holdings to lower risk exposure since it's likely heavier in stocks than you want.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

diceman3
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Re: One Fidelity Fund Only - Possible?

Post by diceman3 » Sat May 23, 2020 8:46 am

TImeshare Queen wrote:
Fri May 22, 2020 5:03 pm
Retirement couple in late 60s luckily in great financial position with about $2M in investments, nice pensions that exceed our expenses, no mortgage or loans, and an unlimited LT care insurance policy. We do not anticipate ever needing our savings to meet our living expenses and have decided to start gifting each of our 2 daughters $15K annually so they will have use to the funds now. No grand kids in sight!

I have a limited knowledge of investing and don't enjoy the ups and downs of stock market investments. Didn't help that the oil stocks I owned took a big hit even though they were suppose to safe dividend paying stocks according to my broker and were not offset by gains in the few other stocks that I do own. Also, I have no interest in spending time on investment research or monitoring. I have about $450K of cash funds that I need to invest in something right now.

My hubby is exactly the opposite and loves researching stocks and investing, but not good at it IMHO, as he lost the $250K inheritance from his parents in the stock market. Of course, it is a sore subject between us, but he is going to do whatever he wants with his $600K in traditional and roth IRA accts.

Honestly, I have no interest in financial investment and prefer to just put my money in one Fidelity Mutual Fund and forget about it. Which is what I did over 20+ yrs ago by purchasing Fidelity Contrafund (FCNTX) - which has doubled the value and now I have $200K in the fund. Probably not great annual return over the years, but I am okay with a net $100K increase. I have spent the last few weeks refreshing myself on AA and other financial matters and feel a bit overwhelmed and mostly indecisive. After reading about AA and looking at the average rates of returns at various AA levels - I think that a balanced porfolio of 50% stock, 40% bonds, and 10% ST is what I want. Also, I am not particularly keen about allocating a portion to foreign equities - is this really necessary?

I was looking at Fidelity Balanced Fund and Puritan Fund - but these are both at 50 to 70% equity allocation. Both of these funds are well regarded with the biggest stated negative is their lack of foreign equities - which is maybe good since I am not keen on them anyway - but then what do I know. Our assigned Fidelity rep recommended Asset Manager 50% (FASMX) as the best way to achieve this objective. I would appreciate any comments or thoughts on FASMX - good for a lazy, uninterested person like myself. As previously stated, about $450K cash to invest - of which about half is in a Roth acct. Any other suggestions that would require only minimal oversight on my part?
Sounds like a fund like VTINX would do the job.

retiredjg
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Re: One Fidelity Fund Only - Possible?

Post by retiredjg » Sat May 23, 2020 11:39 am

I'm not sure that Fidelity offers a Fidelity product that checks all the boxes you want.

The Asset Manager fund is not low cost, it does contain international stocks, and it would be a poor choice for a taxable account (ordinary account with no tax advantage) because it is actively managed and contains bonds and would not be tax-efficient.

The Fidelity Balanced fund is not low cost and is also actively managed, making it a poor choice for a taxable account.

One of the Target Index funds would be low cost but they also contain international stocks and not be the best choice for a taxable account (although a better choice than Asset Manager).

Vanguard offers a Balanced fund (60% stocks and 40% bonds) and a Tax-managed Balanced Fund (50/50) which are low cost and do not contain foreign stocks. The problem is that Fidelity would charge you a commission ($75?) to buy each one. On the other hand, if I understand correctly, there is no commission/fee when you sell. So a 1 time purchase might not be an issue if these funds are what you want.

I've assumed part of this investment will be going into a taxable account, but you don't really say. You also don't say what you would need to sell in taxable in order to buy. And we don't know your tax bracket. These things should be discussed before you make a decision.

nix4me
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Re: One Fidelity Fund Only - Possible?

Post by nix4me » Sat May 23, 2020 2:05 pm

The closest 1 fund would be target date 2020 or iShares ETF AOM. AOM is a 40/60 I think. But they contain international.

My suggestion is:
50% in FZROX total market
50% in FXNAX total bond

And if you wanted some short bonds then use Fidelity short term treasury fund or iShares SHV ETF

Topic Author
TImeshare Queen
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Re: One Fidelity Fund Only - Possible?

Post by TImeshare Queen » Sun May 24, 2020 1:49 pm

Hello Fellow Investors:

Thanks everyone for your comments and suggestions - very much appreciated! We all have our own special crystal balls that guide us - LOL!

Very enlightening to learn that I need to pay more attention to the fund management fees - which can add up to quite a bit of extra fees when you have significant amounts of money. Wow, about $3K annually for $450K investment - would certainly be nice sum over 10 yrs with a total of $30K - nothing to sneeze at. So my research should involve looking for Index funds and not actively managed fund like Fidelity Balanced and Puritan funds - got it!

I do have about $50K in some Vanguard funds - which I was thinking about transferring over to Fidelity - just to have everything in one place for an easier overview of all our funds - so I can easily see the AA to domestic and foreign stocks, bonds, and ST. So maybe I should transfer the $300K in my Federal Gov't retirement fund (TSP) to Vanguard and buy some more Vanguard mutual funds there before I transfer the account to Fidelity for consolidation to preclude the $75 fee for purchase of Vanguard funds in my Fidelity acct.

Once again, I again confirmed the varying opinions regarding the need for an allocation to foreign stocks. Just like my purchase of oil stocks, my broker recommended allocation to a foreign mutual fund that has not done well over the last six or seven yrs since retirement.

Several folks recommended FIKFX - Fidelity Freedom® Index Income Fund - Investor Class. But the biggest drawback I see is that target date funds change the AA percentages as you get closer to the target retirement date - which I think is about 10 yrs for this fund. Remember, I am a just do it and then forget about it person. But for sure, I think it is conservative enough, and may be a good choice for a do nothing person such as myself.

FFNOX- FIDELITY FOUR-IN-ONE INDEX FUND: Also, saw this fund recommended for a retirement acct on one of the Investment advice websites. It is very heavy on equities about 80% allocated - so would likely freak me out with its ups and downs in volatile markets with large dollars invested in just ONE fund.

Although using my prescribed AA to a few of the suggested index funds may be okay and I can try to make myself re-balance the allocations periodically - MAYBE! Is rebalancing at the end of each quarter sufficient ? Just do it on the specified date regardless of what the market is doing that day or time period and just be done with it?

Also, right now, I do have a significant amount of cash to invest. Of course, I wish I had invested it when the market hit its low back in March - don't we all wish the same! Also, no one quite understands why the market has recovered in the last very months given the poor economic news and unemployment - so most are eventually expecting another pull back later this year?? So for you seasoned investors, would you just invest these funds in increments until the end of the year - weekly, bi-weekly, monthly?? Or just do it pretty much all at the same time and get it done - which would be easy!

Once again, thank you in advance for your comments and thoughts!

retired@50
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Re: One Fidelity Fund Only - Possible?

Post by retired@50 » Sun May 24, 2020 1:55 pm

TImeshare Queen wrote:
Sun May 24, 2020 1:49 pm

Although using my prescribed AA to a few of the suggested index funds may be okay and I can try to make myself re-balance the allocations periodically - MAYBE! Is rebalancing at the end of each quarter sufficient ? Just do it on the specified date regardless of what the market is doing that day or time period and just be done with it?

Once again, thank you in advance for your comments and thoughts!
Re-balancing once per year is probably sufficient. Even less hassle than each quarter. Your idea of just re-balancing regardless of market noise is smart too. Re-balancing isn't supposed to be about maximizing returns, it's about controlling risk by holding the appropriate amounts of each desired asset.

Regards,
This is one person's opinion. Nothing more.

Topic Author
TImeshare Queen
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Re: One Fidelity Fund Only - Possible?

Post by TImeshare Queen » Sun May 24, 2020 2:19 pm

arcticpineapplecorp. wrote:
Fri May 22, 2020 7:24 pm
TImeshare Queen wrote:
Fri May 22, 2020 5:03 pm
My hubby is exactly the opposite and loves researching stocks and investing, but not good at it IMHO, as he lost the $250K inheritance from his parents in the stock market. Of course, it is a sore subject between us, but he is going to do whatever he wants with his $600K in traditional and roth IRA accts.
Does the $600k affect anything in terms of future living ability? Because if he does with the $600k what he did to the $250k inheritance, will you still be ok?[/quote]

Unfortunately, hubby is going to do whatever he wants regardless of what I think. Luckily, we don't need the $600K for future living expenses since we have long care insurance for an unlimited time period. While it may not cover all LT costs, I hope it would cover a majority of such expenses - which is the biggest anticipated big expense in our golden years. He never even told me he had lost the $250K inheritance in the stock market - I just happened to find out about 10 yrs later one day. The loss of that kind of money does not seem to phase him one bit - so don't know that he has really learned a lesson. But now with $600K of retirement funds that he can now personally manage, he is going to go crazy.

[/quote]
are you sure you've only doubled your money in the past 20 years with contrafund? Because if I look at what happened to $10,000 invested once on 1/1/2000 to now, it'd be worth five times (not twice) the amount? [/quote]

I don't really know for sure - but that is what the total gain in my Fidelity acct states - that there was an 85% increase in total value. Could be likely that I invested in the fund during one of its highest prices many years ago - which is what usually happens to me. But maybe my acct is not totally correct since the tracking systems were not as robust in the old days. Because $100K in one mutual fund seems like a large amount of available $$ in those days - particularly since I had quit work to raise my kids for many years??

Sorry, don't know how to use the "quote" system on the forum - I am computer challenged.

Topic Author
TImeshare Queen
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Re: One Fidelity Fund Only - Possible?

Post by TImeshare Queen » Tue May 26, 2020 10:27 am

Hello All:

After further research based on comments received, I have decided to transfer my $350K TSP acct to Vanguard instead of Fidelity due to lower fund fees and invest in one of the Balanced funds where rebalancing is performed by the company for lazy me who has no interest to monitor my investments. So funds I am considering are below with key features per the "compare" function as of May 25 ( really frustrated that I was unable to paste my excel table into the post - ugh!) :

Name, stock/bonds, foreign %, fee, 10 yr return:

VBIAX - Balanced Index, 60/40, no foreign, .07% fee, 7.88%

VTMFS - Tax Managed Balanced, 50/50, no foreign, 0.09% fee, 7.09

VWELX - Wellington, 65/35, 10% foreign, 0.25% fee, 7.89

VWINX- Wellesley, 40/60, 5% foreign, 0.23% fee, 6.86


Review of the 4 subject funds discloses that the 10yr returns are fairly comparable - with not huge differences IMHO. This investment will be in a Roth account. So my questions follow:

1. What is the major difference between Balanced Index and Tax Managed Balanced (uses tax free municipal bonds) funds?

2. Since the fund fee (.25%) for Wellington and Wellesley are twice as much as the .09% for the Balanced Index and Tax Managed Index, is it worth the extra fee??

3. The actual AA between stocks/bonds show are rounded numbers reported on May 25: are these AA the established goals for each of the subject funds? So Wellington fund would be most aggressive with 65% in stocks and Wellesley most conservative with 40% stocks - is that correct?

Any recommendation on which fund to select for lazy me would be most appreciated - along with a brief reason why!

Once again, thanks for sharing your expertise and knowledge.

retiredjg
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Re: One Fidelity Fund Only - Possible?

Post by retiredjg » Tue May 26, 2020 10:41 am

Since this money is going into a Roth IRA, you can scratch the Tax Managed Balanced fund - it is designed for a taxable account.

Wellington and Wellesley are both actively managed funds with long histories of good management and return. The biggest difference between them is that Wellington is moderately aggressive (stays near 1/3rd bonds) and Wellesley Income is moderately conservative (stays near 2/3rd bonds). I suspect that most people in their 60's would choose the Wellesley Income fund but if you want to be more aggressive, Wellington is a good choice.

Some people mix them half and half to achieve something close to a 50/50 ratio.

If you want active management at low cost, either or both of these should be among the best choices available anywhere.

If 60% stocks suits you, the Balanced fund is the way to go.

Some people who like indexing but are a bit enamored of the "W" funds might mix Balanced Index with Wellesley Income.

retiredjg
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Re: One Fidelity Fund Only - Possible?

Post by retiredjg » Tue May 26, 2020 10:43 am

You said Roth account...you know that will probably require some taxes, right?

retired@50
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Re: One Fidelity Fund Only - Possible?

Post by retired@50 » Tue May 26, 2020 10:50 am

TImeshare Queen wrote:
Tue May 26, 2020 10:27 am
Hello All:

After further research based on comments received, I have decided to transfer my $350K TSP acct to Vanguard instead of Fidelity due to lower fund fees and invest in one of the Balanced funds where rebalancing is performed by the company for lazy me who has no interest to monitor my investments. So funds I am considering are below with key features per the "compare" function as of May 25 ( really frustrated that I was unable to paste my excel table into the post - ugh!) :

Name, stock/bonds, foreign %, fee, 10 yr return:

VBIAX - Balanced Index, 60/40, no foreign, .07% fee, 7.88%

VTMFS - Tax Managed Balanced, 50/50, no foreign, 0.09% fee, 7.09

VWELX - Wellington, 65/35, 10% foreign, 0.25% fee, 7.89

VWINX- Wellesley, 40/60, 5% foreign, 0.23% fee, 6.86


Review of the 4 subject funds discloses that the 10yr returns are fairly comparable - with not huge differences IMHO. This investment will be in a Roth account. So my questions follow:

1. What is the major difference between Balanced Index and Tax Managed Balanced (uses tax free municipal bonds) funds?

2. Since the fund fee (.25%) for Wellington and Wellesley are twice as much as the .09% for the Balanced Index and Tax Managed Index, is it worth the extra fee??

3. The actual AA between stocks/bonds show are rounded numbers reported on May 25: are these AA the established goals for each of the subject funds? So Wellington fund would be most aggressive with 65% in stocks and Wellesley most conservative with 40% stocks - is that correct?

Any recommendation on which fund to select for lazy me would be most appreciated - along with a brief reason why!

Once again, thanks for sharing your expertise and knowledge.
Answers to questions.
1. Yes, the tax managed fund uses municipal bonds to help control taxable income. This wouldn't be needed inside a Roth IRA account, since you're not taxed on annual earnings, growth, or withdrawals.
2. The higher expense ratios for the Wellington and Wellesley funds are due to the active management. This means that there are people picking and choosing what to invest in, and what to ignore, in the market. Over long periods of time, this activity is generally not worth much, and may cost you. These funds do have good reputations in the sphere of actively managed funds, but I guess it comes down to whether or not you believe in the indexing approach to investing. Many people use a little of both.
3. The active funds mentioned in question 2 probably have more latitude to wander away from the asset allocation. Typically an index fund like the balanced index will stick within 1 or 2 percent of target. Your assessment of aggressive / conservative is correct. Holding more stock would be considered more aggressive.

Recommendation from the funds mentioned: Vanguard Balanced Index - VBIAX
For what it's worth, I recommended this fund for my sister too. She's happy, which makes me happy.

Regards,
This is one person's opinion. Nothing more.

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ruralavalon
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Re: One Fidelity Fund Only - Possible?

Post by ruralavalon » Tue May 26, 2020 12:07 pm

TImeshare Queen wrote:
Tue May 26, 2020 10:27 am
Hello All:

After further research based on comments received, I have decided to transfer my $350K TSP acct to Vanguard instead of Fidelity due to lower fund fees and invest in one of the Balanced funds where rebalancing is performed by the company for lazy me who has no interest to monitor my investments. So funds I am considering are below with key features per the "compare" function as of May 25 ( really frustrated that I was unable to paste my excel table into the post - ugh!) :

Name, stock/bonds, foreign %, fee, 10 yr return:

VBIAX - Balanced Index, 60/40, no foreign, .07% fee, 7.88%

VTMFS - Tax Managed Balanced, 50/50, no foreign, 0.09% fee, 7.09

VWELX - Wellington, 65/35, 10% foreign, 0.25% fee, 7.89

VWINX- Wellesley, 40/60, 5% foreign, 0.23% fee, 6.86


Review of the 4 subject funds discloses that the 10yr returns are fairly comparable - with not huge differences IMHO. This investment will be in a Roth account. So my questions follow:

1. What is the major difference between Balanced Index and Tax Managed Balanced (uses tax free municipal bonds) funds?

2. Since the fund fee (.25%) for Wellington and Wellesley are twice as much as the .09% for the Balanced Index and Tax Managed Index, is it worth the extra fee??

3. The actual AA between stocks/bonds show are rounded numbers reported on May 25: are these AA the established goals for each of the subject funds? So Wellington fund would be most aggressive with 65% in stocks and Wellesley most conservative with 40% stocks - is that correct?

Any recommendation on which fund to select for lazy me would be most appreciated - along with a brief reason why!

Once again, thanks for sharing your expertise and knowledge.
Since this will be a tax-advantaged account at Vanguard, cross VTMFS - Tax Managed Balanced off your list of funds to consider.

Any one of the other three would be reasonable in my opinion. All three are well diversified with low expense ratios.

All three have an asset allocation within the range of what is reasonable in your late 60s, retired with nice pensions covering your expenses.

Personally I would lean toward either Vanguard Balanced Index Fund (VBIAX) or actively managed Vanguard Wellington (VWELX). Since you have nice pensions covering your expenses, you could afford to go for higher returns using a higher stock allocation.

Is this a Roth TSP account you are moving? Or are you planning to convert a traditional tax-deferred account to a Roth IRA?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

backpacker61
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Re: One Fidelity Fund Only - Possible?

Post by backpacker61 » Tue May 26, 2020 12:47 pm

TImeshare Queen wrote:
Sun May 24, 2020 1:49 pm
So maybe I should transfer the $300K in my Federal Gov't retirement fund (TSP) to Vanguard and buy some more Vanguard mutual funds there before I transfer the account to Fidelity for consolidation to preclude the $75 fee for purchase of Vanguard funds in my Fidelity acct.
Honestly, are you really anxious to transfer out of the Federal Government's TSP? They have some of the lowest investment fund expenses available anywhere; including that available to retail investors at Vanguard.

You could achieve your objective with 50% 'C Fund', 40% 'F Fund', and 10% 'G Fund'.

Fund Fund Expense
C Fund - 0.042%
F Fund - 0.042%
G Fund - 0.043%

The 'G Fund' in particular is a nice one that is pretty much unavailable anywhere else.

I would think carefully before transferring assets out of the TSP (I labor in the private sector, and so don't have it available to me).

rgs92
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Re: One Fidelity Fund Only - Possible?

Post by rgs92 » Tue May 26, 2020 1:40 pm

Withing Fidelity, you can put everything into Vanguard Balanced Index (admiral) (VBIAX) for a one time fee of $75. There are never any other fees for withdrawal. You will get continuous rebalancing and a constant 60/40 stock/bond allocation and pure index performance.

The expense ratio is as low as you can get for a balanced fund with continuous rebalancing (.07 %, or 7 basis points).

(Any additional contributions will be $75 each time, but it sounds like you don't need to do that.)

It is a true set and forget fund with a fine record. The $75 is worth it for the convenience of just staying at Fidelity IMHO.

The only caveat is that the constant rebalancing is can cost more in taxes in a taxable account, but that is true with any target or balanced fund, and that is what you seem to be asking for. But it is still indexing, so you don't get expensive stock churn.

There are no foreign stocks in this fund, but Jack Bogle would approve of that.

The Alternative is one of the Fidelity Freedom Index target funds, but they have a higher expense ratio (.11 to .12%) that will add up over time vs. the .07% for VBIAX. The Fidelity as a large foreign stock component, for better of worse.

You might consider putting, say, 25% of your investments into the Fidelity Freedom Index (2020 or 2025 versions) to get some international exposure, and the other 75% into the Vanguard fund (VBIAX).

crefwatch
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Re: One Fidelity Fund Only - Possible?

Post by crefwatch » Tue May 26, 2020 1:56 pm

I'm also very fee-averse. But the reason you are looking at index funds isn't just because they tend to be cheaper. It's because there is very limited long-term data to suggest that ACTIVELY managed funds deliver superior performance.

I think trying to use one fund only is a false economy. You can ask for automatic rebalancing at many firms. How hard is it to rebalance once a year? You should be looking at your retirement investments roughly quarterly. (OPINION) Your investments deserve at least that much attention - but not much more. You should plan to revisit your allocation every X years.

The main reason a single (hybrid or balanced) fund may be desirable is that it smooths out you fluctuations if you are an investor who checks their balance too often. This may prevent market-timing impulses (that must be suppressed.)

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TImeshare Queen
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Re: One Fidelity Fund Only - Possible?

Post by TImeshare Queen » Tue May 26, 2020 3:19 pm

Once again, thank you everyone for your thoughts and comments regarding the 4 subject Vanguard Balanced funds. You know in my younger days, I actually owned either Wellington or Wellesley at some point since I have had my Vanguard account since 1987. My current balance of $43K is almost split equally between the Growth Index - VIGAX and Total Market Index VTSAX. Probably haven't looked or touched these funds for 20 yrs - just invested it and left it.

So will buy VBIAX - 60% stock seems reasonable.

My plan is to rollover the $350K TSP into a Traditional IRA at Vanguard or Fidelity and then transfer portions to a Roth IRA - along with paying the required income taxes. Just want to get the funds out of TSP since I am reaching the age when RMD are required and likely easier to deal with a outside firm than the very slow Federal Gov't. Rather just do the transfer in the largest chunks possible and get it done! Hubby states the income range between the various tax brackets are large, so should be able to make the transfer in big chunks without moving us into the next highest income tax rate. But will have to do more analysis regarding pushing our income into the next Medicare bracket - which is more problematic.

BTW, can you transfer shares of stocks or mutual funds from a traditional IRA to a Roth IRA with out selling the shares and repurchasing?

How about gifting the shares to my two daughters annually - does the $15K in mutual funds have to be sold and then repurchase in their accounts OR can they just to transferred directly into their brokerage accounts. Gosh, I don't even want to think about the taxes - growth in a Roth would be tax free, but growth in their account would not be taxable. So I guess the shares would have to be sold and then repurchased in their accounts.

Also, I do understand that it is only a $75 fee to purchase a Vanguard fund in a Fidelity acct - not a lot. But since I already have a Vanguard acct, no biggie transferring it there first, buy the funds I want, and then eventually transferring all the funds to Fidelity.

retiredjg
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Re: One Fidelity Fund Only - Possible?

Post by retiredjg » Tue May 26, 2020 4:18 pm

TImeshare Queen wrote:
Tue May 26, 2020 3:19 pm
My plan is to rollover the $350K TSP into a Traditional IRA at Vanguard or Fidelity and then transfer portions to a Roth IRA - along with paying the required income taxes.
Good. Better than what I thought you meant from the other post. Any of the funds you are considering are fine in traditional IRA too.

BTW, can you transfer shares of stocks or mutual funds from a traditional IRA to a Roth IRA with out selling the shares and repurchasing?
I'm not sure and the answer many not be the same for all situations. But if there is a sell-buy, it should not be a problem. At least, I don't see why there would be a problem.

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TImeshare Queen
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Re: One Fidelity Fund Only - Possible?

Post by TImeshare Queen » Fri May 29, 2020 2:54 pm

Hey All,

I need now to ask about how to proceed on purchasing some bond funds and if now is the time to purchase a large $$ amt due to need to rebalance. As interest rates rise, the price of bond funds will decrease.

So if I don't anticipate ever needing these funds to meet daily living expenses, is a better alternative to purchase individual bonds instead if I just plan to hold them to maturity?

Just purchased some Municipal Bonds with an adjusted yield of about 4.5 % that mature in 7 to 8 yrs - callable earlier. So very decent return in a taxable account versus using a bond fund that has variable results depending on the time of sale. So am I missing something in my rationale here of purchasing individual bonds??

Any thoughts on what types of individual bonds to purchase? I have only ever purchased municipals.

Thanks for any comments.

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