What to Invest in for Long Term

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Topic Author
sjhotwings
Posts: 7
Joined: Sat Aug 22, 2020 9:12 pm

What to Invest in for Long Term

Post by sjhotwings »

I listen to a friend totally clueless and open a fidelity account and max out my roth ira ( FSKAX ) for this year. Since i cannot put anymore money into roth but still have around 10k-20k that i don't need and would like to invest in something using my brokerage account. so my question is what should i invest in ? . should i invest in few shares into Apple, Microsoft,Walmart and Target ?. Pls give me your tip advice and guidance. thank you and sorry for my english. btw i'm 38 years old

Debt: No Debt
Tax Filing Status: Single this year, ( next year married )
State of Residence: California
Age: 38
Emergency Funds: 80k in bank saving
Free Funds: 20k can be use to invest
Desired Asset allocation: 100% stock for growth
Roth IRA at Fidelity
100% (6k) FFidelity® Total Market Index Fund MUTF: FSKAX
401k: NONE
fuddbogle
Posts: 58
Joined: Fri Jun 21, 2019 8:35 am

Re: What to Invest in for Long Term

Post by fuddbogle »

You could stay with the Fidelity family and put the money in the ETF > ITOT.

Its similar to your FSKAX but last I checked a little more tax efficient than the mutual fund.
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ruralavalon
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Location: Illinois

Re: What to Invest in for Long Term

Post by ruralavalon »

Welcome to the forum :) .

Co congratulations on your imminent marriage.

sjhotwings wrote: Sat Aug 22, 2020 9:28 pm I listen to a friend totally clueless and open a fidelity account and max out my roth ira ( FSKAX ) for this year. Since i cannot put anymore money into roth but still have around 10k-20k that i don't need and would like to invest in something using my brokerage account. so my question is what should i invest in ? . should i invest in few shares into Apple, Microsoft,Walmart and Target ?. Pls give me your tip advice and guidance. thank you and sorry for my english. btw i'm 38 years old

Debt: No Debt
Tax Filing Status: Single this year, ( next year married )
State of Residence: California
Age: 38
Emergency Funds: 80k in bank saving
Free Funds: 20k can be use to invest
Desired Asset allocation: 100% stock for growth
Roth IRA at Fidelity
100% (6k) FFidelity® Total Market Index Fund MUTF: FSKAX
401k: NONE
Is there a plan at work you can use? Such as a 401k, 403b, 457, SEP IRA, SIMPLE IRA, TSP?

In a taxable account at Fidelity invest in a very diversified stock index ETF. For U.S. stocks that could be either:
1) Vanguard Total Stock Market ETF (VTI) or
2) iShares Core S&P Total US Stock Market ETF (ITOT).

For international stocks that could be either:
1) Vanguard Total International Stock ETF (VXUS) or
2) iShares Core MSCI Total International Stock ETF (IXUS).

What is your tax bracket, both federal and state? What state do you pay any income tax to? If in a very high tax bracket you could consider a tax-exempt bond fund like Fidelity® Tax-Free Bond Fund (FTABX).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Taylor Larimore
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Location: Miami FL

Re: What to Invest in for Long Term

Post by Taylor Larimore »

sjhotwings wrote: Sat Aug 22, 2020 9:28 pm I listen to a friend totally clueless and open a fidelity account and max out my roth ira ( FSKAX ) for this year. Since i cannot put anymore money into roth but still have around 10k-20k that i don't need and would like to invest in something using my brokerage account. so my question is what should i invest in ? . should i invest in few shares into Apple, Microsoft,Walmart and Target ?. Pls give me your tip advice and guidance. thank you and sorry for my english. btw i'm 38 years old.
hotwings:

Your English is quite good. Probably better than mine.

As easy as it looks, please do not make the mistake of investing in "individual stocks." I say this from personal experience and listening to financial experts such as these:

What Financial Experts Say About Individual Stocks vs. Mutual Funds

When investing in a taxable account, it is very important to use only tax-efficient funds that can be held 'forever.' A Total Stock Market Index Fund and a Total International Index Fund meet this requirement.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "The winning formula for success in investing is owning the entire stock market through an index fund, and then doing nothing. Just stay the course."
"Simplicity is the master key to financial success." -- Jack Bogle
Outer Marker
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Re: What to Invest in for Long Term

Post by Outer Marker »

If you have extra money to invest in taxable at Fidelity, use their total market index “zero” fund. It’s a lost leader to entice new customers, and since your already there it’s a no brainer. Much better using a broad index fund than to try and pick individual stocks. Expanding your index reach to international is optional. Also available for free at fidelity.
zie
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Joined: Sun Mar 22, 2020 4:35 pm

Re: What to Invest in for Long Term

Post by zie »

Outer Marker wrote: Sun Aug 23, 2020 11:11 am If you have extra money to invest in taxable at Fidelity, use their total market index “zero” fund. It’s a lost leader to entice new customers, and since your already there it’s a no brainer. Much better using a broad index fund than to try and pick individual stocks. Expanding your index reach to international is optional. Also available for free at fidelity.
I like FZROX, the Total market zero fund, but I don't like it in Taxable accounts. In a ROTH or other tax-advantaged I am very happy with it. If you ever decided to leave Fidelity, there is no chance that Fidelity would let you take your FZROX holding(s) with you.

I'm very happy with Fidelity, but I'm investing for decades. I don't really think they would go out of their way to make my upset enough to leave, but it's possible some action they take for their greater good might inadvertently harm me, but when VTI or iTOT are more tax-efficient and portable, why bother?

For the OP:

Usually you want to invest your monies in tax advantaged accounts, (401k, etc) before investing in taxable.it's almost always in your favour. The wiki talks about this.

As for what to invest in, The wiki talks about the 1 , 2 and 3 fund portfolios, they will likely do you very well.
whereskyle
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Joined: Wed Jan 29, 2020 10:29 am

Re: What to Invest in for Long Term

Post by whereskyle »

sjhotwings wrote: Sat Aug 22, 2020 9:28 pm I listen to a friend totally clueless and open a fidelity account and max out my roth ira ( FSKAX ) for this year. Since i cannot put anymore money into roth but still have around 10k-20k that i don't need and would like to invest in something using my brokerage account. so my question is what should i invest in ? . should i invest in few shares into Apple, Microsoft,Walmart and Target ?. Pls give me your tip advice and guidance. thank you and sorry for my english. btw i'm 38 years old

Debt: No Debt
Tax Filing Status: Single this year, ( next year married )
State of Residence: California
Age: 38
Emergency Funds: 80k in bank saving
Free Funds: 20k can be use to invest
Desired Asset allocation: 100% stock for growth
Roth IRA at Fidelity
100% (6k) FFidelity® Total Market Index Fund MUTF: FSKAX
401k: NONE
VTI (Vanguard Total US Stock Market ETF, ER .03) if you want to stick to us-only equity.

VT (Vanguard Total World Stock ETF, ER .08) if you want the whole world.

I just buy these two funds all the time. Feel like I can't make a bad purchase.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Topic Author
sjhotwings
Posts: 7
Joined: Sat Aug 22, 2020 9:12 pm

Re: What to Invest in for Long Term

Post by sjhotwings »

i came up with this asset allocation after hours of research. please have a look at it, and yea i didn't get any bond because i probably don't need it for my age. As for my Roth Ira account i cancel out FSKAX and invest in FXAIX instead .

60% FZROX - Zero total market index fund
10% FSPGX - Large Cap Growth index fund - better return for only 0.035% ER vs FNILX Zero Large Cap Index fund
20% FZILX - Zero international index fund
10% FSMAX - Extended Market Index Fund 0.036% ER - pick this over FZIPX - ZERO Extended Market Index because it has Tesla in it.
Affable at 50
Posts: 68
Joined: Fri Dec 27, 2019 2:34 am

Re: What to Invest in for Long Term

Post by Affable at 50 »

sjhotwings wrote: Sun Aug 23, 2020 11:19 pm i came up with this asset allocation after hours of research. please have a look at it, and yea i didn't get any bond because i probably don't need it for my age. As for my Roth Ira account i cancel out FSKAX and invest in FXAIX instead .

60% FZROX - Zero total market index fund
10% FSPGX - Large Cap Growth index fund - better return for only 0.035% ER vs FNILX Zero Large Cap Index fund
20% FZILX - Zero international index fund
10% FSMAX - Extended Market Index Fund 0.036% ER - pick this over FZIPX - ZERO Extended Market Index because it has Tesla in it.
For the long run I would not carry both FSPGX and FSMAX. Since all the stocks in these funds are already held in the total stock market index FZROX. If you’re going to include the extra funds make it’s not because you like the funds’ past performance,which does not guarantee future results.

FSPGX is a fine low cost index fund if you want to tilt toward large cap growth. It’s a bet against medium and small cap funds and especially small cap value funds.

Be very careful with FSMAX, a medium and small cap fund meant to complement a S&P 500 fund. The fund’s recent outperformance is heavily influenced by Tesla. I would never buy a mutual fund because it contains a high flying growth stock like Tesla. The most obvious reason in this particular case is that Tesla may not be held in this fund for very long. If Tesla is added to the S&P 500 in the coming months, FSMAX will have to sell its Tesla shares. While long term holders of FSMAX have benefited from Tesla’s growth, any new shareholders will not benefit from that past performance. If anything you may suffer the inevitable consequences of the fund having to sell its Tesla shares, a taxable capital gain distribution.

The greatness of a fund like FZROX is that it holds virtually all of the US stock market and is an excellent pick for a core portfolio holding for a Fidelity brokerage customer. If you’re going add a large cap growth fund or a completion index fund make sure you do it for the right reasons.
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dogagility
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Re: What to Invest in for Long Term

Post by dogagility »

sjhotwings wrote: Sun Aug 23, 2020 11:19 pm i came up with this asset allocation after hours of research. please have a look at it, and yea i didn't get any bond because i probably don't need it for my age. As for my Roth Ira account i cancel out FSKAX and invest in FXAIX instead .

60% FZROX - Zero total market index fund
10% FSPGX - Large Cap Growth index fund - better return for only 0.035% ER vs FNILX Zero Large Cap Index fund
20% FZILX - Zero international index fund
10% FSMAX - Extended Market Index Fund 0.036% ER - pick this over FZIPX - ZERO Extended Market Index because it has Tesla in it.
My suggestion is to only use FZROX and FZILX for the reasons Affable stated above.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
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ruralavalon
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Location: Illinois

Re: What to Invest in for Long Term

Post by ruralavalon »

sjhotwings wrote: Sun Aug 23, 2020 11:19 pm i came up with this asset allocation after hours of research. please have a look at it, and yea i didn't get any bond because i probably don't need it for my age. As for my Roth Ira account i cancel out FSKAX and invest in FXAIX instead .

60% FZROX - Zero total market index fund
10% FSPGX - Large Cap Growth index fund - better return for only 0.035% ER vs FNILX Zero Large Cap Index fund
20% FZILX - Zero international index fund
10% FSMAX - Extended Market Index Fund 0.036% ER - pick this over FZIPX - ZERO Extended Market Index because it has Tesla in it.
This is way too complicated with enormous duplication, for no particular reason that I can see other than the behavioral pitfall of recency bias in favor of large cap growth. Don't fall into that behavioral trap.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Outer Marker
Posts: 1251
Joined: Sun Mar 08, 2009 8:01 am

Re: What to Invest in for Long Term

Post by Outer Marker »

Stick with just the two total market Zero funds and give yourself at least 20% bonds.

If you’re prone to tinkering and can’t keep your hands off, use a singe target date fund and be done.
Grt2bOutdoors
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Location: New York

Re: What to Invest in for Long Term

Post by Grt2bOutdoors »

Affable at 50 wrote: Mon Aug 24, 2020 1:20 am
sjhotwings wrote: Sun Aug 23, 2020 11:19 pm i came up with this asset allocation after hours of research. please have a look at it, and yea i didn't get any bond because i probably don't need it for my age. As for my Roth Ira account i cancel out FSKAX and invest in FXAIX instead .

60% FZROX - Zero total market index fund
10% FSPGX - Large Cap Growth index fund - better return for only 0.035% ER vs FNILX Zero Large Cap Index fund
20% FZILX - Zero international index fund
10% FSMAX - Extended Market Index Fund 0.036% ER - pick this over FZIPX - ZERO Extended Market Index because it has Tesla in it.
For the long run I would not carry both FSPGX and FSMAX. Since all the stocks in these funds are already held in the total stock market index FZROX. If you’re going to include the extra funds make it’s not because you like the funds’ past performance,which does not guarantee future results.

FSPGX is a fine low cost index fund if you want to tilt toward large cap growth. It’s a bet against medium and small cap funds and especially small cap value funds.

Be very careful with FSMAX, a medium and small cap fund meant to complement a S&P 500 fund. The fund’s recent outperformance is heavily influenced by Tesla. I would never buy a mutual fund because it contains a high flying growth stock like Tesla. The most obvious reason in this particular case is that Tesla may not be held in this fund for very long. If Tesla is added to the S&P 500 in the coming months, FSMAX will have to sell its Tesla shares. While long term holders of FSMAX have benefited from Tesla’s growth, any new shareholders will not benefit from that past performance. If anything you may suffer the inevitable consequences of the fund having to sell its Tesla shares, a taxable capital gain distribution.

The greatness of a fund like FZROX is that it holds virtually all of the US stock market and is an excellent pick for a core portfolio holding for a Fidelity brokerage customer. If you’re going add a large cap growth fund or a completion index fund make sure you do it for the right reasons.
I disagree, I don’t believe a long term investor needs to be wary of holding an index because of one or two companies moving on to another larger index. It’s like saying over your investing lifetime the collective growth of new entrants and existing companies don’t stand a chance of growth - the answer is you don’t know and neither do I. That’s why you hold indexes, now if the OP wants to overweight extended market there is no reason to say it’s unreasonable unless they had a large amount because they were performance chasing. I would say it’s perfectly fine to hold it and invest in it if his horizon is over 10 years. It’s a volatile fund even if Tesla were not in it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Topic Author
sjhotwings
Posts: 7
Joined: Sat Aug 22, 2020 9:12 pm

Re: What to Invest in for Long Term

Post by sjhotwings »

thank you guys for all the inputs. i settled with 90% FZROX and 10% FZILX in roth & brokerage account. yea keep it simple haha
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dogagility
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Re: What to Invest in for Long Term

Post by dogagility »

sjhotwings wrote: Mon Aug 24, 2020 6:30 pm thank you guys for all the inputs. i settled with 90% FZROX and 10% FZILX in roth & brokerage account. yea keep it simple haha
Good call :sharebeer
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
gautamsa
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Joined: Sun Aug 09, 2020 7:31 pm

Re: What to Invest in for Long Term

Post by gautamsa »

sjhotwings wrote: Mon Aug 24, 2020 6:30 pm thank you guys for all the inputs. i settled with 90% FZROX and 10% FZILX in roth & brokerage account. yea keep it simple haha
good call and good pointer for me. I plan to take similar funds from Vanguard. Keep it simple.
Topic Author
sjhotwings
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Joined: Sat Aug 22, 2020 9:12 pm

Re: What to Invest in for Long Term

Post by sjhotwings »

i heard ETF is more tax efficient vs index fund in taxable account, so is it a better choice vs an index fund ?. i'm looking at vanguard VTI total market ETF
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