Fidelity for Bogleheads?

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veritas
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Fidelity for Bogleheads?

Post by veritas » Thu Jan 26, 2017 7:09 pm

I just opened a Fidelity account with about 500K in taxable assets. Which funds would you recommend buying with max risk?

I'm 27 with no debt, home, family so looking for the most returns. Also do you recommend spreading out my purchase over the course of a year or all at once.

Thanks!

Jack FFR1846
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Re: Fidelity for Bogleheads?

Post by Jack FFR1846 » Thu Jan 26, 2017 7:25 pm

Put it all in FSTVX Total Market Index Premium tomorrow.

(I own this fund among others)
Bogle: Smart Beta is stupid

mhalley
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Re: Fidelity for Bogleheads?

Post by mhalley » Thu Jan 26, 2017 7:34 pm

Max risk is 100% stock. But should anyone ever be 100% stock? Most would say that 80-90% is probably the max. That being said, the go to portfolio here is the 3 fund portfolio, consisting of total stock market, total international stock market, and total bond market, in an asset allocation that lets you sleep at night.
Fidelity has a number of index funds and ETFs that are suitable for the boglehead style of investing. Check out the wiki for some more details. Look into the premium class of the fidelity index funds.
https://www.bogleheads.org/wiki/Fidelity
https://www.bogleheads.org/wiki/Three-fund_portfolio
https://www.bogleheads.org/wiki/Asset_allocation
DCA vs lump sum investing has been discussed multiple times on this board. Where did the money come from that you are investing? Was it a windfall, invested elsewhere? Lump sum has a 66% chance of beating dca. From the wiki:
"Lump sum investing will always carries a higher expected return, because it immediately moves your funds from asset classes with lower expected returns to ones with higher expected returns. Note that higher expected returns do not guarantee that your actual returns will be higher. According to an investopedia article,[5] studies indicate that lump sum investing has produced higher returns 66% of the time."
https://www.bogleheads.org/wiki/Asset_allocation

boglephreak
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Re: Fidelity for Bogleheads?

Post by boglephreak » Thu Jan 26, 2017 7:37 pm

100% FSSVX (Fidelity small cap index fund), all at once.

pkcrafter
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Re: Fidelity for Bogleheads?

Post by pkcrafter » Thu Jan 26, 2017 7:49 pm

welcome veritas,

Serious question, why would you ask this?
Also do you recommend spreading out my purchase over the course of a year or all at once?
Paul
Last edited by pkcrafter on Thu Jan 26, 2017 8:22 pm, edited 3 times in total.
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.

lack_ey
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Re: Fidelity for Bogleheads?

Post by lack_ey » Thu Jan 26, 2017 7:50 pm

Max risk involves some kind of leverage. Taken to the extremes, highly unrecommended, as you actually reduce your likely return.

And even if you limit to 100% exposure, certainly you can get higher risk than some of the weak suggestions so far, and I don't even mean in intentionally narrow slices that are historically unrewarded (higher risk without higher average return seen). Emerging markets small cap value, here we come? :twisted:

There's not particularly great theoretical rationales for spreading out the entry point, but psychologically it is not ideal for a lot of people and honestly whether you step your toes into the water at first or go full cannonball, whichever plan you can stick with is probably okay.

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arcticpineapplecorp.
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Re: Fidelity for Bogleheads?

Post by arcticpineapplecorp. » Thu Jan 26, 2017 7:58 pm

welcome to the forum.

In order to get the best most tailored answer to your questions, you should go to the following page and come back and re-post ("asking portfolio questions"):

viewtopic.php?t=6212

See there's a bit too much unknown based on the limited information provided. For example, do you have a 401K? If so, have you maxed it out yet? If not, why? Do you have a Roth IRA? Have you maxed it out yet? If not, why? And so on...

By the way, you might want to slow down and read the getting started page:
https://www.bogleheads.org/wiki/Getting_started
read, watch the videos, etc

And you might want to use the search bar here. If I had a nickel for everytime someone asked here whether to lump sum vs. dollar cost average...well, then I'D have $500K in my taxable account. see what "lump sum vs. dca" in the search bar yields:

https://www.bogleheads.org/w/index.php? ... arch&go=Go

general goolge search for same:
https://www.google.com/#q=bogleheads+lump+sum+vs+dca
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

410nick21044
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Re: Fidelity for Bogleheads?

Post by 410nick21044 » Thu Jan 26, 2017 7:59 pm

You are 27 and have $500k? And you are investing??

Smart one here.

If you earned this money somehow, just keep doing whatever you were doing!

If an inheritance or something like that (gift, maybe windfall because you work for Facebook, etc..) consider 1) keep 10% in cash so you can always buy if the market gets cheap

2) dollar cost average $20k month over 2 years, can accelerate if S&P 500 PE goes below 16.

If at Fidelity, use iShares ETFs. Cheaper and more tax efficient than anything else out there. ITOT is their total market index. You can trade for free at Fidelity. I like DGRO too, paired with ITOT. Kind of add an extra helping of dividend growth stocks, VIG is good too. Take a look for yourself.

junior
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Re: Fidelity for Bogleheads?

Post by junior » Thu Jan 26, 2017 8:02 pm

Lump sum investing is much riskier, especially with PE10 as high as it is now. I wouldn't recommend it.

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FIREchief
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Re: Fidelity for Bogleheads?

Post by FIREchief » Thu Jan 26, 2017 8:14 pm

Jack FFR1846 wrote:Put it all in FSTVX Total Market Index Premium tomorrow.

(I own this fund among others)
+1
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

anil686
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Re: Fidelity for Bogleheads?

Post by anil686 » Thu Jan 26, 2017 8:58 pm

FIREchief wrote:
Jack FFR1846 wrote:Put it all in FSTVX Total Market Index Premium tomorrow.

(I own this fund among others)
+1
+1 kind of - I would recommend buying ITOT ETF instead due to a taxable account with a one time purchase and better tax efficiency in the form of dividends and capital gains in comparison to Fidelity TSM. At 500K - a tax drag of an additional 0.2% or more will be noticeable IMO...

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PhysicianOnFIRE
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Re: Fidelity for Bogleheads?

Post by PhysicianOnFIRE » Thu Jan 26, 2017 9:12 pm

I set up a three fund portfolio (down from 28 funds) for someone near and dear to me with these three Fidelity Funds:

FSTVX — Total [US] Market Index Fund
FTIPX — Total International Index Fund
FSITX — US Bond Index Fund

You may not want much, if any money in bonds, but if you do, I would use a municipal fund in a taxable account.

:beer
-PoF

PaulF
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Re: Fidelity for Bogleheads?

Post by PaulF » Thu Jan 26, 2017 9:16 pm

Caesars Palace. Red. Some would say "00" but I am trying to be reasonable here.

sambb
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Re: Fidelity for Bogleheads?

Post by sambb » Thu Jan 26, 2017 9:19 pm

smart move to go with fidelity instead of vanguard - vanguard has some serious customer service and IT issues, and unclear if management understands or cares. I know you are ok with risk, but i would still go 1/3 total market, 1/3 intl, 1/3 bond. The reason is that with this money, you wont have to go for more risk - you'll be fine with the 1/3 splits.

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EyeYield
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Re: Fidelity for Bogleheads?

Post by EyeYield » Thu Jan 26, 2017 9:35 pm

arcticpineapplecorp. wrote:welcome to the forum.

In order to get the best most tailored answer to your questions, you should go to the following page and come back and re-post ("asking portfolio questions"):

viewtopic.php?t=6212

See there's a bit too much unknown based on the limited information provided. For example, do you have a 401K? If so, have you maxed it out yet? If not, why? Do you have a Roth IRA? Have you maxed it out yet? If not, why? And so on...

By the way, you might want to slow down and read the getting started page:
https://www.bogleheads.org/wiki/Getting_started
read, watch the videos, etc

And you might want to use the search bar here. If I had a nickel for everytime someone asked here whether to lump sum vs. dollar cost average...well, then I'D have $500K in my taxable account. see what "lump sum vs. dca" in the search bar yields:

https://www.bogleheads.org/w/index.php? ... arch&go=Go

general goolge search for same:
https://www.google.com/#q=bogleheads+lump+sum+vs+dca
+1

Slow down! Is this all your money? You have no home or family, but may want both in the future, so you may want to put some safe money aside for future wants and needs. If you follow the format for asking portfolio questions, you'll get much more specific answers.

If this 500k is a result of a windfall, check out this from the wiki.
https://www.bogleheads.org/wiki/Managing_a_windfall
"The stock market is a giant distraction from the business of investing." - Jack Bogle

chmcnm
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Re: Fidelity for Bogleheads?

Post by chmcnm » Thu Jan 26, 2017 9:41 pm

Let it sit for a month while you research and ponder. Determine your risk level. Lots of people say they're risk takers but sell at the first sign of trouble. I use ITOT, IXUS, and AGG. Some iShares ETF's are free at Fidelity. Low expense and rarely any capital gains.

pascalwager
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Re: Fidelity for Bogleheads?

Post by pascalwager » Thu Jan 26, 2017 10:00 pm

Studies show lump sum, on average, provides better long-term investment returns than DCA. But look into the studies yourself, and then decide, considering your own temperament.

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Earl Lemongrab
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Re: Fidelity for Bogleheads?

Post by Earl Lemongrab » Fri Jan 27, 2017 1:57 am

veritas wrote:I just opened a Fidelity account with about 500K in taxable assets.
I hope you signed up for a bonus ($1200): https://rewards.fidelity.com/offers/depositbonus

Topic Author
veritas
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Re: Fidelity for Bogleheads?

Post by veritas » Fri Jan 27, 2017 2:10 am

Thanks for all the help so far, been doing some lurking for the past few weeks but hearing other peoples opinions and recommendations is helpful especially since not too many of my friends talk about investing much. I've actually been making solid returns of about 15-20% every year basically buying blindly into stocks I like and realized I was only performing slightly better than the S&P. Wanted to focus more of my time on building my business and less time following stocks.

A portion of the cash is from an acquisition but the majority is from a profitable S-Corp which has been growing 50% y/y. I actually didn't realize how easy it was to setup a 401K so I just set one up for my company with guideline.com with .008% fees thanks to you guys.


Also was wondering if I should get a Roth IRA despite being non tax-deductible?

Leading towards:
ITOT
IXUS
DGRO
Last edited by veritas on Sat Jan 28, 2017 11:20 am, edited 1 time in total.

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aj76er
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Re: Fidelity for Bogleheads?

Post by aj76er » Fri Jan 27, 2017 2:27 am

70% ($350k) in FSTVX — Total [US] Market Index Fund
30% ($150k) in FTIPX — Total International Index Fund

Alternatively, you could split up the total international index fund into developed+emerging:

70% ($350k) in FSTVX — Total [US] Market Index Fund
20% ($100k) in FSIVX — Developed International Index Fund
10% ($50k) in FPMAX — Emerging Markets Index Fund

This is probably the best you can do when considering these things: simplicity, cost, risk, and future returns.

Re-balance once per year and you should do well over the long term.
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

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aj76er
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Re: Fidelity for Bogleheads?

Post by aj76er » Fri Jan 27, 2017 2:32 am

veritas wrote: Also was wondering if I should get a Roth IRA despite being non tax-deductible?
Nope. Based on your tax bracket, you want to save taxes now. I would max out 401k and then plan on doing roth conversions later if you find yourself in a lower "marginal" tax bracket.
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

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F150HD
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Re: Fidelity for Bogleheads?

Post by F150HD » Sat Jan 28, 2017 11:25 am

410nick21044 wrote:If at Fidelity, use iShares ETFs. Cheaper and more tax efficient than anything else out there. ITOT is their total market index. You can trade for free at Fidelity. I like DGRO too, paired with ITOT. Kind of add an extra helping of dividend growth stocks, VIG is good too. Take a look for yourself.
The iShares Core S&P Total U.S. Stock Market ETF (the Fund), formerly iShares S&P 1500 Index Fund, seeks investment results that correspond to the price and yield performance, before fees and expences, of the Standard & Poor’s Composite 1500 (the Index). The Index consists of the S&P 500, Midcap 400 and SmallCap 600 indices, which together represent approximately 92% of the total United States equity market.
https://www.google.com/finance?q=NYSEARCA:ITOT

so where does one get the other 8% ?

What are the advantages/disadvantages of using this versus FSTVX?
Long is the way and hard, that out of Hell leads up to light.

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