Fidelity 3 Funds Portfolio for my 401k

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cycbill
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Joined: Tue May 29, 2018 8:05 am

Fidelity 3 Funds Portfolio for my 401k

Post by cycbill » Tue Sep 04, 2018 11:09 pm

<t>Hello,<br/>
I've been reading Jack's books and this forum's discussions for long time, and I am grateful to all the things I learnt from you guys.<br/>
<br/>
I am now 27 years old and I just start my job in U.S., and my employee offer 401k options provided by Fidelity.<br/>
Matching: 50% of my contribution and maximum is $5000 per year. I am going to put $10k inside to get the full match amount.<br/>
<br/>
I am going to build up my portfolio with the 3-fund method:<br/>
(1) 66% asset: FID TOT MKT IDX PR (FSTVX) Stock Investments 0.02%<br/>
(2) 17% asset: FID INTL INDEX PR (FSIVX) Stock Investments 0.05%<br/>
(3) 17% asset: ??? A US bond market fund ???<br/>
<br/>
However, my employer seems doesn't offer the total bond market fund(FXNAX), so I am thinking what other bond fund options I should take.<br/>
Also, my employer offers the Target Fund 2055, but the expense is a bit high 0.75%. Do you think I should take the target fund or build my own 3-fund portfolio?<br/>
<br/>
**My employer's 401k fund options**<br/>
Name/Inception Date Asset Class Gross Expense Ratio**<br/>
FID BLUE CHIP GR (FBGRX) Stock Investments 0.70%<br/>
FID CONTRAFUND (FCNTX) Stock Investments 0.74%<br/>
FID DIVIDEND GR (FDGFX) Stock Investments 0.52%<br/>
FID EQ DIV INCOME (FEQTX) Stock Investments 0.71%<br/>
FID EQUITY INC (FEQIX) Stock Investments 0.63%<br/>
FID EXPORT & MULTI (FEXPX) Stock Investments 0.76%<br/>
FID FIDELITY FUND (FFIDX) Stock Investments 0.50%<br/>
FID FOCUSED STOCK (FTQGX) Stock Investments 0.57%<br/>
FID GROWTH COMPANY (FDGRX) Stock Investments 0.85%<br/>
FID LARGE CAP STOCK (FLCSX) Stock Investments 0.67%<br/>
FID OTC PORTFOLIO (FOCPX) Stock Investments 0.81%<br/>
FID TOT MKT IDX PR (FSTVX) Stock Investments 0.02%<br/>
FID VALUE STRAT (FSLSX) Stock Investments 0.62%<br/>
FID EXT MKT IDX PR (FSEVX) Stock Investments 0.05%<br/>
FID GROWTH STRAT (FDEGX) Stock Investments 0.78%<br/>
FID LOW PRICED STK (FLPSX) Stock Investments 0.68%<br/>
FID MID CAP STOCK (FMCSX) Stock Investments 0.61%<br/>
FID VALUE (FDVLX) Stock Investments 0.61%<br/>
FID SM CAP DISCOVERY (FSCRX) Stock Investments 0.69%<br/>
FID SMALL CAP VALUE (FCPVX) Stock Investments 0.99%<br/>
FID DIVERSIFD INTL (FDIVX) Stock Investments 0.94%<br/>
FID EMERGING MKTS (FEMKX) Stock Investments 0.97%<br/>
FID EUROPE (FIEUX) Stock Investments 1%<br/>
FID INTL INDEX PR (FSIVX) Stock Investments 0.05%<br/>
FID OVERSEAS (FOSFX) Stock Investments 1%<br/>
FID PACIFIC BASIN (FPBFX) Stock Investments 1.11%<br/>
FID INTL REAL ESTATE (FIREX) Stock Investments 1.12%<br/>
FID REAL ESTATE INVS (FRESX) Stock Investments 0.76%<br/>
FID SEL ENERGY (FSENX) Stock Investments 0.79%<br/>
FID SEL GOLD (FSAGX) Stock Investments 0.86%<br/>
FID SEL NATURAL RES (FNARX) Stock Investments 0.83%<br/>
FID TELECOM & UTIL (FIUIX) Stock Investments 0.55%<br/>
FID CONVERTIBLE SEC (FCVSX) Blended Investment* 0.45%<br/>
FID FREEDOM 2005 (FFFVX) Blended Investment* 0.49%<br/>
FID FREEDOM 2010 (FFFCX) Blended Investment* 0.53%<br/>
FID FREEDOM 2015 (FFVFX) Blended Investment* 0.57%<br/>
FID FREEDOM 2020 (FFFDX) Blended Investment* 0.61%<br/>
FID FREEDOM 2025 (FFTWX) Blended Investment* 0.66%<br/>
FID FREEDOM 2030 (FFFEX) Blended Investment* 0.70%<br/>
FID FREEDOM 2035 (FFTHX) Blended Investment* 0.74%<br/>
FID FREEDOM 2040 (FFFFX) Blended Investment* 0.75%<br/>
FID FREEDOM 2045 (FFFGX) Blended Investment* 0.75%<br/>
FID FREEDOM 2050 (FFFHX) Blended Investment* 0.75%<br/>
FID FREEDOM 2055 (FDEEX) Blended Investment* 0.75%<br/>
FID FREEDOM 2060 (FDKVX) Blended Investment* 0.75%<br/>
FID FREEDOM INCOME (FFFAX) Blended Investment* 0.47%<br/>
FID PURITAN (FPURX) Blended Investment* 0.55%<br/>
FID CAPITAL & INCOME (FAGIX) Bond Investments 0.67%<br/>
FID INFL PR IDX PR (FSIYX) Bond Investments 0.05%<br/>
FID INTERMED BOND (FTHRX) Bond Investments 0.45%<br/>
FID INVST GR BD (FBNDX) Bond Investments 0.45%<br/>
FID MORTGAGE SEC (FMSFX) Bond Investments 0.45%<br/>
FID NEW MARKETS INC (FNMIX) Bond Investments 0.82%<br/>
FID SHORT TERM BOND (FSHBX) Bond Investments 0.45%<br/>
FID GOVT MMKT (SPAXX) Short-Term Investments 0.42%</t>

PFInterest
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by PFInterest » Wed Sep 05, 2018 7:02 am

- realize FSIVX does not have small/EM, so you need to add that at some point.
- yes avoid those TDF
- i guess i would use FBNDX as your bond

rkhusky
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by rkhusky » Wed Sep 05, 2018 7:13 am

You can put the EM/Small Int'l into a Roth IRA. +1 on FBNDX, FSTVX, FSIVX.

If you didn't want EM/Small Int'l at the present time and have the funds, alternatively you could put bonds into a Roth IRA. That is not recommended long term, but could be a placeholder until you get a better bond fund in the 401k.

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2pedals
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by 2pedals » Wed Sep 05, 2018 8:27 am

You are on the right path and congratulations on your new job. It makes a lot of sense to reduce your expenses and avoid the Freedom funds. You can do slightly better by balancing your asset allocation yourself with the lower fees of the index funds. The only problem I see with that is you will need to from time to time (say once every 2 years) review your asset allocation and adjust the funds. I would not worry too much about the slightly higher ER for the FBNDX fund. You could also mix your bond funds by buying are shorter weighted average maturity bond fund to lower your exposure to rising interest rates using both FBNDX and FSHBX or FBNDX and SPAXX.

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ruralavalon
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by ruralavalon » Wed Sep 05, 2018 10:23 am

Welcome to the forum :) .

I agree that its not a good idea to use those high expense ratio (0.75%) target date funds.

I think it's a good idea to use a three-fund portfolio, your expenses will be significantly lower. Over the long-term low expenses are critical to investing performance.

The two stock index funds you picked are the right choices for stocks in your 401k.

For bonds I suggest Fidelity Intermediate Bond Fund (FTHRX) ER 0.45%, average effective duration = 3.88 years, average credit quality = A, moderate expense ratio, and well diversified with 31% government bonds, 56% corporate bonds, 10% securitized.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

gostars
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by gostars » Thu Sep 06, 2018 12:44 am

I would suggest reaching out to the HR/benefits department at your employer, or whoever is responsible for selecting the funds, and asking them to work with Fidelity to add the US Bond Index fund. It's extremely common to find this in Fidelity 401k plans, to the point that I'm a bit surprised that yours doesn't offer it.

mervinj7
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by mervinj7 » Thu Sep 06, 2018 10:19 am

gostars wrote:
Thu Sep 06, 2018 12:44 am
I would suggest reaching out to the HR/benefits department at your employer, or whoever is responsible for selecting the funds, and asking them to work with Fidelity to add the US Bond Index fund. It's extremely common to find this in Fidelity 401k plans, to the point that I'm a bit surprised that yours doesn't offer it.
+1. Here's the ticker in case you need it for your proposal for HR: FXNAX.
https://fundresearch.fidelity.com/mutua ... /316146356

sco
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by sco » Thu Sep 06, 2018 9:43 pm

Do you have the brokerageLink option?

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LadyGeek
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Re: Fidelity 3 Funds Portfolio for my 401k

Post by LadyGeek » Thu Sep 06, 2018 11:15 pm

New member JustWantToGetItRight has a question which I've moved into his original thread. See: Build 401K and Live off Cash or Invest it in Vanguard? Help!

(He quoted gostars' post.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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