ROTH Advice - "Diversification/Simplification"

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ROTH Advice - "Diversification/Simplification"

Post by JoeRevere » Thu Dec 27, 2018 6:56 pm

Hoping to get some help on determining if the current Roth investments I have are diversified enough, duplicates, (or over-diversified/overkill!)

I have been contributing to a traditional 401k for several years (Target Date Retirement) and recently heard I should be maxing out a Roth IRA as well.

Any advice will be much appreciated.

This is what I currently have setup in a Fidelity Roth IRA:

FIHFX Fidelity Freedom® Index 2035
Contribution 20% Expense 0.19%

FXAIX Fidelity® 500 Index
Contribution 20% Expense 0.015%

FSMDX Fidelity® Mid Cap Index
Contribution 20% Expense 0.025%

FSSNX Fidelity® Small Cap Index
Contribution 20% Expense 0.025%

FHKCX Fidelity® China
Contribution 10% Expense 1%

FPADX Fidelity® Emerging Markets Index
Contribution 10% Expense 0.08%

Spirit Rider
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Re: ROTH Advice - "Diversification/Simplification"

Post by Spirit Rider » Thu Dec 27, 2018 7:47 pm

The Fidelity Freedom Index fund duplicates most of the individual assets. Either solely use the Freedom fund or drop it and put in bonds to meet your AA.

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Re: ROTH Advice - "Diversification/Simplification"

Post by 02nz » Thu Dec 27, 2018 7:53 pm

There's quite a bit of overlap in there (in addition to what has already been pointed out, China is part of emerging markets although the former fund is active and the latter passive; this means you're significantly overweight in China; not saying that's right or wrong but you should be aware of it).

The Bogleheads approach is to look at the asset allocation of your overall portfolio as a whole - including 401k, Roth IRAs, and other investments, rather than accounts in isolation. So consider putting your information in the forum template format to get better advice.

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Re: ROTH Advice - "Diversification/Simplification"

Post by TravelforFun » Thu Dec 27, 2018 7:56 pm

Glad to see you don't have any bonds or money market in your Roth. I make sure my Roth is 100% equities and I let my IRAs and 401k carry my bonds, CDs, and money market.


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Re: ROTH Advice - "Diversification/Simplification"

Post by JoeRevere » Thu Jan 10, 2019 1:11 pm

Thank you for your replies. I dropped the Freedom Fund and taking another look at the China investments. I am new to this forum and will use the template in the future along with providing all other investment info (The 'Big Picture'). Thanks again!

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Re: ROTH Advice - "Diversification/Simplification"

Post by JBTX » Thu Jan 10, 2019 3:03 pm

You have emerging markets but no international developed markets. Is that what you intended?

Also your portfolio has a mid/small cap tilt, with allocations much larger than a market weight index. That is neither bad nor good, just making sure you understand this.

If you want market weights the target date fund as a single fund is probably these best way to go.

An alternative allocation with tilts could be:

70-80% target date
10-15% small cap index
10-15% emerging markets.

China is kind of the wild wild west in terms of investing so personally I would not put extra in a china fund.

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David Jay
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Re: ROTH Advice - "Diversification/Simplification"

Post by David Jay » Thu Jan 10, 2019 3:09 pm

It is pretty much screaming, "hair on fire" heresy at Bogleheads to select a fund, any fund, with a 1% expense ratio.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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