New Job: Fideilty 401K Choices

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redraider11
Posts: 28
Joined: Mon Mar 05, 2018 10:11 pm

New Job: Fideilty 401K Choices

Post by redraider11 » Wed Mar 13, 2019 6:39 pm

Hello,
I recently started a new job that provides a 401K through Fidelity. I had a 403B at Vangaurd at my previous job. I utilized a traditional 3 fund portfolio for this account (VTSAX:65% VTIAX:25% VBTLX:10%). I am very comfortable with this AA and would like to replicate it as much as possible with the funds with my new account. I will post the funds available below. Please feel free to give me some guidance on this new account.

Another tidbit of information about myself is that I am beneficiary of two estates that are in the process of being disbursed at the moment. I will have a net worth of close to 1M before all is said and done, most of which is in the form of cash or in a taxable brokerage account at VG. These funds are currently being managed by VG PAS for the time being. I plan on transitioning from PAS to self directed when I gain a better knowledge of investing. I wasn't sure if any of the above information would change any opinions on how I should be investing within my 401K or not.

Emergency funds: 6mo
Debt: 0
Tax Filing Status: Single
Tax Rate: 22% Federal 0% State
State of Residence:TX
Age:26
Desired Asset allocation: 80% stocks / 10% bonds
Desired International allocation: 25% of stocks

Funds Availabe:

Company Stock
BD STOCK FUND (ER:0.0122%)

Large Cap
ABF BW LG CP VAL INS ( ER:0.72%)
FID GROWTH CO POOL (0.43%)
NT S&P 500 IDX NL 4 (0.01%)

Mid-Cap
NT S&P 400 IDX NL 4 (0.025%)

Small Cap
US SMALL CAP I (0.4936%)

International
NT ACWI EX US IMI 4 (0.0725%)
VANG INTL GROWTH ADM (0.32%)

Bond Investments

Stable Value
INVESCO FIXED INCOME (0.33%)
Income
BAIRD AGGR BOND INST (0.3%)

Target Funds
BTC LP IDX 2055 N (0.06%)

venkman
Posts: 877
Joined: Tue Mar 14, 2017 10:33 pm

Re: New Job: Fideilty 401K Choices

Post by venkman » Wed Mar 13, 2019 11:50 pm

For the stocks, use the S&P 500 fund and the NT ACWI EX US fund. The ER on the bond funds is kinda high, but not prohibitive. Either one should be okay.

Once you get the $1M, you might consider increasing the allocation to bonds in the 401k, and holding mostly stocks in a taxable account (assuming you plan to earmark some of the $1M toward retirement). But you don't have to worry about that right now.

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Tyler Aspect
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Location: California
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Re: New Job: Fideilty 401K Choices

Post by Tyler Aspect » Thu Mar 14, 2019 12:12 am

Use only the S&P 500 index selection, and adjust your old 401k's bond allocation up to compensate.
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lakpr
Posts: 794
Joined: Fri Mar 18, 2011 9:59 am

Re: New Job: Fideilty 401K Choices

Post by lakpr » Thu Mar 14, 2019 8:49 am

Tyler Aspect wrote:
Thu Mar 14, 2019 12:12 am
Use only the S&P 500 index selection, and adjust your old 401k's bond allocation up to compensate.
The NT ACWI EX US fund expense ratio is just 0.0725%. For comparison, the Vanguard International Index fund, VGTSX, has an expense ratio of 0.17%. I would definitely use that fund for international exposure.

Agree with the second part of the advice, go full-stocks in this particular 401k, and adjust the amount of bonds in the old 401k to get to the overall exposure level. Don't ever close the old 401k.

cherijoh
Posts: 5353
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: New Job: Fideilty 401K Choices

Post by cherijoh » Thu Mar 14, 2019 9:05 am

redraider11 wrote:
Wed Mar 13, 2019 6:39 pm
Hello,
I recently started a new job that provides a 401K through Fidelity. I had a 403B at Vangaurd at my previous job. I utilized a traditional 3 fund portfolio for this account (VTSAX:65% VTIAX:25% VBTLX:10%). I am very comfortable with this AA and would like to replicate it as much as possible with the funds with my new account. I will post the funds available below. Please feel free to give me some guidance on this new account.

Another tidbit of information about myself is that I am beneficiary of two estates that are in the process of being disbursed at the moment. I will have a net worth of close to 1M before all is said and done, most of which is in the form of cash or in a taxable brokerage account at VG. These funds are currently being managed by VG PAS for the time being. I plan on transitioning from PAS to self directed when I gain a better knowledge of investing. I wasn't sure if any of the above information would change any opinions on how I should be investing within my 401K or not.

Emergency funds: 6mo
Debt: 0
Tax Filing Status: Single
Tax Rate: 22% Federal 0% State
State of Residence:TX
Age:26
Desired Asset allocation: 80% stocks / 10% bonds
Desired International allocation: 25% of stocks

Funds Availabe:

Company Stock
BD STOCK FUND (ER:0.0122%)

Large Cap
ABF BW LG CP VAL INS ( ER:0.72%)
FID GROWTH CO POOL (0.43%)
NT S&P 500 IDX NL 4 (0.01%)

Mid-Cap
NT S&P 400 IDX NL 4 (0.025%)

Small Cap
US SMALL CAP I (0.4936%)

International
NT ACWI EX US IMI 4 (0.0725%)
VANG INTL GROWTH ADM (0.32%)

Bond Investments

Stable Value
INVESCO FIXED INCOME (0.33%)
Income
BAIRD AGGR BOND INST (0.3%)

Target Funds
BTC LP IDX 2055 N (0.06%)
I think you need to look at AA on a total portfolio basis, not an account by account basis. Since the bond funds in the 401k plan have a relatively high ER, I'd periodically increase the bonds in your 403B to cover your entire bond allocation.

For international I'd go with the lower ER fund and for domestic stock you could go with the S&P 500 or a mix of the S&P 500 and the S&P 400 midcap which I believe gives you the next 400 largest stocks in the S&P index beyond the top 500. I use a combination of S&P 500 index and a extended market index in a 4:1 ratio. I think that would be close enough for your purposes. If your 403b has a good low cost Small cap index fund you could add that to the mix.

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NYCPete
Posts: 724
Joined: Thu Apr 12, 2007 1:24 pm
Location: New York, NY

Re: New Job: Fideilty 401K Choices

Post by NYCPete » Thu Mar 14, 2019 9:29 am

redraider11 wrote:
Wed Mar 13, 2019 6:39 pm
Hello,
I recently started a new job that provides a 401K through Fidelity. I had a 403B at Vangaurd at my previous job. I utilized a traditional 3 fund portfolio for this account (VTSAX:65% VTIAX:25% VBTLX:10%).
lakpr wrote:
Thu Mar 14, 2019 8:49 am
Tyler Aspect wrote:
Thu Mar 14, 2019 12:12 am
Use only the S&P 500 index selection, and adjust your old 401k's bond allocation up to compensate.
The NT ACWI EX US fund expense ratio is just 0.0725%. For comparison, the Vanguard International Index fund, VGTSX, has an expense ratio of 0.17%. I would definitely use that fund for international exposure.

Agree with the second part of the advice, go full-stocks in this particular 401k, and adjust the amount of bonds in the old 401k to get to the overall exposure level. Don't ever close the old 401k.


OP, I know this isn't what you're asking about, but I want to add to what lakpr said about not closing the old 403b account. Strongly consider leaving your old 403b where it is, and do not roll it over into a rollover IRA. If it is run by Vanguard, then it likely has very low costs and can be kept around for the long term. Creating unnessecary rollover IRAs may cause you headaches down the line. If your income increases and puts you out of reach for Roth contributions, you'll more easily be able to utilize back door Roth contributions when you have no trad./rollover money lying around. Having a bunch of trad./rollover IRA funds will create a significant tax hit from making backdoor roth contributions. Keeping the money in a 401k/403b style plan will not.

Congrats on the new job!

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha

User avatar
ruralavalon
Posts: 15040
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: New Job: Fideilty 401K Choices

Post by ruralavalon » Thu Mar 14, 2019 2:00 pm

I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

In my opinion in your 401k these are the funds to consider using:
1) Northern Trust S&P 500 IDX NL 4 (81% of U.S.stock market, selected large-cap and mid-cap companies) ER 0.01%;
2) Northern Trust ACWI EX US IMI 4 (a total international stock index fund) ER 0.0725%; and
3) BAIRD AGGR BOND INST (intermediate-term, investment-grade bonds) (BAGIX???) ER 0.3%.

What is the ticker symbol for the Baird bond fund offered in your 401k?

redraider11 wrote:Another tidbit of information about myself is that I am beneficiary of two estates that are in the process of being disbursed at the moment. I will have a net worth of close to 1M before all is said and done, most of which is in the form of cash or in a taxable brokerage account at VG. These funds are currently being managed by VG PAS for the time being. I plan on transitioning from PAS to self directed when I gain a better knowledge of investing. I wasn't sure if any of the above information would change any opinions on how I should be investing within my 401K or not.
What sort of accounts will be involved? Inherited IRAs, taxable brokerage accounts? How much is in your 401k account? Do you still have the old 403b account, or was that rolled over? How much is in each account which you currently have or will aquire?

It will make a difference.

It's often better to coordinate investments among all accounts, treating all accounts together as a single unified portfolio, rather than treating each account separately.

Don't try to place all elements of the desired asset allocation in each account. It may, or may not, be better to use your 401k entirely for the bond fund.

Bond funds are not very tax-efficient, so ordinarily should be held in a tax-advantaged account, preferably in a tax-deferred account like your 401k. In taxable brokerage account stick to very tax-efficient stock index funds. Wiki article "Tax-efficient fund placement".

Examples of very tax-efficient stock index funds include:
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%; and
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%.
Those funds are also suitable for any type of account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

JBTX
Posts: 4787
Joined: Wed Jul 26, 2017 12:46 pm

Re: New Job: Fideilty 401K Choices

Post by JBTX » Thu Mar 14, 2019 6:14 pm

redraider11 wrote:
Wed Mar 13, 2019 6:39 pm
Hello,
I recently started a new job that provides a 401K through Fidelity. I had a 403B at Vangaurd at my previous job. I utilized a traditional 3 fund portfolio for this account (VTSAX:65% VTIAX:25% VBTLX:10%). I am very comfortable with this AA and would like to replicate it as much as possible with the funds with my new account. I will post the funds available below. Please feel free to give me some guidance on this new account.

Another tidbit of information about myself is that I am beneficiary of two estates that are in the process of being disbursed at the moment. I will have a net worth of close to 1M before all is said and done, most of which is in the form of cash or in a taxable brokerage account at VG. These funds are currently being managed by VG PAS for the time being. I plan on transitioning from PAS to self directed when I gain a better knowledge of investing. I wasn't sure if any of the above information would change any opinions on how I should be investing within my 401K or not.

Emergency funds: 6mo
Debt: 0
Tax Filing Status: Single
Tax Rate: 22% Federal 0% State
State of Residence:TX
Age:26
Desired Asset allocation: 80% stocks / 10% bonds
Desired International allocation: 25% of stocks

Funds Availabe:

Company Stock
BD STOCK FUND (ER:0.0122%)

Large Cap
ABF BW LG CP VAL INS ( ER:0.72%)
FID GROWTH CO POOL (0.43%)
NT S&P 500 IDX NL 4 (0.01%)

Mid-Cap
NT S&P 400 IDX NL 4 (0.025%)

Small Cap
US SMALL CAP I (0.4936%)

International
NT ACWI EX US IMI 4 (0.0725%)
VANG INTL GROWTH ADM (0.32%)

Bond Investments

Stable Value
INVESCO FIXED INCOME (0.33%)
Income
BAIRD AGGR BOND INST (0.3%)

Target Funds
BTC LP IDX 2055 N (0.06%)
Is 2055 the only target date available? That is certainly a great expense ratio for a target date fund. 2055 basically has no bonds. If you backed up to 2040 or so you may get closer to what you want.

I know you are pretty content with your AA and I'm guessing target dates have two much international for you, but don't rule them out. You don't mention how much your 401k is so it really may not make that much difference.

https://www.morningstar.com/funds/xnas/ ... quote.html

Maybe do the target date here and have more domestic stocks and bonds in your other 401k.

I agree your eventual allocation should encompass all of your investments.

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