Selecting funds in Fidelity - 403(b)

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Cora0623
Posts: 1
Joined: Mon Sep 09, 2019 9:44 pm

Selecting funds in Fidelity - 403(b)

Post by Cora0623 » Mon Sep 09, 2019 10:47 pm

Emergency funds: 2-3 months

Debt: Credit cards: 6K (~14% rate), School Loans: 49k (6% rate)

Tax Filing Status: Single

Tax Rate: 12.25% Federal, 0% State

State of Residence: Texas

Age: 31

Desired Asset allocation: 95% stocks / 5% bonds (Although I am open to % changes)
Desired International allocation: Not sure, I am open to suggestions

I am new to investing and don't have an established portfolio or savings.

Current retirement assets

None
_______________________________________________________________

Contributions

New annual Contributions
$4665, 403b (8.5% employer contributions)

Available funds

Funds available in 403(b)
Columbia Contrarian Core Fund Institutional Class (SMGIX) (0.77%)
Fidelity 500 Index (FXAIX) (0.015%)
Fidelity Contrafund - Class K (FCNKX) (0.73%)
Fidelity Fund - Class K (FFDKX) (0.40%)
MFS Value Fund Class R6 (MEIKX) (0.48%)
MainStay Large Cap Growth Fund Class R6 (MLRSX) (0.64%)
T. Rowe Price Dividend Growth Fund I Class (PDGIX) (0.51%)
Fidelity Extended Market Index Fund (FSMAX) (0.045%)
Fidelity Low-Priced Stock Fund - Class K (FLPKX) (0.53%)
Morgan Stanley Institutional Fund Trust Discovery Portfolio Class IS (MMCGX) (0.66%)
Virtus Ceredex Mid-Cap Value Equity Fund Class R6 (SMVZX) (0.87%)
Carillon Eagle Small Cap Growth Fund Class R6 (HSRUX) (0.65%)
Heartland Value Plus Fund Institutional Class (HNVIX) (0.95%)
Royce Pennsylvania Mutual Fund Institutional Class (RPMIX) (0.88%)
Columbia Acorn International Fund Institutional 2 Class (CAIRX) (0.94%)
DFA Emerging Markets Portfolio Institutional Class (DFEMX) (0.57%)
Fidelity International Discovery Fund - Class K (FIDKX) (0.77%)
Fidelity International Index Fund (FSPSX) (0.035%)
Invesco International Growth Fund Class R6 (IGFRX) (0.91%)
Oakmark International Fund Investor Class (OAKIX) (1.01%)
Cohen & Steers Realty Shares Fund Class L (CSRSX) (0.94%)
T. Rowe Price Equity Income Fund I Class (REIPX) (0.54%)

Blended Investments
Fidelity Freedom 2005 Fund - Class K (FSNJX) (0.42%)
Fidelity Freedom 2010 Fund - Class K (FSNKX) (0.46%)
Fidelity Freedom 2015 Fund - Class K (FSNLX) (0.49%)
Fidelity Freedom 2020 Fund - Class K (FSNOX) (0.53%)
Fidelity Freedom 2025 Fund - Class K (FSNPX) (0.56%)
Fidelity Freedom 2030 Fund - Class K (FSNQX) (0.60%)
Fidelity Freedom 2035 Fund - Class K (FSNUX) (0.63%)
Fidelity Freedom 2040 Fund - Class K (FSNVX) (0.65%)
Fidelity Freedom 2045 Fund - Class K (FSNZX) (0.65%)
Fidelity Freedom 2050 Fund - Class K (FSNBX) (0.65%)
Fidelity Freedom 2055 Fund - Class K (FNSDX) (0.65%)
Fidelity Freedom 2060 Fund - Class K (FNSFX) (0.65%)
Fidelity Freedom Income Fund - Class K (FNSHX) (0.42%)
Oakmark Equity And Income Fund Investor Class (OAKBX) (0.88%)

Bonds
American Century Inflation Adjusted Bond Fund R5 Class (AIANX) (0.27%)
Fidelity High Income Fund (SPHIX) (0.70%)
Fidelity Government Income Fund (FGOVX) (0.45%)
PIMCO Total Return Fund Institutional Class (PTTRX) (0.71%)
Templeton Global Bond Fund Class R6 (FBNRX) (0.67%)
Vanguard Total Bond Market Index Fund Institutional Shares (VBTIX) (0.035%)

Short-Term
Fidelity Government Cash Reserves (FDRXX) (0.38%)


Questions:
1. What funds should I select? I would like to keep it simple (3-, 4-, or 5-fund portfolio)

2. What % should I put into each fund? Given my age, I would like to be aggressive.

3. I plan to pay off the credit card debt this year and will be applying for loan forgiveness for the loans (I am a health professional). After paying off the debt, would you recommend I put more money into the 403b, or open a Roth IRA or other account and invest there?

Thank you for the help!

User avatar
Frugal Al
Posts: 1717
Joined: Fri May 28, 2010 10:09 am

Re: Selecting funds in Fidelity - 403(b)

Post by Frugal Al » Tue Sep 10, 2019 5:25 am

Cora, you seem to have a good plan. I like to keep 401/403 investments simple and low cost, while taking advantage of the inherent dollar cost averaging provided by payroll investing. In my opinion the Fidelity 500 Index (FXAIX) achieves that end with a low expense level. You can alter your overall allocation as you grow your personal Roth IRA and taxable investments. If equities allocation gets uncomfortably high you can move some of the FXAIX over to the Vanguard Total Bond. That 95% equities target allocation is a bit high for a new investor, but you can revisit that once you have some significant amounts accumulated. I generally don't recommend higher than 80% equities.

student
Posts: 3748
Joined: Fri Apr 03, 2015 6:58 am

Re: Selecting funds in Fidelity - 403(b)

Post by student » Tue Sep 10, 2019 5:46 am

If you are starting, probably make it as simple as possible, so Fidelity 500 Index for domestic, Fidelity International Index for international and Vanguard Bond Index for fixed income. Your asset allocation very aggressive but as long as you understand it, it's ok.

retiredjg
Posts: 37438
Joined: Thu Jan 10, 2008 12:56 pm

Re: Selecting funds in Fidelity - 403(b)

Post by retiredjg » Tue Sep 10, 2019 8:35 am

Cora0623 wrote:
Mon Sep 09, 2019 10:47 pm

Fidelity 500 Index (FXAIX) (0.015%)
Fidelity Extended Market Index Fund (FSMAX) (0.045%)
Fidelity International Index Fund (FSPSX) (0.035%)
Vanguard Total Bond Market Index Fund Institutional Shares (VBTIX) (0.035%)
These are your best fund choices. You'll notice they are also the lowest cost fund choices. :happy

1. What funds should I select? I would like to keep it simple (3-, 4-, or 5-fund portfolio)
See above.
2. What % should I put into each fund? Given my age, I would like to be aggressive.
I'd suggest an 80% stock and 20% bond allocation with about 1/3rd of the stock in international. To achieve that, you'd use something like

45% Fidelity 500 Index (FXAIX) (0.015%)
11% Fidelity Extended Market Index Fund (FSMAX) (0.045%)
24% Fidelity International Index Fund (FSPSX) (0.035%)
20% Vanguard Total Bond Market Index Fund Institutional Shares (VBTIX) (0.035%)

The two top funds combine to give you something like total stock market. If you have read about the "3 fund portfolio", this is one way to make it up using the funds you have available.

3. I plan to pay off the credit card debt this year and will be applying for loan forgiveness for the loans (I am a health professional). After paying off the debt, would you recommend I put more money into the 403b, or open a Roth IRA or other account and invest there?
Right now, your debt is more important than even the 403b plan as long as you are contributing enough to get the entire employer match. When the debt is gone, I'd use Roth IRA (while still getting the entire employer match at work).

retiredjg
Posts: 37438
Joined: Thu Jan 10, 2008 12:56 pm

Re: Selecting funds in Fidelity - 403(b)

Post by retiredjg » Tue Sep 10, 2019 8:39 am

Cora0623 wrote:
Mon Sep 09, 2019 10:47 pm
Tax Rate: 12.25% Federal, 0% State
This is not a tax bracket or a marginal rate. It is likely an effective rate which is not very useful for making decisions.

Learn your real tax bracket by comparing your taxable income (line 10 on the postcard size 2018 tax form) to this chart.

http://www.moneychimp.com/features/tax_brackets.htm

You can learn your real marginal rate by manipulating your tax return by $100 and see how much tax is taken out of that last $100. This assumes you do your own tax return.

Ferdinand2014
Posts: 581
Joined: Mon Dec 17, 2018 6:49 pm

Re: Selecting funds in Fidelity - 403(b)

Post by Ferdinand2014 » Tue Sep 10, 2019 8:43 am

Cora0623 wrote:
Mon Sep 09, 2019 10:47 pm
Emergency funds: 2-3 months

Debt: Credit cards: 6K (~14% rate), School Loans: 49k (6% rate)

Tax Filing Status: Single

Tax Rate: 12.25% Federal, 0% State

State of Residence: Texas

Age: 31

Desired Asset allocation: 95% stocks / 5% bonds (Although I am open to % changes)
Desired International allocation: Not sure, I am open to suggestions

I am new to investing and don't have an established portfolio or savings.

Current retirement assets

None
_______________________________________________________________

Contributions

New annual Contributions
$4665, 403b (8.5% employer contributions)

Available funds

Funds available in 403(b)
Columbia Contrarian Core Fund Institutional Class (SMGIX) (0.77%)
Fidelity 500 Index (FXAIX) (0.015%)
Fidelity Contrafund - Class K (FCNKX) (0.73%)
Fidelity Fund - Class K (FFDKX) (0.40%)
MFS Value Fund Class R6 (MEIKX) (0.48%)
MainStay Large Cap Growth Fund Class R6 (MLRSX) (0.64%)
T. Rowe Price Dividend Growth Fund I Class (PDGIX) (0.51%)
Fidelity Extended Market Index Fund (FSMAX) (0.045%)
Fidelity Low-Priced Stock Fund - Class K (FLPKX) (0.53%)
Morgan Stanley Institutional Fund Trust Discovery Portfolio Class IS (MMCGX) (0.66%)
Virtus Ceredex Mid-Cap Value Equity Fund Class R6 (SMVZX) (0.87%)
Carillon Eagle Small Cap Growth Fund Class R6 (HSRUX) (0.65%)
Heartland Value Plus Fund Institutional Class (HNVIX) (0.95%)
Royce Pennsylvania Mutual Fund Institutional Class (RPMIX) (0.88%)
Columbia Acorn International Fund Institutional 2 Class (CAIRX) (0.94%)
DFA Emerging Markets Portfolio Institutional Class (DFEMX) (0.57%)
Fidelity International Discovery Fund - Class K (FIDKX) (0.77%)
Fidelity International Index Fund (FSPSX) (0.035%)
Invesco International Growth Fund Class R6 (IGFRX) (0.91%)
Oakmark International Fund Investor Class (OAKIX) (1.01%)
Cohen & Steers Realty Shares Fund Class L (CSRSX) (0.94%)
T. Rowe Price Equity Income Fund I Class (REIPX) (0.54%)

Blended Investments
Fidelity Freedom 2005 Fund - Class K (FSNJX) (0.42%)
Fidelity Freedom 2010 Fund - Class K (FSNKX) (0.46%)
Fidelity Freedom 2015 Fund - Class K (FSNLX) (0.49%)
Fidelity Freedom 2020 Fund - Class K (FSNOX) (0.53%)
Fidelity Freedom 2025 Fund - Class K (FSNPX) (0.56%)
Fidelity Freedom 2030 Fund - Class K (FSNQX) (0.60%)
Fidelity Freedom 2035 Fund - Class K (FSNUX) (0.63%)
Fidelity Freedom 2040 Fund - Class K (FSNVX) (0.65%)
Fidelity Freedom 2045 Fund - Class K (FSNZX) (0.65%)
Fidelity Freedom 2050 Fund - Class K (FSNBX) (0.65%)
Fidelity Freedom 2055 Fund - Class K (FNSDX) (0.65%)
Fidelity Freedom 2060 Fund - Class K (FNSFX) (0.65%)
Fidelity Freedom Income Fund - Class K (FNSHX) (0.42%)
Oakmark Equity And Income Fund Investor Class (OAKBX) (0.88%)

Bonds
American Century Inflation Adjusted Bond Fund R5 Class (AIANX) (0.27%)
Fidelity High Income Fund (SPHIX) (0.70%)
Fidelity Government Income Fund (FGOVX) (0.45%)
PIMCO Total Return Fund Institutional Class (PTTRX) (0.71%)
Templeton Global Bond Fund Class R6 (FBNRX) (0.67%)
Vanguard Total Bond Market Index Fund Institutional Shares (VBTIX) (0.035%)

Short-Term
Fidelity Government Cash Reserves (FDRXX) (0.38%)


Questions:
1. What funds should I select? I would like to keep it simple (3-, 4-, or 5-fund portfolio)

2. What % should I put into each fund? Given my age, I would like to be aggressive.

3. I plan to pay off the credit card debt this year and will be applying for loan forgiveness for the loans (I am a health professional). After paying off the debt, would you recommend I put more money into the 403b, or open a Roth IRA or other account and invest there?

Thank you for the help!
This is easy. FXAIX hands down. FSPSX if you decide to have any international. VBTIX for your bond fund. You do not need anything else. I personally don't use international. If you do, make it anywhere from 10-40% of your STOCK portion. The stock/bond allocation should be anywhere from 25/75 to 75/25. I might suggest 60% FXAIX/15% FSPSX/40% VBTIX. that's a 75/25 stock/bond and 20% international stock percent. You could add FSMAX at a ratio of 80/20 to FXAIX to mimic the total stock market vs the S&P 500, but will add unnecessary complication and won't make any difference in your returns at least historically over the past 114 years. That is a generic suggestion that follows the 3 fund concept. I personally hold 100% FXAIX only and cash.
Last edited by Ferdinand2014 on Tue Sep 10, 2019 9:33 am, edited 1 time in total.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

Jack FFR1846
Posts: 9917
Joined: Tue Dec 31, 2013 7:05 am

Re: Selecting funds in Fidelity - 403(b)

Post by Jack FFR1846 » Tue Sep 10, 2019 9:29 am

1: what to pick?
Fidelity 500 Index (FXAIX) (0.015%)
2: how much?

all of it
Bogle: Smart Beta is stupid

sco
Posts: 898
Joined: Thu Sep 24, 2015 2:28 pm

Re: Selecting funds in Fidelity - 403(b)

Post by sco » Tue Sep 10, 2019 3:36 pm

If this is your only account, don't make it overly complicated. The few funds outlined are all you should ever need.

If you have other accounts then look at all of them in whole. Often smaller accounts can just have 1 fund and you can rebalance as needed in 1 larger account.

nix4me
Posts: 294
Joined: Sat Oct 13, 2018 9:32 am

Re: Selecting funds in Fidelity - 403(b)

Post by nix4me » Tue Sep 10, 2019 3:56 pm

100% in the Fidelity 500 fund is what I would do at your age.

lakpr
Posts: 2221
Joined: Fri Mar 18, 2011 9:59 am

Re: Selecting funds in Fidelity - 403(b)

Post by lakpr » Tue Sep 10, 2019 8:29 pm

$6K at 14% rate is an emergency! I would spend down that 2 to 3 months EF to zero and pay it off yesterday. If not enough, I would suggest you forego 403b contributions even for a couple of months.

Refinance those student loans, but only if you pay down credit card debt. Refinancing looks at your credit scores, and you want to be in a good shape first before approaching a lender to refi. Score increase can only happen if you pay off the credit card debt.

Investing, honestly, should be your THIRD priority item, not the first.

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