Fidelity Freedom Fund Question [Freedom Fund vs Freedom Index Fund]

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Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Fidelity Freedom Fund Question [Freedom Fund vs Freedom Index Fund]

Post by Mikano »

Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 and the Freedom index has a .012 planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael


[Title edited to better reflect the poster's question -- moderator oldcomputerguy]
Last edited by Mikano on Fri Oct 16, 2020 1:16 pm, edited 1 time in total.
Grt2bOutdoors
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Re: New Member here quick question

Post by Grt2bOutdoors »

Mikano wrote: Fri Oct 16, 2020 11:46 am Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 and the Freedom index has a .012 planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael
Are you satisfied with the performance of the fund you hold now? Six bps is like splitting straws, but if the performance is as good or better than index then I’d stay with it. Is the expense ratio really .072 or is it .72? If the latter, then I’d move it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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David Jay
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Re: New Member here quick question

Post by David Jay »

Welcome to the forum!

We would definitely recommend making this switch, Jack Bogle used to say: "you get what you don't pay for". There is no reason to wait for the dividend, you will get equivalent proportions of the dividend from the old fund and the new fund values respectively if you switch today.

BTW - I think your expense ratios are both off by one digit, I believe they are .72 and .12 respectively.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
Topic Author
Mikano
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Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

Grt2bOutdoors wrote: Fri Oct 16, 2020 12:25 pm
Mikano wrote: Fri Oct 16, 2020 11:46 am Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 and the Freedom index has a .012 planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael
Are you satisfied with the performance of the fund you hold now? Six bps is like splitting straws, but if the performance is as good or better than index then I’d stay with it. Is the expense ratio really .072 or is it .72? If the latter, then I’d move it.
Yes its .72
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

David Jay wrote: Fri Oct 16, 2020 12:26 pm Welcome to the forum!

We would definitely recommend making this switch, Jack Bogle used to say: "you get what you don't pay for". There is no reason to wait for the dividend, you will get equivalent proportions of the dividend from the old fund and the new fund values respectively if you switch today.

BTW - I think your expense ratios are both off by one digit, I believe they are .72 and .12 respectively.
Thank you David, defiantly will make that switch. will save more in the long run.
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galawdawg
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Re: New Member here quick question

Post by galawdawg »

Welcome to Bogleheads!

You can compare the two funds here: https://fundresearch.fidelity.com/fund- ... HX%2CFIHFX

It appears that a switch would likely be a wise move.

You can lower your fees even more by "recreating" the all-in-one target date fund using the individual component index funds. Take a look at the asset allocation of the Freedom Index 2035 fund. You can use FSKAX for your US equities Index fund (0.015% ER), FSPSX for your international equities index fund (0.035% ER), FXNAX for your US bond index fund (0.025% ER) and FUMBX for short-term treaasury bond index (0.03% ER). The only advantage to holding the target date fund is that Fidelity rebalances for you (at a cost of about 0.1% per year. If you have a $100k portfolio, that is an annual expense of $100, for a $1 million portfolio, it costs $1,000 annually. It is just a personal decision if the additional expense is worth it to avoid rebalancing yourself.
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gwe67
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Re: New Member here quick question

Post by gwe67 »

Please change the subject of your post to reflect a summary of your question. This will draw more interest and help with searchability.
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bloom2708
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Re: New Member here quick question

Post by bloom2708 »

The primary question is "do you want bonds in your Roth IRA?"

A Target fund steadily increases bonds.

Placement might dictate that your Roth (Roths) have all stock index funds. Last to be used, no RMD, tax free growth.

Our Roth accounts are 100% VTSAX. Set it and forget it. Bond are in 401k/Traditional IRAs.

Look at your portfolio as one big portfolio.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

bloom2708 wrote: Fri Oct 16, 2020 1:16 pm The primary question is "do you want bonds in your Roth IRA?"

A Target fund steadily increases bonds.

Placement might dictate that your Roth (Roths) have all stock index funds. Last to be used, no RMD, tax free growth.

Our Roth accounts are 100% VTSAX. Set it and forget it. Bond are in 401k/Traditional IRAs.

Look at your portfolio as one big portfolio.
Good Morning, I'm 48 years old. I don't want to have any bonds now but long as the freedom fund adjusts itself towards near retirement I'll stick with.
Going more aggressive in index funds now that I'm probably keeping since its been paying good dividends. Max out Roth and Roth 401 at Job.
My Index funds here, my three index funds I been putting money in every year. I do own some stock in Roth as well. Also in my Broker account I have two funds I put in weekly or bi-weekly every month.
Roth Ira :
FXAIX
FSPGX
FNCMX

Broker tax Acc:
SPHD
PEY
I'm looking at more dividends monthly if not quarterly
drumboy256
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Joined: Sat Jun 06, 2020 2:21 pm

Re: New Member here quick question

Post by drumboy256 »

Mikano wrote: Sat Oct 17, 2020 7:51 am
bloom2708 wrote: Fri Oct 16, 2020 1:16 pm The primary question is "do you want bonds in your Roth IRA?"

A Target fund steadily increases bonds.

Placement might dictate that your Roth (Roths) have all stock index funds. Last to be used, no RMD, tax free growth.

Our Roth accounts are 100% VTSAX. Set it and forget it. Bond are in 401k/Traditional IRAs.

Look at your portfolio as one big portfolio.
Good Morning, I'm 48 years old. I don't want to have any bonds now but long as the freedom fund adjusts itself towards near retirement I'll stick with.
Going more aggressive in index funds now that I'm probably keeping since its been paying good dividends. Max out Roth and Roth 401 at Job.
My Index funds here, my three index funds I been putting money in every year. I do own some stock in Roth as well. Also in my Broker account I have two funds I put in weekly or bi-weekly every month.
Roth Ira :
FXAIX
FSPGX
FNCMX

Broker tax Acc:
SPHD
PEY
I'm looking at more dividends monthly if not quarterly
Personally (I'm about 10 years behind you), I would go with: FSKAX, FXAIX and FXNAX in your Roth and kick FSPGX and FNCMX to the curb. FSKAX is a better fund that you are super tilted on tech heavy growth which doesn't always mean you're going to see gains. I also would suggest on doing some on cutting back some of your risk based on age. For example, look for the 90/10, 80/20, 70/30 threads of which in all of the reading I've done, a 90/10 split like I was doing was only going to net me a 0.4% gain--- which is a LOT more risk to endure vs. the 80/20 portfolio. As for dividends, I personally don't have any individual stocks that award dividends monthly (aside from total bonds segments) and I wouldn't count on that as passive income in the future. (just my point of view.)
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nedsaid
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Re: Fidelity Freedom Fund Question

Post by nedsaid »

Mikano wrote: Fri Oct 16, 2020 11:46 am Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 and the Freedom index has a .012 planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael
I have owned the Fidelity Freedom 2025 form in both Active and Index form. Whenever I checked on it, the Active version oddly enough beat the Index version in performance by a hair despite the difference in expense ratios. Either would be a good choice. I did switch to the Index version because while performance is not guaranteed what you can count on is the expense ratio taken out year after year. All other things being equal, I prefer lower expenses. I am very pleased with the Freedom 2025 Index fund.
A fool and his money are good for business.
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ruralavalon
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Re: Fidelity Freedom Fund Question

Post by ruralavalon »

I prefer a good low cost index fund over a good actively managed fund. Performance is temporary, expenses are forever.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: Fidelity Freedom Fund Question

Post by Mikano »

nedsaid wrote: Sat Oct 17, 2020 12:13 pm
Mikano wrote: Fri Oct 16, 2020 11:46 am Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 with a turnover rate of 31% and the Freedom index has a .012 with a 80% planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael
I have owned the Fidelity Freedom 2025 form in both Active and Index form. Whenever I checked on it, the Active version oddly enough beat the Index version in performance by a hair despite the difference in expense ratios. Either would be a good choice. I did switch to the Index version because while performance is not guaranteed what you can count on is the expense ratio taken out year after year. All other things being equal, I prefer lower expenses. I am very pleased with the Freedom 2025 Index fund.
Last edited by Mikano on Mon Oct 19, 2020 4:08 pm, edited 2 times in total.
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: Fidelity Freedom Fund Question

Post by Mikano »

ruralavalon wrote: Sat Oct 17, 2020 1:29 pm I prefer a good low cost index fund over a good actively managed fund. Performance is temporary, expenses are forever.
Thank you
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

David Jay wrote: Fri Oct 16, 2020 12:26 pm Welcome to the forum!

We would definitely recommend making this switch, Jack Bogle used to say: "you get what you don't pay for". There is no reason to wait for the dividend, you will get equivalent proportions of the dividend from the old fund and the new fund values respectively if you switch today.

BTW - I think your expense ratios are both off by one digit, I believe they are .72 and .12 respectively.
Thank you David
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

galawdawg wrote: Fri Oct 16, 2020 1:06 pm Welcome to Bogleheads!

You can compare the two funds here: https://fundresearch.fidelity.com/fund- ... HX%2CFIHFX

It appears that a switch would likely be a wise move.

You can lower your fees even more by "recreating" the all-in-one target date fund using the individual component index funds. Take a look at the asset allocation of the Freedom Index 2035 fund. You can use FSKAX for your US equities Index fund (0.015% ER), FSPSX for your international equities index fund (0.035% ER), FXNAX for your US bond index fund (0.025% ER) and FUMBX for short-term treaasury bond index (0.03% ER). The only advantage to holding the target date fund is that Fidelity rebalances for you (at a cost of about 0.1% per year. If you have a $100k portfolio, that is an annual expense of $100, for a $1 million portfolio, it costs $1,000 annually. It is just a personal decision if the additional expense is worth it to avoid rebalancing yourself.
Thank you
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CyberBob
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Re: Fidelity Freedom Fund Question [Freedom Fund vs Freedom Index Fund]

Post by CyberBob »

Just to confuse things further, there are also the Freedom Blend funds.
They are part indexed and part active.
Topic Author
Mikano
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Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

Grt2bOutdoors wrote: Fri Oct 16, 2020 12:25 pm
Mikano wrote: Fri Oct 16, 2020 11:46 am Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 and the Freedom index has a .012 planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael
Are you satisfied with the performance of the fund you hold now? Six bps is like splitting straws, but if the performance is as good or better than index then I’d stay with it. Is the expense ratio really .072 or is it .72? If the latter, then I’d move it.
.72
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

Mikano wrote: Wed Oct 21, 2020 12:57 pm
Grt2bOutdoors wrote: Fri Oct 16, 2020 12:25 pm
Mikano wrote: Fri Oct 16, 2020 11:46 am Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 and the Freedom index has a .012 planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael
Are you satisfied with the performance of the fund you hold now? Six bps is like splitting straws, but if the performance is as good or better than index then I’d stay with it. Is the expense ratio really .072 or is it .72? If the latter, then I’d move it.
.072 %
Topic Author
Mikano
Posts: 11
Joined: Fri Oct 16, 2020 11:28 am

Re: New Member here quick question

Post by Mikano »

David Jay wrote: Fri Oct 16, 2020 12:26 pm Welcome to the forum!

We would definitely recommend making this switch, Jack Bogle used to say: "you get what you don't pay for". There is no reason to wait for the dividend, you will get equivalent proportions of the dividend from the old fund and the new fund values respectively if you switch today.

BTW - I think your expense ratios are both off by one digit, I believe they are .72 and .12 respectively.
.072% .012 %
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David Jay
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Re: Fidelity Freedom Fund Question [Freedom Fund vs Freedom Index Fund]

Post by David Jay »

Image
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
Grt2bOutdoors
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Location: New York

Re: New Member here quick question

Post by Grt2bOutdoors »

Mikano wrote: Wed Oct 21, 2020 12:57 pm
Grt2bOutdoors wrote: Fri Oct 16, 2020 12:25 pm
Mikano wrote: Fri Oct 16, 2020 11:46 am Hi all new to the Boglehead,

I been invested in my Roth Ira since 1997. My quest is I'm invested in the Fidelity freedom fund 2035 and the expense ratio is .072. I wanted to know if its a good idea to transfer all cash and gains from this Freedom fund to a Freedom 2035 Index Fund in January after this years 2020 December dividends.
The Ratio expense in my Freedom fund is .072 and the Freedom index has a .012 planning on keeping this fund for good.

Any help with be appreciated
Thank You
Michael
Are you satisfied with the performance of the fund you hold now? Six bps is like splitting straws, but if the performance is as good or better than index then I’d stay with it. Is the expense ratio really .072 or is it .72? If the latter, then I’d move it.
.72
Move it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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