3 Accounts - Asset Allocation

[LearningMustachian72]

Hey,

My wife and I are maxing out 3 tax advantaged retirement accounts.  I have gone total market index funds to keep things simple but thinking of putting 10% in one account to REIT index.  Good idea?

Account 1 - 100% SP500 Index (Closest to total market offered and 0.01% fee)
Account 2 - 100% VSPMX @ 0.02% fees
Account 3 - 100% FSKAX @ 0.015% fees
                  (Considering putting 10% in FSRNX at 0.07% fees. Note that Fidelity is only broker we can use)

We are in our early 30s with a retirement goal of 50 with a somewhat more aggressive approach.

Any feedback is much appreciated.

[MustacheAndaHalf]

"Total Market" means U.S. market, not international.  While REITs have low correlation and are good 10% diversification, you should also consider adding international to one of those accounts.
https://investor.vanguard.com/mutual-funds/profile/VTSNX

Vanguard had a really good white paper on the topic that is gone from the location where I linked it.  But this research brief is similar, and shorter:
https://www.vanguardinvestments.se/documents/strategic-asset-allocation-brief-tlor.pdf

[BicycleB]

Hey,

My wife and I are maxing out 3 tax advantaged retirement accounts.  I have gone total market index funds to keep things simple but thinking of putting 10% in one account to REIT index.  Good idea?

Account 1 - 100% SP500 Index (Closest to total market offered and 0.01% fee)
Account 2 - 100% VSPMX @ 0.02% fees
Account 3 - 100% FSKAX @ 0.015% fees
                  (Considering putting 10% in FSRNX at 0.07% fees. Note that Fidelity is only broker we can use)

We are in our early 30s with a retirement goal of 50 with a somewhat more aggressive approach.

Any feedback is much appreciated.

While waiting for wiser commenters:
1. I think this diversification could reduce average volatility without reducing total return too much
2. The above guess is based on the assumptions that real estate returns would be close to stock ones over time but that may not be true
3. I assume real estate will on average be more stable than stocks and partially uncorrelated, both tending to produce the result in 1. I can't be sure this will work but guess it will.
4. I do something roughly similar but in a different investment company. Happy so far without any amazing results, but also without any tragedies.
5. FSRNX shows significant lag compared to "real estate" in Fidelity's public facing materials over periods of 3 years and longer. Maybe a wiser commenter can suggest reasons why, and discuss whether FSRNX is a reasonable vehicle for the proposed strategy?
https://fundresearch.fidelity.com/mutual-funds/summary/316146232#

TL;DR - sounds maybe reasonable, but research FSRNX and listen to other posters. :)

[JoePublic3.14]

10% of the total, or 10% of just the amount in account 3?

What’s the overall make-up? You should consider all accounts together.

[LearningMustachian72]

Yeah, 10% in the account #3 I described. Point taken to consider all three accounts as a whole. The reason I only considered that account is accounts #1 and #2 have no REITs. Account 2 does have International options at reasonable fees so something to consider there.

Do not have a strategy ironed out yet, still reading and learning.

I appreciate everyone’s insight and helpfulness.

[JoePublic3.14]

Yeah, 10% in the account #3 I described. Point taken to consider all three accounts as a whole. The reason I only considered that account is accounts #1 and #2 have no REITs. Account 2 does have International options at reasonable fees so something to consider there.

Do not have a strategy ironed out yet, still reading and learning.

I appreciate everyone’s insight and helpfulness.

Based on the information given, you are doing the right thing for now. Keep reading, ask more questions, don’t think complexity equals quality, and do not make extreme shifts. Oh, and don’t make any moves based on the current noise.

[cool7hand]

+1 for considering all three accounts as part of a whole plan. We used a spreadsheet to track investments across multiple platforms and employer accounts for rebalancing purposes before we fired and consolidated at Schwab. It was a pain, but it worked!