Author Topic: FUSVX and FSTVX  (Read 7515 times)

doneby35

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FUSVX and FSTVX
« on: November 05, 2016, 04:15:55 PM »
I'm really a beginner when it comes to investing, but I just recently enrolled in my employer offered 401k, I did not find Vanguard VTSAX so I chose a 100% of my maxed out contribution towards FUSVX (Fidelity's 500 index). I wasn't sure if this was a good decision, so I wanted to check with you guys to see if I did the right thing??

The second question is, I also want to open a tIRA and max that out in addition to my 401k contributions. Is it ok to go with FSTVX (Fidelity's total market index) or go with VTSAX?

Radagast

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Re: FUSVX and FSTVX
« Reply #1 on: November 05, 2016, 05:16:22 PM »
What are your other options for the 401k? Is the 500 fund the only good one available? Only list ones with expense ratios below 0.5% or the ten with the lowest expense ratios. There is nothing wrong with an S&P500 fund, though total market will probably be a little better.

It's hard to say about the IRA until we know what the 401k options are. You can use an "extended market index" or "market completion index" which are all the companies not part of the 500, if total US stock market is your thing. Make them equal to 25% of the S&P500 fund to approximate total market.

I suggest adding international stock funds for about a fixed 30% to 50% of the total. Personally, if the S&P500 fund was the only good one in the 401k, I would put 100% of the IRA into Vanguard's international small company index, VSS, or mutual fund equivalent. This would give you small companies and international at the same time while keeping only one fund per account to make things simple.

All the above options are available at both Vanguard and Fidelity.

Frankies Girl

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Re: FUSVX and FSTVX
« Reply #2 on: November 05, 2016, 05:33:21 PM »
I'm a Fidelity only investor.

Both of those are great funds.

FUSVX (Fidelity's 500 index) has an expense ratio of 0.045% meaning you pay 45 for every thousand you invest in it. It is low turnover so that means it's tax efficient, and it is a broad index fund based off the S&P index.

That being said, FSTVX (Fidelity's total market index) is better. Same very low cost, but much broader range of funds (not just the S&P), so it is MUCH closer to the definition of diversified. If you have a choice, go with FSTVX, but you're not doing at all badly choosing FUXVX.

You don't mention who your 401k is with, but I'm going to assume it is with Fidelity since those are both Fido funds. While VTSAX is great and the gold standard for index investing, you will likely be charged a transaction fee if you invest in it outside of Vanguard since it is a Vanguard fund. In Fidelity's case, buying and possibly selling VTSAX inside a Fidelity 401k or tIRA will cost you $75 if I am reading the fine print correctly.

Since Fido already offers their own line of index funds (FSTVX is the equivalent to VTSAX), then I would not buy outside funds like Vanguard there. There's no point as the FSTVX is going to run the same costs, and perform similarly to Vanguard's total market index, but will be a no transaction fee option.

 https://www.bogleheads.org/wiki/Fidelity
^good review of Boglehead investing using Fidelity funds

And there are two schools of thought on investing in international stocks. I get why Radagast suggests adding one in, but I personally do not do so, because I agree with the line of thinking that the U.S. stock market is actually pretty well covered internationally just by the virtue of having companies that do business around the globe. And I also like only holding three funds over my entire portfolio (I have a total stock, total bond and a REIT index), adding another one just seems to be heading towards complication. Three is plenty for me. :)
« Last Edit: November 05, 2016, 05:40:08 PM by Frankies Girl »

doneby35

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Re: FUSVX and FSTVX
« Reply #3 on: November 05, 2016, 05:37:51 PM »
The expense ratio for FUSVX was 0.045, that's the lowest of all the other options I had and most of them were T.Rowe Price retirement funds. Did not have an option for total market but I read that S&P 500 and total market are very close.

So since my 401k is fidelity FUSVX based on S&P500, i was thinking my tIRA should be total market since I did not have that option for my 401k.

doneby35

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Re: FUSVX and FSTVX
« Reply #4 on: November 05, 2016, 05:41:02 PM »
Ah it all makes sense now! and yes Frankie's Girl, my 401k account is fidelity, so i'm think i'll go with FSTVX for tIRA.
Thank you both.

Radagast

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Re: FUSVX and FSTVX
« Reply #5 on: November 05, 2016, 06:16:49 PM »
I don't own any of the companies in the S&P. I figured that medium and small US companies and international companies are all involved in pretty much the same business, so why bother? ;)