Author Topic: Help me replicate lazy portfolio with fidelity workplace 401k  (Read 1051 times)

the_fixer

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Help me replicate lazy portfolio with fidelity workplace 401k
« on: December 27, 2018, 09:56:59 AM »
Looking to replicate a 3 fund lazy portfolio (VTSMX VGTSX VBMFX) with my current workplace fidelity 401k while keeping the fees low.  I have brokerage link available but would rather not use it due to additional fess unless necessary.

300K in pretax inside the Fidelity workplace 401k
15K in Roth inside the Fidelity workplace 401K
18K in Roth IRA outside workplace Fidelity

Thinking I would like to replicate something like this

VTSMX 60 70%
VGTSX 10 15%
VBMFX 20 25%

Here are the funds I have available in the Fidelity workplace without going to the brokerage link. The 18K that is outside of the workplace has pretty much everything available that a personal Roth IRA with fidelity would have.

FXAIX looks Like it might be a good replacement for VTSMX. Do you agree or is there something better in the list

No idea on the bonds or the international still researching   


Name   Category   Gross Expense Ratio**

FID 500 INDEX (FXAIX) Stock Investments   Large Cap   0.015%

PIONEER LG CAP GR TR12/30/2016   Stock Investments   Large Cap   0.400%

VANG EQUITY INC ADM (VEIRX)  Stock Investments   Large Cap   0.170%

FID MID CAP IDX (FSMDX)  Stock Investments   Mid-Cap   0.025%

JAN ASP ENTERPRISE I (JAAGX) Stock Investments   Mid-Cap   0.730%

VANG SELECTED VALUE (VASVX)  Stock Investments   Mid-Cap   0.390%

DFA SM CAP GRTH INST (DSCGX)  Stock Investments   Small Cap   0.390%

FID SM CAP IDX (FSSNX) Stock Investments   Small Cap   0.025%

VICTORY S SM CO OP I (VSOIX)    Stock Investments   Small Cap   0.900%

AF NEW WORLD R6 (RNWGX) Stock Investments   International   0.640%

FID OVERSEAS K (FOSKX)   Stock Investments   International   0.890%

VANG DEV MKT IDX ADM (VTMGX)  Stock Investments   International   0.070%

BLKRK LP IDX RTMT K (LIRKX)   Blended Fund Investments*   N/A   0.170%

BAIRD CORE PLUS INST (BCOIX) Bond Investments   Income   0.300%

VANG ST BOND IDX ADM (VBIRX) Bond Investments   Income   0.070%

FID GOVT MMKT (SPAXX)    Short Term Investments   N/A   0.42%
« Last Edit: December 27, 2018, 10:27:01 AM by the_fixer »

MustacheAndaHalf

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Re: Help me replicate lazy portfolio with fidelity workplace 401k
« Reply #1 on: December 27, 2018, 10:27:42 AM »
Are you retiring in 10-15 years?  Your bond allocation corresponds roughly to Vanguard Target 2035.  Just wanted to point that out, in case it's a surprise.

Note that funds don't exactly match their names.  For example, the mid cap fund actually holds 1/3rd large caps, and the small cap fund holds 1/4th mid caps.  So I think an 80% lg/10% mid/10% sm combination approximates the stock market, and you can then apply those ratios to your US equities portion:

65% U.S. equities
--> 53% Fidelity S&P 500 (FXAIX)
--> 6.5% Fidelity Mid-Cap (FSMDX)
--> 6.5% DFA SM CAP GRTH INST (DSCGX)
I favor DFA's small cap fund, but if you don't know the difference with Fidelity Small Cap, I'd go with Fidelity's fund.

15% international
--> 15% VANG DEV MKT IDX ADM (VTMGX)
Do you have an IRA where you could purchase Vanguard Emerging Markets? ("VWO" as an ETF)
Otherwise you only get access to 4/5th of the international markets.

20% bonds
--> 20% VANG ST BOND IDX ADM (VBIRX)
Bonds are intended to stabilize a portfolio, so the lower yield of a short-term bond fund isn't a big deal.  Interest rate increases tend to cause stocks to fall, so having a bond fund that's less impacted by interest rate increases can be helpful in balancing stocks and bonds.

the_fixer

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Re: Help me replicate lazy portfolio with fidelity workplace 401k
« Reply #2 on: December 28, 2018, 09:39:28 AM »
FIRE date is a little over 3 years from now I do not need to start withdrawing for 5 - 8 years.

My internal risk meter is probably broken as I am 100% in a Fidelity S&P 500 fund right now and honestly the swings have not bothered me but then again I have been investing since 1999 and have seen things go up and down so much at this point I am kind of numb to it.

Anyhow figured that since I am moving stuff already I might as well get more balanced in the process.

So keeping my FXAIX

Will add some international

Will add some bonds but VBRIX or BCOIX

Looking at the difference BCOIX has higher fees but is paying better dividends and has a better long term return. Is there a tool that I can use to compare how they do over time with fees considered? I do not mind paying the higher fees if it results in a larger gain in the end.

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MustacheAndaHalf

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Re: Help me replicate lazy portfolio with fidelity workplace 401k
« Reply #3 on: December 29, 2018, 03:35:51 AM »
Here's some morningstar data for the two funds:

VBIRX, 2.98% SEC yield, x2.66 duration, 2.90 year maturity
BCOIX, 3.66% SEC yield, x5.80 duration, 7.95 year maturity

So let's apply a 0.25% increase in bond yields across all bonds, and see what happens:
0.25 x -1 x 2.9 = VBIRX loses -0.73%
0.25 x -1 x 5.8 = BCOIX loses -1.45%

2.98% - 0.73% = 2.25% interest minus loss of capital (VBIRX)
3.66% - 1.45% = 2.21% interest minus loss of capital (BCOIX)

If interest rates go up, and bond yields follow, BCOIX will trail the returns of VBIRX.  When there isn't a rising yield envinment, BCOIX will beat VBIRX.
« Last Edit: December 29, 2018, 03:37:33 AM by MustacheAndaHalf »

the_fixer

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Re: Help me replicate lazy portfolio with fidelity workplace 401k
« Reply #4 on: December 29, 2018, 07:55:02 AM »
Thank you for taking your time to explain. I have read the j collins bond section and some others but bonds are still hard for me to get a grasp on.

Looking at the portfolio visualizer I see that when interest rates were higher 2002 - 2008 the BCOIX was still ahead of VBIRX then really took off during the low interest rate period but BCOIX is starting to trend towards a slower rate now with the interest rates going up.

While they are both bonds I now understand that they are two different types of investments.


blue line is VBIRX
red line is BCOIX
 
« Last Edit: December 29, 2018, 09:16:25 AM by the_fixer »

CanuckExpat

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Re: Help me replicate lazy portfolio with fidelity workplace 401k
« Reply #5 on: December 30, 2018, 04:00:59 PM »
Does this link help with part of your question : Approximating total stock market ?
Do a search within that page for Fidelity funds

Edited to add this link: Approximating total international stock market
« Last Edit: December 30, 2018, 04:02:47 PM by CanuckExpat »