Author Topic: Help with Fidelity - Is my money in the right place?  (Read 8502 times)

Luthien

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Help with Fidelity - Is my money in the right place?
« on: July 28, 2015, 11:42:01 PM »
Looking for some advice from fellow mustachians. My husband and I are in our early 30s and we currently have two retirement accounts set up, both with Fidelity. My husband has a SEP-IRA valued at about $35k, and I have a ROTH-IRA valued at about $18k. We set both of these up before discovering MMM, and all of the money in both accounts is in the Fidelity Freedom 2045 Fund (FFFGX) which was just the one recommended by the advisor at the time.

Needless to say, now we are definitely planning on retiring before 2045, so I'm not sure we are invested in the best fund. Should I move this money into some sort of index fund(s) instead of the FFFGX? Should I have the money split across multiple funds? For those of you who use Fidelity - can I do this without incurring any fees? Does Fidelity have good index funds? Any help in sorting out what would be best for us would be greatly appreciated!

PeteD01

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Re: Help with Fidelity - Is my money in the right place?
« Reply #1 on: July 29, 2015, 12:25:03 AM »
All your questions answered in one place:


http://www.bogleheads.org/wiki/Fidelity

forummm

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Re: Help with Fidelity - Is my money in the right place?
« Reply #2 on: July 29, 2015, 05:43:07 AM »
A 0.75% ER seems too high. I disagree with the Bogleheads link--those are not comparable to Vanguard's 0.18% for their Target Retirement Funds.

Stick with the Spartan funds if you can. Those are low fee.

MDM

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Re: Help with Fidelity - Is my money in the right place?
« Reply #3 on: July 29, 2015, 06:42:33 AM »
A 0.75% ER seems too high. I disagree with the Bogleheads link--those are not comparable to Vanguard's 0.18% for their Target Retirement Funds.
Stick with the Spartan funds if you can. Those are low fee.

Where is there a 0.75% ER in the funds recommended by the Bogleheads link?  Didn't notice any that high, but also didn't do an exhaustive survey.

forummm

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Re: Help with Fidelity - Is my money in the right place?
« Reply #4 on: July 29, 2015, 06:46:54 AM »
https://fundresearch.fidelity.com/mutual-funds/summary/315792424

OP's FFFGX. Bogleheads says it's comparable to the VTRFs. I guess 0.18% is comparable to 0.75%. But not favorably so. :)

Maybe Fidelity jacked up the rates since that wiki entry was updated?

MDM

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Re: Help with Fidelity - Is my money in the right place?
« Reply #5 on: July 29, 2015, 07:28:40 AM »
https://fundresearch.fidelity.com/mutual-funds/summary/315792424

OP's FFFGX. Bogleheads says it's comparable to the VTRFs. I guess 0.18% is comparable to 0.75%. But not favorably so. :)

Maybe Fidelity jacked up the rates since that wiki entry was updated?

Yes, OP's fund is high.  Fortunately for my faith in Bogleheads, they use a different set of funds as the counterparts to the VTRFs. 

forummm

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Re: Help with Fidelity - Is my money in the right place?
« Reply #6 on: July 29, 2015, 08:26:31 AM »
https://fundresearch.fidelity.com/mutual-funds/summary/315792424

OP's FFFGX. Bogleheads says it's comparable to the VTRFs. I guess 0.18% is comparable to 0.75%. But not favorably so. :)

Maybe Fidelity jacked up the rates since that wiki entry was updated?

Yes, OP's fund is high.  Fortunately for my faith in Bogleheads, they use a different set of funds as the counterparts to the VTRFs. 

That's very confusing. The Fidelity Freedom 2045 Fund is 3x as expensive as the Fidelity Freedom 2045 Index Fund. Another reason to not deal with Fidelity. It feels like they are hoping to trick you to get the extra fees.

Luthien

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Re: Help with Fidelity - Is my money in the right place?
« Reply #7 on: July 29, 2015, 08:43:05 AM »
So do you think it would be worth it to move these accounts over to vanguard?

forummm

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Re: Help with Fidelity - Is my money in the right place?
« Reply #8 on: July 29, 2015, 09:32:41 AM »
So do you think it would be worth it to move these accounts over to vanguard?

At minimum I would move the money to the Spartan funds or maybe the "Index" version of the 2045 fund that's 3x cheaper. I personally prefer Vanguard. But it would be a little less hassle to just move to the Spartan funds. You can always put new money in Vanguard if you want to do that. Several good choices are available to you.

TreeTired

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Re: Help with Fidelity - Is my money in the right place?
« Reply #9 on: July 29, 2015, 09:41:28 AM »
The fund invests in other Fidelity mutual funds.    Do the other funds also charge their own expenses?  Is the .75% expense ratio associated with this fund in addition to the expenses of the component funds?   The actual expenses of this fund could be much higher than .75%.

PeteD01

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Re: Help with Fidelity - Is my money in the right place?
« Reply #10 on: July 29, 2015, 03:53:23 PM »
The fund invests in other Fidelity mutual funds.    Do the other funds also charge their own expenses?  Is the .75% expense ratio associated with this fund in addition to the expenses of the component funds?   The actual expenses of this fund could be much higher than .75%.

More likely than not, the expenses of the other funds are in addition to the fund of funds expenses.
It doesn't really matter though, because once you have started down the road of low expenses, there is really no other way than to jot down a plan of what you want to do with your investments and then to stick with it. Observing a target date fund after having found the least expensive one is not on my list of fun things to do and once you have gone down the road of questioning there is no way to go back.
You've already developed an interest in your investments, so a simple three fund portfolio to stick with shouldn't be an issue.
The real issue is to actually stick with your allocation through thick and thin.
Fidelity vs Vanguard has nothing to do withi it as both have acceptable choices for the savvy.
« Last Edit: July 29, 2015, 03:58:58 PM by PeteD01 »

Frankies Girl

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Re: Help with Fidelity - Is my money in the right place?
« Reply #11 on: July 29, 2015, 04:06:59 PM »
I invest exclusively with Fidelity, and you should move your funds over the their Spartan series (see the bogleheads link Pete D01 posted).

I have my funds in:
Fidelity Spartan Total Market Index Fund (FSTVX) ER: 0.07% gross/0.05% net
Fidelity Spartan U.S. Bond Index Fund (FSITX) ER: 0.19% gross/ 0.09% net

And I have a tiny bit of their REIT:
Fidelity Spartan Real Estate Index Fund (FSRVX) ER: 0.19% gross/ 0.09% net

My total expense ratio is something like .11% total? In any case, it's comparable to Vanguard.
 

It is completely possible to do index investing well at Fido and not have to switch over to Vanguard as long as you stick with Fido's Spartan series and ignore any managed funds (or attempts by them to get you to let them handle your accounts). I have a good relationship with my adviser as he understands I'm an indexer. (I'm a premium level member at Fido due to the amount of money invested so have a dedicated adviser; but I pay them nothing other than the expense ratios on my funds - no management fees or anything else).

So basically, if you're happy with Fido, just sell off the funds you have now for the Spartan funds that equal an asset allocation you're comfortable with and let it ride. Easy peasy.


Oh! And since both of your accounts are tax deferred (SEP IRA and Roth) then either one can hold bonds with no worries. Treat them like sub categories of your overall investment portfolio - if you want something like 80% stock and 20% bonds, then you have ~53K in two accounts to work with... so that would mean 42K in the total stock market index fund, and 11K in the total bond fund. Then you just have to check it about once a year to see if it is matching up with your asset allocation (like say stocks had a great year and now your portfolio has an imbalance of like 85% stock/15% bond) and then sell some stock to buy bonds and get it back to match up with your AA...
« Last Edit: July 29, 2015, 08:06:44 PM by Frankies Girl »

Luthien

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Re: Help with Fidelity - Is my money in the right place?
« Reply #12 on: July 29, 2015, 05:15:32 PM »
You people are awesome. Thanks so much for the advice! I'm off to the Fidelity website to go sell all my FFFGX and replace it with Spartan series funds. Thanks!

Luthien

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Re: Help with Fidelity - Is my money in the right place?
« Reply #13 on: July 30, 2015, 05:25:07 PM »
So this post will probably reveal how much of a newbie I am to this investing business...but here goes.

I put in sell orders last night. I was surprised when they didn't go through immediately - I thought I could just buy and sell mutual funds instantly at any time. Didn't realize you could only do it when the market was open! But today is almost over, and my sell orders are still open. How long does it take for something like this to go through?

I was also surprised to find that the $5500 I sent into my IRA in April was still sitting in a cash account, not invested at all! D'oh! Guess I really need to step up my game!

Also, was a little surprised to find I can't place my buy orders until after the sell orders are closed. I did see an option to sell all shares and replace them with another fund all in one order, but I want to split the amount between multiple funds, and there was no option to do that. Is it normal for these things to take a few days to process?

In a way I'm glad, because it's giving me more time to decide what to buy. I guess it's good I'm taking some time to think about it, because if the process takes several days I'll be less inclined to move things around. Still, every where I read seems to say there is no "right" answer and that asset allocation is a matter of personal preference. I just don't know what my preference is for sure yet! Leaning towards almost all in the total stock market index fund with the FSTVX, and a little of the REIT fund with the FRXIX ($2500 minimum would give me about 5% invested in this asset class). I'm thinking this is a good start for such a small amount invested. I do think it's important to diversify, but I think I'll wait until I have a little more money to work with since the Spartan series funds all have a $10k minimum. Thoughts?

Another question - is there a minimum dollar amount required to add to my investments? Like, let's say in some future month I have an extra $500 to invest - can I just buy more shares of a spartan fund I already own? Or do I need to have a higher amount, like the $10,000 minimum? Or something in between? I guess I need someone to explain this to me like I'm 5 (ELI5). Or give me some links to read. Thanks!

Tyler

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Re: Help with Fidelity - Is my money in the right place?
« Reply #14 on: July 30, 2015, 06:10:37 PM »
Mutual funds (including the index variety) all trade at the same end of day price calculated at 4pm Eastern time.  If you want instant intra-day trades, you should use a similar ETF.

https://www.fidelity.com/viewpoints/investing-ideas/mutual-fund-or-etf

When looking at the minimum amount to add to an investment, you need to look not just at the fund rules, but also the share price (if it's an ETF) and any trading fees.  Sometimes it makes sense to save up a little and pay a fee one time instead of every time for a bunch of smaller transactions. 

Luthien

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Re: Help with Fidelity - Is my money in the right place?
« Reply #15 on: July 30, 2015, 07:31:45 PM »
Thanks, Tyler! I didn't really know the difference between mutual funds and ETFs until I read that link. I definitely want to stick with mutual funds, and it's good I know more about how they work.

ClaycordJCA

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Re: Help with Fidelity - Is my money in the right place?
« Reply #16 on: July 30, 2015, 09:27:18 PM »
Inside of the front cover of the new Kiplinger's magazine is a Fidelity ad illustrating how seven of its Spartan equity index funds have lower ERs than the comparable Vanguard funds.

ZiziPB

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Re: Help with Fidelity - Is my money in the right place?
« Reply #17 on: July 31, 2015, 08:17:46 AM »
Thanks, Tyler! I didn't really know the difference between mutual funds and ETFs until I read that link. I definitely want to stick with mutual funds, and it's good I know more about how they work.

If you are selling a Fidelity fund for another Fidelity fund, you can do a direct exchange from one fund to another (sell one and buy another in one transaction).  Both transactions will be effective as of the close of business on the day you initiated the trade as long as you initiated it when the markets are open.

ETA: Like Frankies Girl, I am also a Fidelity customer and very pleased with them. If you want some international exposure in addition to the funds recommended by Frankies Girl, use FSGDX.
« Last Edit: July 31, 2015, 08:19:58 AM by ZiziPB »

zinethstache

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Re: Help with Fidelity - Is my money in the right place?
« Reply #18 on: July 31, 2015, 12:04:20 PM »
I am using my corporate Fidelity interface to do some re-balancing. I thought I could enter my "exchanges" one at a time as I thought through each one... NO, no... now I have to wait until my first transaction completes. /sigh

I even tried to cancel that one since I now have a full re-balancing plan written out, but their interface is having issues with that too.

This is real time experience info. YMMV:) Good luck, this thread caused me to peek at my balances and fees and yikes, its a messy house in here.

Like how did I leave a .64 fee fund still? ugh. I suspect I had a note last year to move that to a cheaper fund and never got back to it. once I am finished with that move and some re-balancing I will be looking at total fees of about .07 /happy dance.

I notice that this corporate 401k of mine has only 25 fund choices and is pretty light on the spartan funds...that makes me sad

Phenix

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Re: Help with Fidelity - Is my money in the right place?
« Reply #19 on: July 31, 2015, 12:30:09 PM »
You people are awesome. Thanks so much for the advice! I'm off to the Fidelity website to go sell all my FFFGX and replace it with Spartan series funds. Thanks!

I was in the same boat as you before I stumbled across this forum.  Such a great resource we have here.

Wolf359

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Re: Help with Fidelity - Is my money in the right place?
« Reply #20 on: August 05, 2015, 01:18:22 PM »
Inside of the front cover of the new Kiplinger's magazine is a Fidelity ad illustrating how seven of its Spartan equity index funds have lower ERs than the comparable Vanguard funds.
Well, yes, but I was recently reading the prospectus on the Spartan Total Market Index Fund - Advantage Class.  The low expense ratio there is only because Fidelity is temporarily absorbing a portion of the expenses.  When they stop, the ER will go up to .07% (to compare to Vanguard's .05%).

Fidelity may be "adjusting" the ERs to compete.