Author Topic: Just opened a Fidelity account - looking for the right place to start  (Read 3308 times)

begood

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We are quite late to this whole Mustachian thing. We have a sizeable 'stache currently being actively managed - I have made very little headway in encouraging my mister to reconsider this. He doesn't WANT to manage the funds, and I have no head for numbers. We would consider ourselves FI were it not for five more years of private school and four years of college still in the offing for our only kid. Plus we will eventually need to buy a house or rent - right now we live in housing provided by my husband's job.

That's a little background, but it's not what brings me to your neck of the Mustachian woods. I finally, after about a year of hemming and hawing, opened a Fidelity account today online. My father died in June with virtually no assets remaining, but he did have a paid-up life insurance policy through the VA that provided my brother and me with $5K each.

I plan to take that $5K and invest it in a mutual fund through Fidelity, with an eye toward transferring it to our daughter when she turns 21 so she'll have a nest egg she can then grow. My hope is to set her on a different course, a simpler path that she can maintain and expand.

I have been planning to invest in FFNOX (Fidelity Four-in-One Index Fund), and wondered if you who know more about such things than I do feel that's a reasonable place to put it. And if not, I am open to other suggestions!
« Last Edit: August 13, 2015, 11:28:14 AM by begood »

Tyler

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #1 on: August 13, 2015, 11:45:30 AM »
FFNOX is a "fund of funds". One thing to keep in mind is that you generally have to pay the expense ratio not only of the top level fund but also of each fund it buys.

The four funds held by FFNOX are all great low-cost Spartan funds. However, you'd probably save a little money buy buying the same four funds directly rather than buying FFNOX.

RFAAOATB

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #2 on: August 13, 2015, 12:04:39 PM »
As I noted before, my Roth IRA is 100% FSTVX Spartan Total Market Index Fund.

FFNOX has a 10 year return of 6.65% with a net expense ratio of .22%
FSTVX has a 10 year return of 8.02% with a net expense ratio of .05%

Overall FSTVX has lower lows and higher highs but has come out ahead for the past three years.

begood

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #3 on: August 13, 2015, 12:18:08 PM »
Thanks, Tyler and RFAAOATB!

I tend to be on the risk-averse end of the spectrum, so the moderate risk of the FFNOX fit my personal risk profile, but I see what you mean about buying them separately. This is ALL NEW to me, which is probably why the idea of the clumped-together, just-pick-it-and-forget-itness of FFNOX appealed to me.

The whole "lower lows and higher highs" thing makes me shudder - I seem quite willing to give up some of the higher highs to avoid the lower lows.

MDM

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #4 on: August 13, 2015, 12:18:18 PM »
One thing to keep in mind is that you generally have to pay the expense ratio not only of the top level fund but also of each fund it buys.

See http://www.bogleheads.org/wiki/Acquired_fund_fees_and_expenses for more details on that topic.

If you look at the Fidelity or Morningstar reports for FFNOX they show the net expense ratio as 0.22%.  Digging further, one finds "...this ratio also includes Acquired Fund Fees and Expenses" so whatever (if anything) Fidelity charges on top of the underlying fund fees is included in the 0.22%.

A similar fund from Vanguard (https://personal.vanguard.com/us/funds/snapshot?FundId=0122&FundIntExt=INT) has a 0.17% fee.



Tyler

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #5 on: August 13, 2015, 02:56:51 PM »
If you look at the Fidelity or Morningstar reports for FFNOX they show the net expense ratio as 0.22%.  Digging further, one finds "...this ratio also includes Acquired Fund Fees and Expenses" so whatever (if anything) Fidelity charges on top of the underlying fund fees is included in the 0.22%.

Good to know.  Thanks!  In that case, FFNOX seems like a fine choice to me for a simple one-stop-shop fund with low fees and reasonable diversification. 
« Last Edit: August 13, 2015, 03:31:18 PM by Tyler »

begood

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #6 on: August 13, 2015, 05:34:36 PM »
If you look at the Fidelity or Morningstar reports for FFNOX they show the net expense ratio as 0.22%.  Digging further, one finds "...this ratio also includes Acquired Fund Fees and Expenses" so whatever (if anything) Fidelity charges on top of the underlying fund fees is included in the 0.22%.

Good to know.  Thanks!  In that case, FFNOX seems like a fine choice to me for a simple one-stop-shop fund with low fees and reasonable diversification.

Awesome, thanks! :)

begood

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #7 on: August 15, 2015, 06:58:37 AM »
UPDATE: Mission accomplished! I ended up opening the account with $6.5K - $5K from my dad and $1.5K of accumulated birthday/Xmas gifts to my daughter from her grandmother, and we invested it all in FFNOX.

My daughter has a savings account at the bank, and I told her when it hits $1000, we'll scoop some of that money into the FFNOX fund too.

PeteD01

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #8 on: August 15, 2015, 12:09:49 PM »
UPDATE: Mission accomplished! I ended up opening the account with $6.5K - $5K from my dad and $1.5K of accumulated birthday/Xmas gifts to my daughter from her grandmother, and we invested it all in FFNOX.

My daughter has a savings account at the bank, and I told her when it hits $1000, we'll scoop some of that money into the FFNOX fund too.

Excellent. FFNOX is top of my list of funds to recommend to new investors with little to invest with and for your particular situation. Great advice on the MMM forum.

arebelspy

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Re: Just opened a Fidelity account - looking for the right place to start
« Reply #9 on: November 05, 2015, 12:17:03 PM »
I use FFNOX as well (with the funds in my 457b). Higher ER, but I like the auto-rebalancing that I wouldn't do if I bought the underlying funds.  Good choice.  :)
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