Author Topic: Looking to change 401k contributions. Any advice is appreciated.  (Read 3194 times)

xclonexclonex

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Hello all,

Currently I have 100% of my 401k contributions set to this fund -

Fidelity Freedom® 2050 Fund (FFFHX)
https://fundresearch.fidelity.com/mutual-funds/summary/315792416

I want to change the contributions as follows -

Spartan® 500 Index Fund - Fidelity Advantage Class (LARGE BLEND) (FUSVX) - 25%
https://fundresearch.fidelity.com/mutual-funds/summary/315911701

Spartan® Total Market Index Fund - Fidelity Advantage Class (LARGE BLEND) (FSTVX) - 25%
https://fundresearch.fidelity.com/mutual-funds/summary/315911800

Spartan® International Index Fund - Fidelity Advantage Class (Foreign Large Blend) (FSIVX) - 20%
https://fundresearch.fidelity.com/mutual-funds/summary/315911875

Fidelity® Government Income Fund (FGOVX) - 30%
http://www.morningstar.com/funds/XNAS/FGOVX/quote.html

Do you guys have an thoughts on this?

Thanks for your help.

forummm

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #1 on: August 03, 2015, 07:26:58 PM »
I think it's good to get out of the high fee fund FFFHX and into something low fee. The Spartan funds are low fee, so that's good. I don't think you need to have both the 500 and the total market. I would just go 50% total market instead. But the way you have it is fine too. I would pick a cheaper bond fund. There are several cheaper bond fund options discussed here:
http://www.bogleheads.org/wiki/Fidelity

Financial.Velociraptor

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #2 on: August 04, 2015, 09:35:01 AM »
What are you trying to get at?  I'm curious if you decided these funds based on recent past performance.  The thing that makes me confused is 'total world' already includes international.  S&P500 derives half its revenue from international.  And then you add an allocation to more international.  Are you intending to be overweight international?  Because I think that is where you are ending up net.

Even if you want to be overweight international, is large cap intl the place to be?  You don't seem to have a plan for how much large/mid/small cap you want.  And international could be developed markets, emerging markets, or frontiers.  Where do you really need to be?  I think you might benefit from sitting down *without* the return and fees information from your choices in front of you and writing an investing policy statement that includes an asset allocation concept.

Also 2050 is a long time to wait to retire.  You are making me miserable just thinking about it ;-p

forummm

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #3 on: August 04, 2015, 09:41:17 AM »
What are you trying to get at?  I'm curious if you decided these funds based on recent past performance.  The thing that makes me confused is 'total world' already includes international.  S&P500 derives half its revenue from international.  And then you add an allocation to more international.  Are you intending to be overweight international?  Because I think that is where you are ending up net.

Even if you want to be overweight international, is large cap intl the place to be?  You don't seem to have a plan for how much large/mid/small cap you want.  And international could be developed markets, emerging markets, or frontiers.  Where do you really need to be?  I think you might benefit from sitting down *without* the return and fees information from your choices in front of you and writing an investing policy statement that includes an asset allocation concept.

Also 2050 is a long time to wait to retire.  You are making me miserable just thinking about it ;-p

Some good points for discussion. But I thought a few points could use clarification:

OP's suggested fund is Total Market (i.e. US--not total world) and has no international stocks in it. OP may not have access to small cap international funds with low ERs in their 401k. And just because the target is 2050 doesn't mean that's when retirement will take place. I routinely recommend people pick a target fund with a date near their 65th birthday because otherwise the funds get too conservative (like 70% bonds) when they have a 60 year retirement ahead of them.

milesdividendmd

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #4 on: August 04, 2015, 10:38:46 PM »
Agree that having an S&P 500 fund as well as a total market fund is needless complexity, Booth funds will be large blend in style, though obviously the total market fund will be a little less large.

Options to consider: adding some exposure to real estate, emerging markets, or small stocks/value stocks.

xclonexclonex

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #5 on: August 05, 2015, 05:02:44 AM »
Thank you all for your replies.

>  The thing that makes me confused is 'total world' already includes international.

I don't think I have a total world fund listed...am I missing something?

>  Are you intending to be overweight international?  Because I think that is where you are ending up net.

I was under the impression that I only have 20% allocated to international. Is that not what my allocation really means?

After reading through the suggestions, I think I will go with this.

Spartan® Total Market Index Fund - Fidelity Advantage Class (LARGE BLEND) (FSTVX) - 50%
https://fundresearch.fidelity.com/mutual-funds/summary/315911800

Spartan® International Index Fund - Fidelity Advantage Class (Foreign Large Blend) (FSIVX) - 20%
https://fundresearch.fidelity.com/mutual-funds/summary/315911875

Fidelity® Government Income Fund (FGOVX) - 30%
http://www.morningstar.com/funds/XNAS/FGOVX/quote.html

What do you all think?

Thanks!

retireatbirth

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #6 on: August 05, 2015, 05:51:18 AM »
Do you have non qualified and IRA investments also? If you do, you should look at your entire portfolio as one and consider tax advantages.

forummm

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #7 on: August 05, 2015, 06:46:34 AM »
Thank you all for your replies.

>  The thing that makes me confused is 'total world' already includes international.

I don't think I have a total world fund listed...am I missing something?

>  Are you intending to be overweight international?  Because I think that is where you are ending up net.

I was under the impression that I only have 20% allocated to international. Is that not what my allocation really means?

After reading through the suggestions, I think I will go with this.

Spartan® Total Market Index Fund - Fidelity Advantage Class (LARGE BLEND) (FSTVX) - 50%
https://fundresearch.fidelity.com/mutual-funds/summary/315911800

Spartan® International Index Fund - Fidelity Advantage Class (Foreign Large Blend) (FSIVX) - 20%
https://fundresearch.fidelity.com/mutual-funds/summary/315911875

Fidelity® Government Income Fund (FGOVX) - 30%
http://www.morningstar.com/funds/XNAS/FGOVX/quote.html

What do you all think?

Thanks!

It looks fine, except I would try to find a cheaper bond fund. The ER is essentially eating your return on that one. If you don't have a cheaper bond fund and you want bonds you could hold your bonds in an IRA instead of your 401k. So the 401k could be 65% total stock market 35% international. And the IRA could be 100% cheap bond fund. Just an example.

Scandium

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Re: Looking to change 401k contributions. Any advice is appreciated.
« Reply #8 on: August 05, 2015, 07:34:10 AM »
Thank you all for your replies.


After reading through the suggestions, I think I will go with this.

Spartan® Total Market Index Fund - Fidelity Advantage Class (LARGE BLEND) (FSTVX) - 50%
https://fundresearch.fidelity.com/mutual-funds/summary/315911800

Spartan® International Index Fund - Fidelity Advantage Class (Foreign Large Blend) (FSIVX) - 20%
https://fundresearch.fidelity.com/mutual-funds/summary/315911875

Fidelity® Government Income Fund (FGOVX) - 30%
http://www.morningstar.com/funds/XNAS/FGOVX/quote.html

What do you all think?

Thanks!

That's a decent AA, and fees should be pretty low. The international fund doesn't have any small cap or emerging markets, but I had the same issue in my 401k before too. If you have an IRA/Roth somewhere else you can add SC and/or emerging markets to make up for it. Although I found this complicated to rebalance, especially as the contribution limits are so different.

Bond funds are expensive. 0.45% is high but not totally crazy. Especially in a 401k I have rarely seen cheap bond funds. If your retirement age is ~2050 I think 30% bonds is a little much, but that's personal preference.