Retirement Self Directed Investment Advice during this season of COVID

[corpblues]

Little introduction as I'm new Mr. Money Mustache.  The articles brought me here as they match my finanically conservative thinking.

I've dabbled in investing but not a skilled investor.   Mostly conservative buy and hold companies like BRK in my personal trading.  And index funds in my 401K.  It has worked out pretty well, much better than holding cash.  I have maxed out my 401K contributions and minimized spending to prepare for the future as much as possible.

I'm 57 and debt free and keep talking myself out of the new car purchase thanks to Mr. MM columns talking me away from the ledge, lol.

Preparing for retirement is my next step and the steps I take over the next couple of years will greatly determine where I'm at at 65 (8 years OMG).   I don't want to take a mistep in the final innings...

My company offered to buy out our pensions and I took the offer, and rolled it into a Fidelity IRA.  I lost the guarantee of annunity for as long as I live, but gained an immediate balance increase of almost 100K.   Now my challenge is how to invest it.   I selected to initiallut y roll it into a sweep cash account so that I don't pay any fees while I figure out where to invest.   My thinking was to wait for a covid impact market correction and then put it into index funds and let it ride until needed (probably 15-20 years).  But my personallity will probably sit on cash too long and let it start to loose value.   

I'm not sure if covid will be a short term situation or if we will enter a long period of major shifts in the economy.   At this time the shifts appears to clear winners (online retailers like amazon and streaming services like netfilx) and losers (restaurants/crusie ships/airlines) due to the current world reality.  I do fear sticking with my index approach will result in subpar long term performance, but picking winners seems to be a short term approach, as winners typically don't win for too long.   Index fund approach removes my thinking I know where the world, companies and market is headed.  But also the world is changing and not investing in innovative companies might be a lost opportunity of a lifetime as the economy shifts.

I also have retirement funds in Fidelity 401K that is almost 100% stock index (international index and U.S. large cap index).  Probaby need to adjust this into more of a balanced approach as I approach retirement.  I've never invested in bonds but might be time to move towards the tradition stock/bond/cash balanced approach.

I have spoken to several professionals that want to manage my retirement investments for a fee.   I've always been fee adverse and paying someone over 1% to manage my money while saving interest rates are currently only 1% seems excessive.

Looking for thoughts on how best to invest my IRA ~$200K with moderate risk with the goal of acheiving 5% annually over the next 15-20 years.   I'm okay with the market roller coaster as long as the long term results in historical average performance.   Since I have my 401K and now IRA at fidelity, looking for recomendations on their best long term stock funds, EFT's and cash account options.

Thanks in advance to anyone that reads this and shares their thoughts.

[BECABECA]

I would just buy Vanguard ETFs in my fidelity account. For keeping it simple while having more exposure to innovative companies and less exposure to last century’s winners, I’d go with Vanguard’s US ESG fund (ticker: ESGV). It has outperformed Vanguard’s Total US Stock Market Fund during this pandemic, so that’s a good sign for its ability to do well as we continue to become a more global and virtual society. To reduce volatility, I’d also invest a percentage in Vanguard’s Total US Bond Market fund (ticker: BND).

[terran]

Definitely skip those advisors with 1% fees. They have to really outperform to make up for the fees and they usually don't.

I agree that commission free ETFs (VTI, VXUS, BND would do it) are a good option. If you'd rather stick with mutual funds these would be good options: https://www.bogleheads.org/wiki/Fidelity

As far as what the appropriate mix for you is, consider: https://www.bogleheads.org/wiki/Asset_allocation. I would say anything between 60-100% stock is appropriate at any stage of the the retirement process higher when you're further away and lower when you're closer both before and after). I would consider international as 20-40% of stocks to also be reasonable.

[corpblues]

Thank you for the responses and advice on funds and efts. 

A friend told me about this site and bogleheads, both great sites for for financial education and advice.   After much reading about why diversification it important, I plan to do so instead of staying 100% stocks.

I did find it interesting that the professional advisor was very willing to talk to me until I questioned his 1.35% during a period of low interest rates.   Instead of explaining his value, he stopped replying.   If he is not going to fight for my business, I question how he would fight for my money.

Edit 2020-07-19 for clarity : I am fully supportive of paying people for the job they do and the value they provide.   I was only questioning the advisor about the 1.35% to rationalize the fee.  For an advisor with 25 years of proven performance, the fee would pay for itself by preventing hacks like me making bad decisions.   Thus if I go it alone, I will be going a simple booglehead approach.  I work in IT and live my K.I.S.S. approach, keep it simple stupid.

I’m looking forward to additional suggestions.

[corpblues]

Thanks for the help.  Leads to my next question for the conservative side of my retirement allocation.
 
The 3 fund portfolio makes sense to me as a simple approach.   In reviewing my current allocation they are all out of whack.  I'm very heavy International Equites and cash, and too light U.S. equites, bonds and perhaps gold

With all the money the world governments are dumping into the economies, it seems prudent to put some assets into value stores that wil not collapse if a currency does.   Only value store I can think of is gold.  Everytime I think about buying gold, I hear Buffett's "It doesn't do anything but sit there and look at you."

I am also tempted to put a little bit into bitcoin as crypocurrancies are not going away.   Knowing which one(s) will win is a bit of a dice toss..  I probalby won't pull the trigger due to the risk.

Should I be considering something other than gold for the world economies collapse protection?
How do I best invest in gold in an IRA/401K account?
Is there a way to invest in cypro currancies in an IRA/401K account?

[facepalm]

Thanks for the help.  Leads to my next question for the conservative side of my retirement allocation.
 
The 3 fund portfolio makes sense to me as a simple approach.   In reviewing my current allocation they are all out of whack.  I'm very heavy International Equites and cash, and too light U.S. equites, bonds and perhaps gold

With all the money the world governments are dumping into the economies, it seems prudent to put some assets into value stores that wil not collapse if a currency does.   Only value store I can think of is gold.  Everytime I think about buying gold, I hear Buffett's "It doesn't do anything but sit there and look at you."

I am also tempted to put a little bit into bitcoin as crypocurrancies are not going away.   Knowing which one(s) will win is a bit of a dice toss..  I probalby won't pull the trigger due to the risk.

Should I be considering something other than gold for the world economies collapse protection?
How do I best invest in gold in an IRA/401K account?
Is there a way to invest in cypro currancies in an IRA/401K account?

You can't predict what will happen with currencies, but it is unlikely that the dollar will collapse.

You could do a three fund plus gold portfolio, tho I can't tell you how to invest in gold. Bitcoin would be pure speculation and does not belong in a retirement account. My opinion. You cold keep it separate if you felt the need to speculate in bitcoin.

I'd just re balance my accounts to reflect whatever AA I was going for, and add gold if you feel the need.

When do you plan to retire? If in the next 5-6 years, I doubt I'd want something extremely speculative in any account.  I'm 5 years out and am in total market, some international total market, as well as short term bond funds with durations of 1-3 years. Your portfolio of course should reflect your own needs.

Good Luck!

[corpblues]

The more reading I do on gold, the less inclined to invest anything in it.
Gold price is currently high.
Gold does not put money to productive active use.
It is very heavy.  LOL
I could forget where I hid my bullion.  LOL
It could be stolen and thus something to worry about.
There are gold EFTs but seems the futher I get from physical gold in hand, the less it makes sense for any world gone crazy scenario.

I am inclined to move to the 3 fund portfolio using Fidelity Zero US and International funds, with a bond fund being my conservative value store.  Then sell bonds and agressive buy up equities during any market correction.    Worse case is I miss the buying opportunties if I am not paying attention.

I am concerned we may have a major correction headed our way due to impacts from covid on all but the large corporations that are currently benefiting from it.  There are a lot of kids not heading back to physical class in fall and a lot of people continuing to loose jobs until we can all be back out and about without fear of contracting covid.

I did buy some BRK.B during the initial covid downturn, so I do have the mindset of being gready when others are fearful.  I did buy too early in the downturn before it reached the bottom, but there is never a way to know the bottom.  I am postive on that buy position, but wish I had waited another week. (Edit that buy is looking better everyday, sometimes boring works.)

[MustacheAndaHalf]

I'd recommend U.S. and international exposure.  If you buy ETFs, you can buy any company's ETF, and you'll pay $0/trade.  Trading is free since Vanguard started charging $0/trade in 2019 (others followed).

* iShares Total Stock Market (ITOT) charges 0.03%/year
* Vanguard Total Stock Market (VTI) charges 0.03%/year
* Vanguard Total International (VXUS) charges .08%/year

Fidelity also has low cost mutual funds, if you search around (under 0.25% is certainly low cost, while funds that charge 1% are high cost).


Note "financial adviser" or whoever asks you pay 1% of your assets per year... that's a salesperson.  In general, they won't beat index funds over the long term, because most active investors can't.  The longer the time frame, the lower the percentage of active funds beat index funds.  Over the past 15 years, about 88% of active funds couldn't beat index funds.
https://www.ifa.com/articles/spiva_-year_2019_active_passive_scorecard/

[corpblues]

I was reading there may be a tax reasons to not use the Fidelity Zero funds.
But since this will be my 401K and IRA tax deferred accounts is there any reason to not use the Fidelity Zero funds?

Fidelity ZERO Total Market Index Fund (FZROX)
or
Fidelity Total Market Index Fund (FSKAX)

Fidelity ZERO International Index Fund (FZILX)
or
Fidelity Total International Index Fund (FTIHX)

thanks!

p.s.  I highly recommend the video series on bogleheads.   Very clear education and reminders when you are tempted to risk up.
https://www.bogleheads.org/wiki/Video:Bogleheads®_investment_philosophy