Author Topic: New Job, new 401K w/ Fidelity. Allocation help.  (Read 3632 times)

catccc

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New Job, new 401K w/ Fidelity. Allocation help.
« on: March 17, 2014, 10:21:54 AM »
My old employer used Vanguard, and I loved those low expenses.  My new employer uses Fidelity, and things look a lot more expensive. If I'm understanding correctly, the Vanguard Target date fund I invested in had a 0.18% expense.  The comparable Fidelity fund has a 0.82% expense.  I always have selected a 2045 target date fund.  Even though I expect to retire much earlier (I'm 34 now, maybe in 10-12 years, so 2026?  IDK why I always chose 2045.  It would be a "traditional" retirement age of 66 for me.  I guess I just didn't want my blend to be too conservative.  I've got time on my side, after all...

Should I invest differently?  Try to get an overall lower ratio by doing my own fund blend?  Any suggestions?  Here are my choices.

Large Cap
FID BLUE CHIP GR 
FID CONTRAFUND 
FID DIVIDEND GR 
FID EQ DIV INCOME 
FID EQUITY INC 
FID EXPORT & MULTI 
FID FIDELITY FUND 
FID FIFTY 
FID GROWTH COMPANY 
FID LARGE CAP STOCK 
FID OTC PORTFOLIO 
SPTN TOT MKT IDX ADV 
Mid-Cap
FID GROWTH STRAT 
FID LOW PRICED STK 
FID MID CAP STOCK 
FID VALUE STRAT 
FID VALUE 
SPTN EXT MKT IDX ADV 
Small Cap
FID SM CAP DISCOVERY 
FID SMALL CAP VALUE 
International
FID DIVERSIFD INTL 
FID OVERSEAS 
Specialty
FID REAL ESTATE INVS 
Blended Investment
FID FREEDOM 2045 (and surrounding years…)
FID FREEDOM INCOME 
FID PURITAN 
Bond Investments
FID INTERMED BOND 
FID INVST GR BD 
FID SHORT TERM BOND 
Short-Term Investments
FID RETIRE MMKT 

iamlindoro

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #1 on: March 17, 2014, 11:08:20 AM »
Although it is categorized as Large cap in your list, I believe the Spartan Total Market fund is meant to be Fidelity's response to VTSMX/VTSAX:

https://fundresearch.fidelity.com/mutual-funds/summary/315911800

Expense ratio is 0.06.
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Another Reader

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #2 on: March 17, 2014, 11:40:17 AM »
In your shoes, I would choose the two Spartan funds - total market and extended market.  The Small Cap Discovery fund is a decent small cap choice.  It's been very successful and is closed to new retail investors.  They also put a lot of their mediocre managed funds on the menu, and I don't care for those choices.  You get total stock market exposure with total market, but it's very heavily weighted to large caps.  Add in the other two funds and you will have the best of a mediocre group.  Complete your asset allocation outside of the 401k - in your IRA's and taxable accounts.

Frankies Girl

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #3 on: March 17, 2014, 12:16:22 PM »
Although it is categorized as Large cap in your list, I believe the Spartan Total Market fund is meant to be Fidelity's response to VTSMX/VTSAX:

https://fundresearch.fidelity.com/mutual-funds/summary/315911800

Expense ratio is 0.06.

I have Fidelity and this is correct. It is the same as VTSAX.

I have my 401k all in (100%) in FSTVX, and I'm "retiring" in about a year or so. It's a smaller portion of my overall portfolio, but I am very comfortable with risk in the short term for the long term rewards.

You really shouldn't look at one individual account if you have more than one, since that's not a complete picture of your total holdings. If you have your asset allocation figured out, then you can implement it across all of your investment buckets, and it would be easy to do if you still have your old account with Vanguard (you said your old 401k was at Vanguard, so you still have that right?)

So figure out what you are comfortable with, and you could roll the Vanguard one into a bond equivalent to balance going all-in on the Spartan index/stocks in your current 401K. Since it is probably a rollover IRA now (or can be easily), you can invest in anything at Vanguard.

If you're wanting to go aggressive say for example with a 80% stocks, 20% bond percentage, then you could set your Fid 401K to go all FSTVX (stocks) and then change your Vanguard (rollover IRA?) to be 20% bonds + whatever percentage would equal up to 80% stocks between that and the Fid account. You'd have to check into it maybe once a quarter or so just to see if it's maintaining the balance you want, but it would mean dirt-cheap expense ratios (Fid's Spartan series is generally LOW expense, and most all of Vanguard's offerings are of course), and you'd have the balance you want for your asset allocation. And that could mean that you're only holding/buying the one fund in your Fid 401K - FSTVX. (although Another Reader's suggestions are good too!)

« Last Edit: March 17, 2014, 12:19:01 PM by Frankies Girl »
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catccc

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #4 on: March 18, 2014, 11:03:30 AM »
Thanks all for the responses.

The Vanguard 2045 fund break down is as follows

   Vanguard Total Stock Market Index Fund Investor Shares   62.9%
   Vanguard Total International Stock Index Fund Investor Shares   27.1%
   Vanguard Total Bond Market II Index Fund Investor Shares   8.0%
   Vanguard Total International Bond Index Fund   2.0%

So I'm going to stick with 90/10 stocks/bonds.  I'm on board with the Spartan Funds.  Any thoughts on International exposure? 

foobar

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #5 on: March 18, 2014, 11:53:09 AM »
FDIVX isn't bad. Yeah the expense ratio is higher than you would like but they have more or less been able to match the index. If this was the only place you could get international exposure I would go with it as the ER is a bit lower than overseas and the manager has been around a lot longer.

I own a bunch of FDGRX from a 401(k) a couple of companies back.  Not sure I would buy it today but it performed very well for me over the last 15 or so years. And if you can get over the ER, the REIT fund has been a pretty solid performer also

Thanks all for the responses.

The Vanguard 2045 fund break down is as follows

   Vanguard Total Stock Market Index Fund Investor Shares   62.9%
   Vanguard Total International Stock Index Fund Investor Shares   27.1%
   Vanguard Total Bond Market II Index Fund Investor Shares   8.0%
   Vanguard Total International Bond Index Fund   2.0%

So I'm going to stick with 90/10 stocks/bonds.  I'm on board with the Spartan Funds.  Any thoughts on International exposure?

robbiejd

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #6 on: March 18, 2014, 01:30:30 PM »
I was going to post the exact same story as OP.  I too am leaving a company that uses Vanguard and the new company is using Fidelity.  Are there any fees associated with rolling over all my Vanguard shares into Fidelity.  I want to ensure I can keep as much of my 401k intact as possible.  If I choose the Spartan fund (large cap) are there any other fees I need to worry about?  Does fidelity sneak in extra fees? Any help is greatly appreciated!

Thanks!

iamlindoro

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #7 on: March 18, 2014, 02:49:57 PM »
I was going to post the exact same story as OP.  I too am leaving a company that uses Vanguard and the new company is using Fidelity.  Are there any fees associated with rolling over all my Vanguard shares into Fidelity.  I want to ensure I can keep as much of my 401k intact as possible.  If I choose the Spartan fund (large cap) are there any other fees I need to worry about?  Does fidelity sneak in extra fees? Any help is greatly appreciated!

Thanks!

If you're happy with your Vanguard 401k, why roll over at all?  Yes, there is some (trivial) overhead to checking a couple of accounts periodically, but if you're happy with the money you've accumulated where it is, then why not leave it there?
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robbiejd

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #8 on: March 18, 2014, 03:05:01 PM »
Sorry, I'm confused.  Wouldn't you want your 401k to all be in the same basket in order to maximize dividend reinvestment.  If you have 50k with company A, why would you want to start over at 0 with company B?  I would think the ideal scenario is to roll 50k into company B then add on top of that with future contributions?

iamlindoro

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #9 on: March 18, 2014, 03:07:14 PM »
Sorry, I'm confused.  Wouldn't you want your 401k to all be in the same basket in order to maximize dividend reinvestment.  If you have 50k with company A, why would you want to start over at 0 with company B?  I would think the ideal scenario is to roll 50k into company B then add on top of that with future contributions?

I am not certain I follow you.  Compounding and dividend reinvestment works the same whether your assets are in 1 account or 50, all other factors being equal.
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catccc

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #10 on: March 18, 2014, 03:13:17 PM »
Sorry, I'm confused.  Wouldn't you want your 401k to all be in the same basket in order to maximize dividend reinvestment.  If you have 50k with company A, why would you want to start over at 0 with company B?  I would think the ideal scenario is to roll 50k into company B then add on top of that with future contributions?

I am not certain I follow you.  Compounding and dividend reinvestment works the same whether your assets are in 1 account or 50, all other factors being equal.

I'm with iamlindoro on this one... I'm leaving my Vanguard money alone for the foreseeable future.  Besides the simplicity of having one account, I see no advantages to combining to Fidelity...  Basically I am a Vanguard fan and since their target date fund is so well priced, I am happy to leave my old 401K there.

catccc

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Re: New Job, new 401K w/ Fidelity. Allocation help.
« Reply #11 on: March 18, 2014, 03:20:06 PM »
FDIVX isn't bad. Yeah the expense ratio is higher than you would like but they have more or less been able to match the index. If this was the only place you could get international exposure I would go with it as the ER is a bit lower than overseas and the manager has been around a lot longer.

I own a bunch of FDGRX from a 401(k) a couple of companies back.  Not sure I would buy it today but it performed very well for me over the last 15 or so years. And if you can get over the ER, the REIT fund has been a pretty solid performer also

Okay, I went with:
65% Spartan Total Market Index Fund (0.06% expense)
17% Spartan Extended Market Index Fund (0.07%)
 8% Fidelity Diversified International Fund (0.95%)
10% Fidelity Intermediate Bond Fund (0.45%)

I think the blended expense ratio is around 0.17%, essentially in line with the Vanguard 2045 fund.  Thanks all for the advice and breaking down the decision for me.  This was much easier to decide with your assistance!