Author Topic: International asset allocation preference? - The new Fidelity ZERO Funds  (Read 961 times)

drperry

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Long time reader and looking for guidance/advice/confirmation.
I previously subscribed to the Dave Ramsey method of paying off debt and now getting into maxing out HSA, 401k and Roth.

My plan is to max out all accounts retirement accounts.
Overall allocation: 100% stocks
My investing career has just begun and I want to set myself up for success.

Vehicle:
401k (Fidelity)
FXAIX - Fidelity 500 index fund - 60% (40.4% weighted)
FSSNX - Fidelity Small cap - 20% (13.5% weighted)
FSPSX - Fidelity International index - 20% (13.5% weighted)

HSA (choice of Vanguard funds)
VTSAX - Vanguard total stock market - 100% (12.7% weighted)

Roth (through Fidelity for simplicity, as 401k is housed there
FZROX - Fidelity ZERO total market 50% (10% weighted)
FZILZX - Fidelity ZERO international index 50% (10% weighted)

The above funds are all low cost.  The highest cost being in my 401k funds.
The total allocation is 76.5% total stock (US) and 23.5% (International)

I counted the 401k funds as total market (one is 500 index and small cap).

How am I doing? Any feedback or guidance is appreciated.  I was eager to get into the market and just deposited 5,500 into the Roth.


jacoavluha

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #1 on: December 29, 2018, 07:57:13 PM »
your choices are fine, you could do a whole lot worse, but not a lot better, for a 100% equities portfolio

just understand why you're choosing 100% equities, and why you're choosing 23.5% international

you don't say how old you are. It would matter if I was going to recommend you do anything different

HBFIRE

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #2 on: December 29, 2018, 11:35:04 PM »
Just curious since you're with Fidelity you don't just use their zero expense ratio funds for everything?  I'm assuming you're using their free HSA available, and if so I think it makes sense to just invest the HSA into their zero cost funds.
« Last Edit: December 29, 2018, 11:37:48 PM by dustinst22 »

MustacheAndaHalf

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #3 on: December 30, 2018, 12:59:48 AM »
Of your U.S. equities, 20/76 = 26% is invested in Small Cap, which is called a "small cap tilt", since your portfolio tilts towards small cap more than the market.  Are you doing this because of historical data?  When small caps do worse than large caps, you need to hang in there until things even out.  It helps to have a strong belief in keeping small caps.

In my view Dave Ramsey is fine for getting out of debt, but offers bad advice on favoring load funds over no-load funds.  And you're clearly using U.S. and international low-fee index funds, which is actually better than Mr Ramsey's advice.  Which makes me curious, how did you make the transition?  How did you discover low fee mutual funds, and decide that they were a better choice than following Dave Ramsey's advice?

drperry

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #4 on: December 30, 2018, 06:20:13 AM »
your choices are fine, you could do a whole lot worse, but not a lot better, for a 100% equities portfolio

just understand why you're choosing 100% equities, and why you're choosing 23.5% international

you don't say how old you are. It would matter if I was going to recommend you do anything different

Jaco,
I am 29 years old and will be able to max all accounts for the first time this year.  I understand why I'm choosing 100% equities (time in the market) but don't have a strong justification for the % of international.

drperry

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #5 on: December 30, 2018, 06:21:58 AM »
Just curious since you're with Fidelity you don't just use their zero expense ratio funds for everything?  I'm assuming you're using their free HSA available, and if so I think it makes sense to just invest the HSA into their zero cost funds.

My 401k work plan does not offer any of the ZERO funds at this time.  I also receive a small match through work for my 401k and HSA.  The funds through the HSA are great, and thought that VTSAX was ideal.

drperry

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #6 on: December 30, 2018, 06:42:33 AM »
Of your U.S. equities, 20/76 = 26% is invested in Small Cap, which is called a "small cap tilt", since your portfolio tilts towards small cap more than the market.  Are you doing this because of historical data?  When small caps do worse than large caps, you need to hang in there until things even out.  It helps to have a strong belief in keeping small caps.


In my view Dave Ramsey is fine for getting out of debt, but offers bad advice on favoring load funds over no-load funds.  And you're clearly using U.S. and international low-fee index funds, which is actually better than Mr Ramsey's advice.  Which makes me curious, how did you make the transition?  How did you discover low fee mutual funds, and decide that they were a better choice than following Dave Ramsey's advice?

Mustache,
Aren't my equities invested 13.5/76.5 = 17.6% ?  I have a single small cap fund.  All else is 500 or TSM.
This is not due to historical data or a strong belief in small cap.  I did not create the tilt intentionally.  I read here, or elsewhere that a 500 index and small cap index would help emulate the total stock market.   My accounts have been "piece mealed" to this point and extended off the allocations below.

To me, there was a natural transition starting with Dave Ramsey and moving elsewhere upon being successful.  I stopped listening to Dave Ramsey after I bought into the "debt snowball" concept  and began at "gazelle speed" or whatever his phrasing is.  His advice on debt was fantastic and it helped me pay off my 75k student loan debt within a couple of years. 

Between here and bogleheads, I discovered Vanguard and more recently Fidelity Funds that are low cost, and perform well over time. Many experienced posters on this site advocate (with data) how low cost index funds can make an individual with a medium salary wealthy.
« Last Edit: December 30, 2018, 06:44:56 AM by drperry »

jacoavluha

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #7 on: December 30, 2018, 09:08:10 AM »
your choices are fine, you could do a whole lot worse, but not a lot better, for a 100% equities portfolio

just understand why you're choosing 100% equities, and why you're choosing 23.5% international

you don't say how old you are. It would matter if I was going to recommend you do anything different

Jaco,
I am 29 years old and will be able to max all accounts for the first time this year.  I understand why I'm choosing 100% equities (time in the market) but don't have a strong justification for the % of international.

If you google vanguard white paper international you might find it helpful in deciding about an international allocation. They determine that from 20% up to market cap (about 50%) to Intl is reasonable, with 30-40% their ideal. Vanguard uses 40% in their fund-of-funds

drperry

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Re: International asset allocation preference? - The new Fidelity ZERO Funds
« Reply #8 on: December 31, 2018, 12:51:05 PM »
Thanks for the resource Jaco,
 I'll check that out.

I'll likely stick to this allocation for the next few years to learn the ins/outs of investing through these vehicles, then get into bond allocations and tax loss harvesting.