Fidelity

[Plectron]

My company has our retirement money in a self-directed account with Fidelity. I would like to use Vanguard funds since I am more familiar with them, but there is a $75 commission per trade. What are the best Fidelity funds/ETFs to set up an aggressive portfolio for someone with a 30+year investment period?

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[ThoracicGuy]

My company has our retirement money in a self-directed account with Fidelity. I would like to use Vanguard funds since I am more familiar with them, but there is a $75 commission per trade. What are the best Fidelity funds/ETFs to set up an aggressive portfolio for someone with a 30+year investment period?

Look at the Spartan funds from Fidelity. They have some funds that are pretty equivalent to Vanguard funds with low ERs.

 

[The White Coat Investor]

You need an investing plan. First goals, then asset allocation, then pick the individual investments. You're trying to jump straight to step 3, which not only makes 3 much harder, but it almost ensures poor results.

 

[Plectron]

Sorry, I should have included that. My goal is to retire in 30 years with as much as possible. I have a 401k/PSP which I max out ($52k/yr currently). With my 30 year time horizon and above average earning power I'm comfortable being more aggressive and would like to put 80% in stocks and the other 20% into bonds and/or REITs.

 

[Plectron]

So after using the calculators and questionnaires available on the Fidelity site for several hours (as well as doing some soul searching) I have come up with the following portfolio:
FDGRX 37.5%
FFNOX 37.5%
FSIVX 15%
FAGIX 10%

It gives me 60% US stock, 26% foreign stock, 14% bonds and an expense ratio of 0.43%

Thoughts?

 

[ThoracicGuy]

So after using the calculators and questionnaires available on the Fidelity site for several hours (as well as doing some soul searching) I have come up with the following portfolio:
FDGRX 37.5%
FFNOX 37.5%
FSIVX 15%
FAGIX 10%

It gives me 60% US stock, 26% foreign stock, 14% bonds and an expense ratio of 0.43%

Thoughts?

I don't personally care for that selection. Here's what I would do:

FSTMX - Spartan Total Market Fund (ER 0.1%) at 60%
FSIIX - Spartan Total International Market Fund (ER 0.2%) at 25%
FIBIX - Spartan Intermediate-Term Treasury Bond Index (ER 0.2%) at 15%

If you get more than $10,000 in a class, then I would up to the Advantage class funds to get the lower ER. That would be FSTVX, FSIVX, and FIBAX respectively. Your overall ER would be much lower with either the Investor or Advantage class funds as compared to what you listed.

Basically you want a Total Domestic, Total International, and Total Bond fund to make up your portfolio. You can get by with just those three. Sometimes you have to mix things up a bit with your available funds in a 401k/403b account and get creative. For instance, in my 401k there is no total domestic fund. Instead I have a S&P 500 index, midcap, and small cap fund. I use a 81%, 6%, and 13% ratio to approximate a total market fund with those. I have a great bond index fund there, but the International options are poor so I'll just make up for it in my Roth or other investment locations.

 

[Plectron]

Thanks, I will check them out. I have access to all Fidelity funds (obviously) so being shut out is not an issue. I like the idea of 3 funds with a really low ER. I have enough in there where I could buy all in the advantage class.

 

[The White Coat Investor]

Sorry, I should have included that. My goal is to retire in 30 years with as much as possible. I have a 401k/PSP which I max out ($52k/yr currently). With my 30 year time horizon and above average earning power I'm comfortable being more aggressive and would like to put 80% in stocks and the other 20% into bonds and/or REITs.

Bonds are very different from REITS. And 80% stocks is pretty vague. But if that is your only requirement, this is going to be very easy.

80% TSM, 20% TBM. There you go. Done.

 

[Stroganoff]

I have a 401k/PSP which I max out ($52k/yr currently)

$53K limit for 2015 to get that extra G in there. Heh.

 

[68PGunner]

Buy an integrated oil major like chevron for 6% dividend yield.

 

[ThoracicGuy]

Buy an integrated oil major like chevron for 6% dividend yield.

Buying single stocks is not the best way to invest for the long term.

 

[68PGunner]

Buying single stocks is not the best way to invest for the long term.

I disagree if you know what you're doing. Obviously throwing all of your retirement money into chevron is a terrible idea, but keep a name like CVX as one of your major cores is a winning strategy considering the current price, dividend history, and attractive yield.

 

[ThoracicGuy]

I disagree if you know what you're doing. Obviously throwing all of your retirement money into chevron is a terrible idea, but keep a name like CVX as one of your major cores is a winning strategy considering the current price, dividend history, and attractive yield.

I'd rather get a total market index and own them all. What happens if Chevron goes out of business suddenly? If that is a "major core" of your investment, that could really hurt...

 

[68PGunner]

What happens if Chevron goes out of business suddenly? If that is a "major core" of your investment, that could really hurt...

This is why I only caution those who don't know what they're doing. Anyway, integrated oil majors like chevron will make money regardless of oil prices, as long as there is demand for oil. The reason for my statement is their refining business. Finally, as a big oil major, they are able to harness a lot of synergies pushing their cost to one of the lowest in the oil industry. I could go on and on... If you want to own a market index and be a wheelchair investor, I suggest buying Bershire Hathaway shares bc it has a 30+ years of history by consistently outperforming the general market. Most funds with their so called records are straight up garbage. The reason for this statement is that once the market goes down and the fund is forcefully liquidated, you will never hear about it again. If you want to invest in a fund, that fund needs 20+ years of record.

 

[ThoracicGuy]

This is why I only caution those who don't know what they're doing. Anyway, integrated oil majors like chevron will make money regardless of oil prices, as long as there is demand for oil. The reason for my statement is their refining business. Finally, as a big oil major, they are able to harness a lot of synergies pushing their cost to one of the lowest in the oil industry. I could go on and on... If you want to own a market index and be a wheelchair investor, I suggest buying Bershire Hathaway shares bc it has a 30+ years of history by consistently outperforming the general market. Most funds with their so called records are straight up garbage. The reason for this statement is that once the market goes down and the fund is forcefully liquidated, you will never hear about it again. If you want to invest in a fund, that fund needs 20+ years of record.

I have a totally different viewpoint. I believe in passively managed mutual funds as the best investment vehicle for the long term. It will not just have a forced liquidation and if individual stocks go bad or even disappear it doesn't really hurt your fund too much. This doesn't make you a 'wheelchair investor', it makes you a smart investor.

I do not suggest buying Berkshire Hathaway shares and even Warren Buffet has stated that when he dies, his wife's investments are to go to Vanguard mutual funds. Besides, past returns do not predict future returns...

If this plan of yours is working for you, good for you, but it's not a great plan for most people. I suggest people read up at http://www.whitecoatinvestor.com and https://www.bogleheads.org/ to find good recommendations and information for investing.

 

[68PGunner]

If this plan of yours is working for you, good for you, but it's not a great plan for most people. I suggest people read up at http://www.whitecoatinvestor.com and https://www.bogleheads.org/ to find good recommendations and information for investing.

I'm a fan of whitecoatinvestor. He has a wealth of knowledge and can teach a bunch of newbies a lot of things in investment. I personally think that if you know what you are doing, you can consistently get 15+% annually by having 10-20 core positions. If you actually read autobiographies of guys like Buffet, Soros, J. Rogers, and Lynch, all of them follow this approach.

 

[ThoracicGuy]

I'm a fan of whitecoatinvestor. He has a wealth of knowledge and can teach a bunch of newbies a lot of things in investment. I personally think that if you know what you are doing, you can consistently get 15+% annually by having 10-20 core positions. If you actually read autobiographies of guys like Buffet, Soros, J. Rogers, and Lynch, all of them follow this approach.

And you have to guess which ones will be the right one. For every Warren Buffet out there, you have thousands, if not millions of people that are wrong on their picks. I don't have the time or desire to try and research all these companies and my crystal ball doesn't work. Like I said, if it works for you, great. You get one of these wrong and maybe that year you aren't performing better than the market. If you do this in taxable accounts you can end up with alot of taxable losses as well compared to total market funds. Most people in 401k vehicles don't have access to individual stocks as well...

 

[Plastikos]

Its not guessing really, there are ways to do it...however, it does take considerable attention and what people gloss over is that most folks dont want to pay attention to their securities. Thats fine, they dont have to, and indexing is a fine way to do just that while receiving a respectable return. Just like medicine different personalities are more inclined to certain styles of investing. Whats enjoyable for me is not for thoracic guy.

As an aside, CVX is the least integrated of the majors, if you were to pick one for stability and dependability it should be XOM. CVX profits are more tied to crude prices than XOM or BP even (actually quite diversified). Their shares may bounce more because of that when/if prices go up in the future but its true. You think prices are low now wait til next quarter after all the proven reserves values are written down and marked to market. BRK on the other hand is a good index fund proxy, and in the future one would think there will eventually be some massive spinning off or dividend payments. Energy companies are an interesting proposition right now. One has to consider that we are in the midst of a secular decline in their ability to continue as profitably as before. Fracking is becoming easier, can be turned on the second prices go up (lots of capped wells), more efficient in cost/production and when deployed worldwide we'll be swimming in oil. On the other side of the coin technological progress and an eye to environmental cost offsetting will not go away. ICE efficiency will increase as it has, hybrids will become more of the proportion of vehicles and electric vehicles will continue their ascendancy to mainstream. Obviously, this will not happen overnight but over the course of decades and there is still money in the oil majors but the future outlook is less bright than in decades past.

 

[The White Coat Investor]

Two tips I always give individual stock pickers:

1) Track your returns meticulously, including the value of your research time.
2) If they are beating a reasonable collection of similarly risky low cost index funds over a long period of time, consider whether you are lucky or good. Proceed only if you are convinced you are good and realize you are a very rare person and should seriously be considering running money for other people too.

 

[deleted480308]

I disagree if you know what you're doing. Obviously throwing all of your retirement money into chevron is a terrible idea, but keep a name like CVX as one of your major cores is a winning strategy considering the current price, dividend history, and attractive yield.

Picking individual stocks is like women with the "pixie" haircut......far more people think they can pull it off than actual can do it well

 

[68PGunner]

Its not guessing really, there are ways to do it...however, it does take considerable attention and what people gloss over is that most folks dont want to pay attention to their securities. Thats fine, they dont have to, and indexing is a fine way to do just that while receiving a respectable return. Just like medicine different personalities are more inclined to certain styles of investing. Whats enjoyable for me is not for thoracic guy.

As an aside, CVX is the least integrated of the majors, if you were to pick one for stability and dependability it should be XOM. CVX profits are more tied to crude prices than XOM or BP even (actually quite diversified). Their shares may bounce more because of that when/if prices go up in the future but its true. You think prices are low now wait til next quarter after all the proven reserves values are written down and marked to market. BRK on the other hand is a good index fund proxy, and in the future one would think there will eventually be some massive spinning off or dividend payments. Energy companies are an interesting proposition right now. One has to consider that we are in the midst of a secular decline in their ability to continue as profitably as before. Fracking is becoming easier, can be turned on the second prices go up (lots of capped wells), more efficient in cost/production and when deployed worldwide we'll be swimming in oil. On the other side of the coin technological progress and an eye to environmental cost offsetting will not go away. ICE efficiency will increase as it has, hybrids will become more of the proportion of vehicles and electric vehicles will continue their ascendancy to mainstream. Obviously, this will not happen overnight but over the course of decades and there is still money in the oil majors but the future outlook is less bright than in decades past.

I think crude will hover bet $40-50 depending on seasonal factors. With that in mind, I think the bottom is in and prices will be range bounded for the next 12-18 months.

With crude this low, a lot of consolidation will happen in the oil industry. CVX is my top pick but you can't go wrong with XOM. People just need to focus on oil majors with great debt/asset ratio along with a lot of cashes. This is the time for these oil majors in the next 12-18 months to go on a major shopping spree.

There is nothing stopping the hybrid movement. I agree. However, I bet that a lot of the new techs are going to be put on the backburner with crude so cheap right now. The technology companies have profited from the clean and efficient auto movement, with speculative money pushing these companies to ridiculous valuations. I personally think that an opportunity will present itself in the next 12-18 months to invest in these names.

I used to trade stocks in my college dorm for a living, so I like the excitement that comes with stock pickings. I can't recommend the same for the rest of the population out there.

 

[Mman]

Two tips I always give individual stock pickers:

1) Track your returns meticulously, including the value of your research time.
2) If they are beating a reasonable collection of similarly risky low cost index funds over a long period of time, consider whether you are lucky or good. Proceed only if you are convinced you are good and realize you are a very rare person and should seriously be considering running money for other people too.

It's actually not being good that is rare, it is being disciplined. Temperament has more predictive ability when it comes to investing returns than any other factor. A large number of people could do quite well picking a diverse basket of individual stocks that would equal or beat market returns over time but many would/do prove incapable of sticking with their decisions. Something about the market going up makes people want to buy more and when it drops they want to sell. It's the exact wrong thing to do but it's exactly what most people would do.

As for tracking the value of your research time, that's only important in relation to what else you would be doing with that time. For me personally I find reading annual and quarterly statements and balance sheets of companies to be an interesting hobby so the relative cost is nothing because I wouldn't be generating any income during that spare time anyway. For other people, that time may have more value.


Buying individual stocks has some risk associated with it. Depending on how much research you do and how conservative and diversified you are with those purchases, though, it can ultimately have less risk than buying low cost index funds.

The overwhelming majority of people should pick an asset allocation and use low cost funds to go there and never think twice. That doesn't mean that is the best decision for all, or that it is the way to get the best returns (or even lowest risk of poor returns) over time.

 

[The White Coat Investor]

Buying individual stocks has some risk associated with it. Depending on how much research you do and how conservative and diversified you are with those purchases, though, it can ultimately have less risk than buying low cost index funds.

The overwhelming majority of people should pick an asset allocation and use low cost funds to go there and never think twice. That doesn't mean that is the best decision for all, or that it is the way to get the best returns (or even lowest risk of poor returns) over time.

The fun thing about "risk" is you can change its definition then argue you're taking less risk no matter what you do.

Interesting that you're convinced you're not in the "overwhelming majority." I guess I'd argue the odds are against that.

 

[deleted480308]

The fun thing about "risk" is you can change its definition then argue you're taking less risk no matter what you do.

Interesting that you're convinced you're not in the "overwhelming majority." I guess I'd argue the odds are against that.

Everyone is a special snowflake

 

[Mman]

The fun thing about "risk" is you can change its definition then argue you're taking less risk no matter what you do.

Interesting that you're convinced you're not in the "overwhelming majority." I guess I'd argue the odds are against that.

I prefer to think of risk like Ben Graham did and Warren Buffet does. There are different types of risk. The risk of losing everything is a real thing and should be avoided. But there is also a risk of losing purchasing power over time. There is also risk of losing money relative to some other investment opportunity. It's all risk, just depends what you are trying to measure.

I also never said or implied I was not in the "overwhelming majority". Not sure where you got the idea. I personally choose to individually invest in stocks with a small portion of my overall savings and I've been doing quite well for nearly a decade as compared to returns from the S&P 500. It could be luck, or it could be real. I'm certainly not willing to risk a large chunk of my retirement money on it but for me it has done better than the alternative of investing in a low cost fund that would approximate the S&P 500. The fact it is academically amusing and enjoyable is a secondary benefit to the real actual financial benefit it has provided.


So I would never suggest somebody should buy individual stocks. But I'm also not naive enough to suggest that nobody should. Lots and lots of people have exceeded market returns via purchasing individual stocks. Look at Eddy Elfenbein on Crossing Wall Street. His Buy list is up more than 50% on the S&P over the last 9 years despite using almost stupid methodology of simply picking 20 stocks and investing a hypothetically equal amount in each January 1 and selling it Dec 31st each year. It's certainly not an ideal way for how he'd do it for his own investing, but mindlessly easy and simple to track and he keeps open and honest records of it over time. There are loads of other examples.

So while I wouldn't encourage anybody to do it, there is no reason to suggest nobody should do it or that only special little flowers should do it. The hardest part of investing is having the temperament to buy low and sell high (the 2nd hardest part is learning how to determine what is cheap and what is expensive). When the market crashes, nearly everybody thinks that is bad and they want to sell. They don't have the mindset of seeing it as sale prices on everything under the sun which is what they really should do. That's why simple dollar cost averaging into low cost funds works best for most investors. It prevents them from making emotional investing decisions. But if you are disciplined and intelligent, there is no reason you can have a profitable investing career going forward with more than just low cost funds.

 

[The White Coat Investor]

I personally choose to individually invest in stocks with a small portion of my overall savings and I've been doing quite well for nearly a decade as compared to returns from the S&P 500. It could be luck, or it could be real.

I agree. Sounds like you're no more willing to bet the farm on your stock picking ability than I am.

 

[Mman]

I agree. Sounds like you're no more willing to bet the farm on your stock picking ability than I am.

No physician should "bet the farm" on their stock picking ability. They have the income necessary to not need to do that to retire comfortably. I personally max out my 401K, backdoor Roth IRA, and defined benefit pension plan every year and those are all with low cost mutual funds at a predetermined allocation (though the pension works a bit differently) well before I invest in individual stocks. But that's all completely mindless and easy. I enjoy studying and reading about companies and that gives me something to do with the rest of the money I'm investing towards retirement. That's why I track my returns religiously to make sure I'm not being a fool.