Investment choices

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Submitted by kev374 on January 1, 2013 - 6:32pm

I have a Rollover IRA that is sitting idle in Cash Reserves for a while and I want to put them into investments now. I have selected the following portfolio, I am going to hold these long term since I am only 38 years old...any comments?

40% towards FFFFX - 2040 Freedom fund
20% FFNOX - Fidelity 4 in 1 index fund
20% FSICX - Fidelity Strategic Income fund
20% Something else [please suggest]

Submitted by carlsbadworker on January 1, 2013 - 9:52pm.

I don't know. People suggest hard-assets on this board.

Submitted by UCGal on January 2, 2013 - 12:13pm.

That's a decent allocation.
You're getting some bond/cash exposure through the target date fund.

I'm a huge fan of index funds - then allocating based by asset class.

I'm not into hard assets. Except as small plays... I'm notoriously bad at picking individual stocks, metals, or real estate. I've done well with low expense ratio index funds.

Submitted by gzz on January 2, 2013 - 10:16pm.

If you can do Vanguard instead of Fidelity, the fees taken out of your return will be much lower.

Vanguard is non-profit and charges the lowest fees almost everywhere it competes.

38 is a bit young to have no pure equity exposure.

Submitted by kev374 on January 2, 2013 - 11:48pm.

Thanks. I have all the money in a MM fund right now and have not made any investments. If I close down the rollover IRA and do a custodian to custodian transfer to Vanguard that may be a prudent choice don't you think? Vanguard seems to have a better reputation than Fidelity in terms of performance and cost.

Submitted by livinincali on January 3, 2013 - 7:57am.

Performance for those fidelity funds have lagged all of the major averages and you've had to pay fees to be in them. I'd rather buy SPY (S&P 500), DIA (Dow 30), or QQQ (Nasdaq 100) than any of those funds. I'd stay away from US treasury bonds as that 30 year bull run is likely to come to an end at some point. Certainly there isn't much upside on US treasury bond prices from here, you're zero bound.

MUB might be an option if you want to play Muni Bonds. While muni's aren't in great shape you could certainly see government bailouts of their bonds and the yield is higher, almost 3% on MUB.

The best income producing play right now seems to be large cap dividend so you could take a look at something like DLN which is a large cap dividend ETF. Currently 25 large multi international companies have better credit risk than the US.

Of course with all that said everybody is desperate to earn a yield or return right now and you're coming into the game pretty late. The easy money has been made. It certainly wouldn't surprise me to see buyers of the fiscal cliff solution end up being the bag holders.

Submitted by DataAgent on January 3, 2013 - 8:41am.

gzz wrote:

Vanguard is non-profit...

Vanguard is a private company but non-profit??? Really?

Submitted by scaredyclassic on January 3, 2013 - 8:42am.

expenses on funds matter a lot

Submitted by UCGal on January 3, 2013 - 9:15am.

squat300 wrote:
expenses on funds matter a lot

I agree with this.

Vanguard, in general has the lowest expense ratios... but Schwab and Fidelity have some funds that come close.

Vanguard is definitely a DIY oriented fund company... but heaven help you if you need customer service. They lost paperwork (death certificates) 3 times before they finally were able to transfer my dad's accounts per the executors wishes. And then couldn't correlate the same death certificate over to the 529's... so more lost copies before that got transferred over. I still have Vanguard accounts - but STRONGLY prefer Schwab's customer service if anything non-standard comes up. And the expense ratio's are very close for similar index funds.

If you want a good idea on asset allocation and how to set up a simple approach - look over at the bogleheads forum for the lazy portfolio or couch potato portfolio...
http://www.bogleheads.org/wiki/Lazy_Port...
http://assetbuilder.com/couch_potato/cou...

You don't have to do Vanguard funds - any low cost INDEX funds will work - from the proper asset class.

Submitted by ltsdd on January 3, 2013 - 12:11pm.

UCGal wrote:
squat300 wrote:
expenses on funds matter a lot

I agree with this.

Vanguard, in general has the lowest expense ratios... but Schwab and Fidelity have some funds that come close.

Vanguard is definitely a DIY oriented fund company... but heaven help you if you need customer service. They lost paperwork (death certificates) 3 times before they finally were able to transfer my dad's accounts per the executors wishes. And then couldn't correlate the same death certificate over to the 529's... so more lost copies before that got transferred over. I still have Vanguard accounts - but STRONGLY prefer Schwab's customer service if anything non-standard comes up. And the expense ratio's are very close for similar index funds.

If you want a good idea on asset allocation and how to set up a simple approach - look over at the bogleheads forum for the lazy portfolio or couch potato portfolio...
http://www.bogleheads.org/wiki/Lazy_Port...
http://assetbuilder.com/couch_potato/cou...

You don't have to do Vanguard funds - any low cost INDEX funds will work - from the proper asset class.

+1 for the lazy portfolio. I would recommend using Vanguard's total bond, total stock, total int, plus may be one more (inflation adjusted). Keep it small and simple to no more than 4 funds. Rebalance at least once a year.

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