Help with Fund Selection and Allocation %s

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trblemaker
Posts: 9
Joined: Tue Sep 05, 2017 4:12 pm

Help with Fund Selection and Allocation %s

Post by trblemaker » Sun Oct 29, 2017 9:51 pm

Emergency Funds: 3-6 months? Yes
Debt: None, but planning on $160,000 mortgage at 4% interest
Tax Filing Status: Single
Tax Rate: 25% Federal/ 0% State
State of Residence: NV
Age: 47
Desired asset allocation: 65% stocks/ 35% bonds - asking advice on this
Desired international allocation: 30% ? of stocks - asking advice on this

Size of current portfolio: ~ $350,000
Roth IRA: ~$50,000
50% CORE FDIC Insured Deposit Sweep
2% BPT BP Prudhoe Bay RTY TR Unit Bent It
48% PRASX T Rowe Price New Asia

Rollover IRA: ~$300,000
95.7% CORE FDIC Insured Deposit Sweep
0.3% MSOFT Microsoft Corporation
4% RCL Royal Carrie an

401K: ~$5,000, 3% company match
100% FITHX FA Freedom 2035 I

Contributions
$13,000/yr 401k
$5,500/yr Roth IRA

Available Low Expense Ratio Funds (for Roth IRA and Rollover IRA)
0.035 FSTVX Fidelity Total Market Index Fund - Premium
0.09 FSTMX Fidelity Total Market Index Fund - Investor

0.06 FSIVX Fidelity International Index Fund - Premium
0.16 FSIIX Fidelity International Index Fund - Investor
0.045 FSPSX Fidelity International Index Fund - Institutional Premium Class
0.05 FSPNX Fidelity International Index Fund - Institutional Class
0.08 FPADX Fidelity Emerging Markets Index Fund - Institutional Premium Class

0.025 FXNAX Fidelity U.S. Bond Index Fund - Institutional Premium Class
0.035 FXSTX Fidelity U.S. Bond Index Fund - Institutional Class
0.045 FSITX Fidelity U.S. Bond Index Fund - Premium
0.14 FBIDX Fidelity U.S. Bond Index Fund - Investor FBIDX


Some Available Funds (401K)
Not that there weren't very low expense ratio options.

0.2. CPXRX Columbia Mid Cap Index Fund Class R5
0.5. JUEMX J.P. Morgan U.S. Equities Fund Class R6
0.64 PSPTX PIMCO Stocks Plus Absolute Return Fund
0.75 BDSAX Black Rock Advantage Small Cap Core Fund
0.87 WFMIX Wells Fargo Special Mid Cap Value Fund

0.6 PIYFX Invesco Multi-Asset Income Fund Class Y
0.6 PHSIX PIMCO High Yield Spectrum Fund
0.57 PHYZX Prudential High Yield Fund Class Z

0.75 FITHX Fidelity Advisor Freedom 2035 Fund

Questions
1. I just opened the Fidelity Rollover IRA and Roth IRA. That is why the majority of the funds are in CORE right now. Of the available funds low expense ratio funds listed above, which do you recommend? Or maybe recommendations other than those listed above. I am looking to do the 3 fund portfolio, so my available funds above are given in the following general categories:
Total Market Index Fund
Total International Index Fund
U.S. Bond Index Fund

2. What do you recommend for the asset allocation %s? My initial guess above is 65% stocks (with 30% of that in International) and 35% bonds. Thoughts/suggestions?

3. What do you think of me leaving the 401k in the 2035 target date fund? If this is a bad idea, where should I put it? I can't find low expense ratio funds or ones similar to the 3-fund portfolio suggestion. I have updated my post to include some of the lower expense ratio options.

4. Updated Question - Fund Selections
Thanks for mega317's input. Below are my tentative selections, with the asset allocation %s. What do you all think?

Roth IRA and Rollover IRA
50% FSTVX Fidelity Total Market Index Fund - Premium
25% FTIPX Fidelity Total Internal Fund - Premium
25% FSITX Fidelity U.S. Bond Index Fund - Premium

401K
70% BSPIX iShares S&P 500 Index Fund
30% PIYFX Invesco Multi-Asset Income Fund Class Y

Average Asset Allocation among all 3 accounts
57% U.S. Stocks
17% International
26% U.S. Bonds
Last edited by trblemaker on Mon Oct 30, 2017 1:06 pm, edited 2 times in total.

venkman
Posts: 294
Joined: Tue Mar 14, 2017 10:33 pm

Re: Help with Fund Selection and Allocation %s

Post by venkman » Sun Oct 29, 2017 10:15 pm

trblemaker wrote:
Sun Oct 29, 2017 9:51 pm
Questions
1. I just opened the Fidelity Rollover IRA and Roth IRA. That is why the majority of the funds are in CORE right now. Of the available funds low expense ratio funds listed above, which do you recommend? Or maybe recommendations other than those listed above. I am looking to do the 3 fund portfolio, so my available funds above are given in the following general categories:
Total Market Index Fund
Total International Index Fund
U.S. Bond Index Fund

2. What do you recommend for the asset allocation %s? My initial guess above is 65% stocks (with 30% of that in International) and 35% bonds. Thoughts/suggestions?

3. What do you think of me leaving the 401k in the 2035 target date fund?

Thanks for your input.
1. Just go with the lowest ER total market fund that you qualify for within each group.

2. AA depends on your willingness to take risk, and your time horizon. For comparison purposes, the Vanguard Target Retirement funds for 2035 and 2040 are currently about 80% and 85% in stocks, respectively.

3. I would say dump it and find something with a lower ER, but that depends on what else is available in your 401k.

mega317
Posts: 1098
Joined: Tue Apr 19, 2016 10:55 am

Re: Help with Fund Selection and Allocation %s

Post by mega317 » Sun Oct 29, 2017 10:51 pm

1. You can't afford the institutional classes. FXNAX, for example, has a minimum initial investment of 100 million.
I use FSTVX, FTIPX (total international index, which you didn't list as an option), and FSITX. As far as I know that's the least expensive way for an individual to have a three fund portfolio at Fidelity.

2. Your allocation is perfectly reasonable-- it is almost exactly where I plan to be at your age.

3. Please update your post with your 401k options. I don't hold target-date funds, it just complicates the math by one step when trying to figure out what I have.

trblemaker
Posts: 9
Joined: Tue Sep 05, 2017 4:12 pm

Re: Help with Fund Selection and Allocation %s

Post by trblemaker » Sun Oct 29, 2017 11:49 pm

I have updated my post to list some of the lower expense ratio options from my 401k. The options are confusing me since they are not low expense ratio and I can't find ones in the typical 3-fund portfolio scheme. For example, I can't find ones in:
Total Market Index Fund
Total International Fund
U.S. Total Bond Fund

I appreciate input.

mega317
Posts: 1098
Joined: Tue Apr 19, 2016 10:55 am

Re: Help with Fund Selection and Allocation %s

Post by mega317 » Mon Oct 30, 2017 12:13 am

In just a few minutes of internet searching the JPM US Equities fund seems fine, similar to an S&P 500 fund. I'd bet many people don't have an option that good in their plans. This is probably close enough to a total market fund that you can treat it as such, or you can add the mid-cap in your 401k and a small-cap fund in another account to round out the difference.

You could also use only the mid-cap index here, and add large- and small-cap in other accounts. It would be the cheapest way but might be more complicated than it's worth. Are there no other options with the word "index"?

trblemaker
Posts: 9
Joined: Tue Sep 05, 2017 4:12 pm

Re: Help with Fund Selection and Allocation %s

Post by trblemaker » Mon Oct 30, 2017 12:01 pm

There is one option with the word "Index", I just missed it:

iShares S&P 500 Index Fund BSPIX

My guess is that is the way to goes for the Total Market Fund. Now I just need to figure out the International Fund (if there are any) and the Bond Fund.

mega317
Posts: 1098
Joined: Tue Apr 19, 2016 10:55 am

Re: Help with Fund Selection and Allocation %s

Post by mega317 » Mon Oct 30, 2017 12:32 pm

trblemaker wrote:
Mon Oct 30, 2017 12:01 pm
Now I just need to figure out the International Fund (if there are any) and the Bond Fund.
I don't think you need to. Just hold only the ishares S&P 500 fund in your 401k, and hold bonds and international in the other accounts.

One example:
401k: 5k S&P 500
Roth IRA: 50k FSTVX (total US)
rollover IRA: 94k FSTVX, 82k FTIPX (total international), 124k FSITX (total bond).

That's 65/35 with 35% of stocks international, and you don't have to use any other funds in your 401k. You can direct all 401k contributions to the S&P 500 fund and adjust in the rollover IRA once in a while.

trblemaker
Posts: 9
Joined: Tue Sep 05, 2017 4:12 pm

Re: Help with Fund Selection and Allocation %s

Post by trblemaker » Mon Oct 30, 2017 1:10 pm

mega317, I didn't see your post before I updated my post. I didn't know I could just put in International in one account, U.S. in another account, and then a spread of the 3 options in the Rollover account.

In that case, I'm guessing the option I put in my updated post question 4 is not a good choice?

Sorry for all the questions. I'm still a beginner at all this as my ex-husband did all the investing.

mega317
Posts: 1098
Joined: Tue Apr 19, 2016 10:55 am

Re: Help with Fund Selection and Allocation %s

Post by mega317 » Mon Oct 30, 2017 1:29 pm

Your example seems fine too although I'm not sure about the math. Your Roth+rollover are 99% of your portfolio so I don't see how you go from 50/25/25 to 57/17/26.

trblemaker
Posts: 9
Joined: Tue Sep 05, 2017 4:12 pm

Re: Help with Fund Selection and Allocation %s

Post by trblemaker » Mon Oct 30, 2017 2:17 pm

Yeah, my math is off. Thanks for the input.

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