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JT1906

Need Help Figuring Things Out

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Let me start by saying: I found this site by accident towards the end of last school year.  I am so glad that I did. Starting into a new profession of teaching I was eager to contribute to any one that would take my money.  However, I soon realized that the AXA financial was not the way to go; thanks to many of you in this forum.

 

At the encouragement of some of the posters I was informed to sign up with Fidelity.  I’ve done that but I need more guidance as to what specific funds I should send money.  Below is how much I have put in and also where it’s going.  

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I’m glad you are now contributing to a Fidelity 403b! That’s great. The funds you’ve selected are not the ones we suggested back in Oct 2018:

https://board.403bwise.com/topic/6938-reputable-403b-houston-area/

We are big fans of either using a target retirement fund, or a 2 or 3 fund portfolio using the “Total” index funds. Fidelity’s Total Market Index fund is broadly diversified and contains all the market segments that you have selected. The segments you’ve selected are more risky than the total market index funds. You can read about the 3 Fund Portfolio here:  https://www.bogleheads.org/wiki/Three-fund_portfolio

You can read about index funds here:  https://investor.vanguard.com/index-funds/what-is-an-index-fund

The funds you’ve selected have a much higher weighted expense ratio (ER). Have you looked up the ERs? What is the 49.05% of “Other”?

The higher ERs will reduce your return over time. I think you would be better off using the funds below (which are those suggested by Ed).

Total Market Index Premium, FSTVX, ER 0.02%

International Index Premium, FSIVX, ER 0.05%

US Bond Index Premium, FSITX, ER 0.03%

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Good morning Krow36! Thank you for your response.  I am currently on Fidelity's site now.  I am searching for the funds you and Ed recommended but can not seem to locate them.  In what particular area should I search?

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Nevermind, I found them!

 

Good morning Krow36! Thank you for your response.  I am currently on Fidelity's site now.  I am searching for the funds you and Ed recommended but can not seem to locate them.  In what particular area should I search?

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It sounds like you've got this under control, but for anybody else reading this thread:

  • I documented the fees associated with Fidelity as well as the funds I would recommend for building a fully diversified portfolio with rock bottom expenses.
  • I also wrote an Investing 101 page that explains the fundamentals of fund selection.

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I agree with the recommendations too!!

Fidelity is only a good choice as far as sticking to their index funds. The rest of their funds are expensive often sector specific funds. There are only so many equities/bonds  in the universe and the basic index funds mentioned by Krow and Ed is all you really need. The reason there are so many other choices is there is money to be made by companies. Its  like going to the grocery store to buy basic laundry detergent (index funds) but  then when you get to the isle you suddenly realize you are inundated with more choices than you know what to do with( Tide, Fab, Arm and Hammer, All, Oxiclean, Wisk, Clorox etc. which causes you confusion and you might end up paying more than you wanted to and maybe even more product than you need. Advertising also influences your decision with detergents and investments. Salespeople are there to advertise and promote a certain product.Stick with the basic index fund and forget about the rest.  Avoid the noise and you will be better served. And as you can see below even Index fund selections can get extreme. You will probably do just as well with a 3 fund portfolio mentioned above. And I also learned the hard way that cleaning products make amazing claims about their cleaning abilities but most work about the same. So stick to the basic  low cost concoction in most cases.

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JT1906, it's been a long time since I had a Fidelity 403b account so I'm not familiar with their current website. If you just want to learn about a particular index fund, just google the ticker (the fund's 5 letter symbol). If you want to know how you go about selecting them for your account, perhaps you should give the Fidelity help line a call?

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I deleted the bond and international funds I had listed here because after looking there are some cheaper ones. 

The Fidelity® Total Market Index Fund FSKAX is .015%

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I'm puzzled. The Fidelity index funds I listed are from 403bcompare. These are the funds that Fidelity submits to the 403bcompare site run by CalSTRS, the CA teacher's pension authority.  https://www.403bcompare.com/products/68#/investmentoptions 

I think Fidelity may restrict the index funds available in their K-12 403b accounts to those funds and not allow the very lowest cost alternatives?

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5 hours ago, ChrisC said:

From my research the zero fee funds are not available in a 403B. These are the funds that Fidelity offers through in a 403b: https://pcs.fidelity.com/public/netbenefits/planfunds/performance?plan=95924&client=99999

 

that's a confusing array of choices and easy to end up in higher fee active funds. Can you access a brokerage account with fidelity? in a 403b?

 

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Thank you ChrisC for providing the fund list for Fidelity's 403b plan. Because they have been lowering the ERs trying to catch up with Vanguard, they have introduced new share classes of the funds listed in 403bcompare. So I think these 3 funds are what we would recommend currently:

Fidelity® Total Market Index Fund, FSKAX, ER 0.015%

Fidelity® International Index Fund, FSPSX, ER 0.035%

Fidelity® U.S. Bond Index Fund, FXNAX, ER 0.025%

JT1906, if you use these 3 funds for the majority of your 403b, I think you will do very well. You will be completely diversified and super low-cost. You haven't said what your "other" funds were, but I think it should be the same. You've said you are in your mid-30s and plan to retire at 60, so you have many decades before you need your retirement money. If you can't resist trying to beat the index, I would confine it to a small percentage, ideally 5% or less. Max 10%? Rebalancing every year should not be very time consuming. 

As a suggestion, you might consider 60% Total MKt Index, 20% International  Index and 20% Bond Index. 

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KRow36 Thank you for checking into this! I’ve followed your advice. 
 

I’ve in posted material from this site in our teachers lounge. 

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WOW! You've certainly simplified and lowered the costs of your 403b contributions! And you are fully diversified and not on any particular sector. Others might choose different percentages of the 3 funds (more or less bonds, etc.) but I think yours are very reasonable for someone at the start of their investing for retirement. Nice idea to post it in the teacher's room. Hopefully it will generate some discussion! Maybe you could include the 403bwise.org address? Thanks for the update!

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Yeah, way to go JT! And posting your work in the teacher's lounge is a new strategy. Your stock 80%/bond 20% split is appropriate for an investor under 35 years old (but its a general rule of thumb with many variables to tweet it differently, of course). 

krow mentioned this site to announce to your colleagues. Also, there is another new site which is growing rapidly over these past few months since its launch. There are over 600 teachers on the Facebook page and its very active. Post your Rebalance Summary there too: https://www.facebook.com/groups/349968819000560/?ref=bookmarks 

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