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Retirement investing advice
Old 12-19-2013, 07:32 PM   #1
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Retirement investing advice

Hi,

My name is Barb and I've been unemployed for over a year now. Jobs in my field are hard to find even in Silicon Valley. The start up solar company I worked for ran out of money so they let almost everyone go. Prior to that I worked for Intel until they relocated the fab to Chengdu, China.

I decided to take my 401K money and roll it over to Fidelity IRA. I've invested some of that into Fidelity Healthcare ETF and Fidelity Industrial Index ETF. I did this because I read that ETFs cost less to invest in. I have about $36K left to invest and wanted to get some feedback as to where I should put the money to grow tax free until withdrawal. Would you recommend index funds and if so, which one?

I should add that although I have mutual funds with Janus, Oppenheimer and Fidelity. They've done well but then the market has performed very well this year.

I plan to work for a couple more years and then retire. The house is paid off and I am debt free.

Any input would be appreciated.

Thank you,

Barb
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Old 12-19-2013, 09:40 PM   #2
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As a baseline, you should be invested in a portfolio that looks like it evenly covers the global markets. And has a bond/cash level that is reasonable for you. Then you can branch out from that to specialized funds or over/under weighting. Sounds like you are picking funds that have caught your eye without considering how your overall portfolio looks.

A quick partial survey of Fidelity commission-free ETF's suggests ITOT (total US) and IXUS (total international) might be a good start. But be sure to keep your entire portfolio in mind while investing in the IRA.
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Old 12-20-2013, 03:05 AM   #3
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Thanks for your response and advice. I did meet with a Fidelity rep who went over my portfolio with me and she told me I'm on the right track. I am pretty well diversified. We also did retirement planning and I'm good until my 80s.

I was advised to look into getting a long term care insurance now (at age 58) instead of waiting until later.

Thanks also for the ETF recommendations. I will read up on them.
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Old 12-20-2013, 06:50 AM   #4
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Thanks for your response and advice. I did meet with a Fidelity rep who went over my portfolio with me and she told me I'm on the right track. I am pretty well diversified. We also did retirement planning and I'm good until my 80s.

I was advised to look into getting a long term care insurance now (at age 58) instead of waiting until later.

Thanks also for the ETF recommendations. I will read up on them.
"I'm good until my 80s", and then what? Fidelity took my plan out into my 90s.
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Old 12-20-2013, 07:03 AM   #5
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While it is unclear from your post, the post suggests that you are concentrated in two sector ETFs. If that is the case, then I would not consider that well diversified and am surprised your Fidelity rep would say so.
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Old 12-21-2013, 07:21 AM   #6
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Barb,
If you're working with a competent Fidelity rep, then I'd suggest following his/her recommendation on what to do with your $36K; we don't have enough information.
Keep educating yourself on portfolio construction and diversification.
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Old 12-21-2013, 09:55 AM   #7
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Barb,
If you're working with a competent Fidelity rep, then I'd suggest following his/her recommendation on what to do with your $36K; we don't have enough information.
Keep educating yourself on portfolio construction and diversification.
Yes, have you checked into Fidelity's GPS tool, it attempts to make that diversification easier. But as racy suggested education is your best friend.

Edit to add: FYI - your plan is in RIP, you can change the plan till age to be any number.
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Old 12-23-2013, 03:01 AM   #8
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I looked at my retirement planning again and it is actually planned out to age 94.

After reading your responses, I did talk to the Fidelity rep and I am well diversified. My investments are doing well. She advised me to not rush the investing of the $36K. We will be meeting again next year. In the meantime I will try to do the Action Steps in the RIP.

Action Steps (copied from RIP)
Keep your budget current. Re-examine your expenses by periodically using the Budget Worksheet in the Retirement Income Planner tool located at Fidelity.com.

Keep your portfolio aligned with the target asset mix you selected.
Rebalance your portfolio at least annually to adjust for changes in the value of your investments. Transactions may be placed on Fidelity.com or by calling your representative.

Track all of your finances in one place. Simplify your life by consolidating your investment, bank,and credit card accounts onto a single page. Fidelity’s FullView helps you manage your finances with one-stop viewing. (Visit the Cards and Checking Products tab located at Fidelity.com.)

Consolidate your Fidelity accounts in one statement by filling out a Household Relationship form.This will allow you to view your investment performance in one place.

Explore your pension payment options.
You may want to explore the impact of different pension payment options may have on your retirement income plan.Visit "Compare Your Pension Benefits Options" in the Retirement Income Planner tool.

I'll also be educating myself more on retirement planning.

Thanks again,

Barb
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Old 12-23-2013, 08:16 AM   #9
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We can't tell how well diversified you are with the limited info you've provided which is fine. But I'd enter all my holdings in the Morningstar X-Ray online tool (it's free, no login required) to get a second opinion on how well diversified you are. It'll also show you how the fees you're paying compare to lower cost funds, an expense every investor should at least be aware of.

And though she said no hurry on deploying your cash, I would think she would have at least had a recommendation of some sort for when the time comes. Hopefully your cash isn't in a savings of money market fund providing negative real returns (returns less than inflation).
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Old 12-23-2013, 10:59 AM   #10
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Quote:
Originally Posted by CABarb View Post
...
I was advised to look into getting a long term care insurance now (at age 58) instead of waiting until later.

Thanks also for the ETF recommendations. I will read up on them.
ETF's work well for me. I'd suggest looking at your portfolio's overall ER. If it is around 0.20% then you are fine. If too high, look at the high ER funds and assuming there are no big tax consequences find a substitute low ER ETF or fund.

To deploy the cash, why not just distribute it to your current holdings if they are well diversified?

I would beware of LT care insurance and know exactly the rep's bonus in this sort of thing. It's a quagmire in my opinion. We self-insure. I suggest being suspicious of financial planners mixing insurance and investing.
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Old 12-23-2013, 11:13 AM   #11
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I'm surprised no one suggested getting in touch with Vanguard.

You're into some fairly high expense mutual fund families. And, I don't see where you're well deversified with your two ETF funds. I'd suggest looking at total stock ETF as a start and go from there. Good Luck........expenses and diversification should be your two main goals.....I'll be interested what others have to say.
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Old 12-23-2013, 11:59 AM   #12
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Fidelity has both active and passive funds, as well as no fee ETFs. Look into their Spartan funds, ERs are about the same as Vangaurd. You can buy many Vanguard funds in their network.

A big reason I use Fidelity is there's an investment center with face to face training. Of course my advisor is helpful, he's never pushed LTC or any other type of insurance products to me. His advice was in part responsible for me being able to RE, by not rolling my 401k over to Fidelity (55-59.5 contingency).
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