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Fidelity FUSEX fund
Old 12-24-2017, 09:48 PM   #1
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Fidelity FUSEX fund

Hello,
My brother in law gave me so e advice today, said I should invest in a S & P Index fund. He suggested Fidelity. Anyone have an opinion on this? Always been probably too conservative, muni bonds, certificates of deposits, etc..

Happy holidays
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Old 12-24-2017, 10:18 PM   #2
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That one seems fine, the expenses are low, turnover is low. You could also consider VTI, VEX, VXUS , the last 2 will give you exposure to the rest of the world.

Most folks feel a person with a balanced savings would have 50% in Stocks/ETF/Funds , and the rest in "muni bonds, certificates of deposits, etc."

So do you have any stock ETF's or Funds, or plain Stocks ?
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Old 12-24-2017, 11:10 PM   #3
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............Most folks feel a person with a balanced savings would have 50% in Stocks/ETF/Funds , and the rest in "muni bonds, certificates of deposits, etc." ..........
Not really. An appropriate asset allocation depends on many factors like age, eligibility for a pension, risk tolerance, real estate holdings, etc.

I think the OP needs to clarify his / her status.
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Old 12-24-2017, 11:13 PM   #4
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Most S&P500 index funds are market-weighted. IOW, they are overweight in large-cap stocks, because that's primarily what composes the index. I chose an equal-weight index, which allocates less to large-caps and more to mid- and small-caps which also tends to outperform the S&P500 market-weighted funds. I bought the Guggenheim equal-weight fund (ETF ticker RSP) and, indeed, it outperforms the S&P500 on most days.
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Old 12-25-2017, 12:03 AM   #5
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If you want to diversify into the Russell 2000 Mid Cap, Fidelity has the Index fund FSCLX and Small Cap Index fund FSSPX
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Old 12-25-2017, 01:09 AM   #6
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If in a taxable account, consider Vanguard since Bogleheads report the taxable distributions are less than with the Fidelity fund. I also favor a total market index fund or ETF - with the total market index you have exposure to the broad market, including mid caps and small caps, all in one fund. Vanguard, Fidelity and Schwab all have very low cost total market index funds and ETFs. Vanguard’s is the most tax efficient fund.
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Old 12-25-2017, 08:15 AM   #7
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You may want to consider an ETF, rather than an index fund. Generally no capital gains distributions and low fees.

At Fidelity, buy IVV.
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Old 12-25-2017, 08:31 AM   #8
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Originally Posted by Bruceski44 View Post
Most S&P500 index funds are market-weighted. IOW, they are overweight in large-cap stocks, because that's primarily what composes the index. I chose an equal-weight index, which allocates less to large-caps and more to mid- and small-caps which also tends to outperform the S&P500 market-weighted funds. I bought the Guggenheim equal-weight fund (ETF ticker RSP) and, indeed, it outperforms the S&P500 on most days.
VFIAX is cap weighted 500 index from Vanguard. In the last 5 years, it is .45 ahead of the equal weighted RSP. Over ten years, VFIAX trails RSP by over 1.00. This does not prove any outperformance, just different performance over different time periods. If you want more performance from midcaps and small caps, get the Total stock market index or tilt directly with small and midcap funds.
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Old 12-25-2017, 08:47 AM   #9
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Originally Posted by pletal View Post
Hello,
My brother in law gave me so e advice today, said I should invest in a S & P Index fund. He suggested Fidelity. Anyone have an opinion on this? Always been probably too conservative, muni bonds, certificates of deposits, etc..

Happy holidays
A pretty good fund and instant diversification.
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Old 12-25-2017, 10:01 AM   #10
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Invest >$10k & get Investor Class (FUSVX), which will cut your fees in half (to 0.045%).

I own a lot of FSTVX, which is similar: DJ versus S&P index. Needless to say, Iíve been very pleased the past several years.
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Old 12-25-2017, 10:01 AM   #11
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I think your BIL gave you both good advice and bad advice.

The good advice, as others have said, is that you need to have a significant fraction of your portfolio in equities.

The bad advice is to buy an S&P 500 fund. I have never thought these funds were great strategy and IMO the arguments against them are getting stronger.
Thing #1: They are a sector bet: large cap US stocks. What we see in history is that sectors wax and wane. A passive portfolio does not make sector bets.

Thing #2: I think there is a tenable argument that the S&P is in a sort or mini-bubble. A majority of naive investors like your BIL have believed the indexing arguments (really arguments for passive investing) and have piled into the S&P. So it is probably overvalued relative to the 60% of the world stocks that have not benefited from their naivete.

Thing #3: Towards the end of every bull market, professionals start to talk about stock held in "weak hands." IOW, people who have bought but will not have the courage to ride out the next correction. Remember the story that JP Morgan got out of the market in 1928 because his shoe shine boy started giving him stock tips? True or not, it's an issue worth considering. So in this bull market, the concern about weak hands increases when talking about the S&P simply because that is where the naive dollars have been going
In ten years or more, most of these things are washed away by time but I still think they argue for not concentrating an equity portfolio in any S&P fund right now. Just buy a total US market fund or, better, total world market fund. Then commit the Copilot's Checklist to memory: Sit down, shut up, and hang on.

If I wanted to make sector bets, which I do not, I would try to assemble a portfolio that included the world market specifically sans US large caps.
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Old 12-25-2017, 12:12 PM   #12
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Not really. An appropriate asset allocation depends on many factors like age, eligibility for a pension, risk tolerance, real estate holdings, etc.

I think the OP needs to clarify his / her status.
Well true, I didn't take a poll so it should have been Many folks would consider a balanced fund to be approximately 50% in Stock type investments.

By the way I checked OP's planned retirement date, so either he is old or rich, or has very very low expenses.
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Old 12-25-2017, 03:08 PM   #13
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To the OP. Ask us what time it is and we will collectively tell you how to build a watch. All with only the best intentions though.
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Old 12-25-2017, 07:22 PM   #14
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In my 401(k) I own FUSVX which is the premium lower cost version of FUSEX. I have been very happy with it. Note that as an S&P 500 fund it doesn't cover all equities. I own some other funds to get more exposure to equities that are not in the S&P 500. That said, this is the largest single holding in my 401(k).
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Old 12-26-2017, 06:21 AM   #15
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40-65% equities is typical for retirees, according to "How to make your money last" by Jane Bryant Quinn. She has mentioned this range quite a few times in the book.

"So how much to allocate to stocks? Typically itís 40% to 65%. You might keep 90% in stocks if you wonít need the money and are basically managing it for the next generation. You might put zero in stocks if youíre in poor health and your savings are modest."

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Old 12-26-2017, 07:56 AM   #16
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Originally Posted by pletal View Post
Hello,
My brother in law gave me so e advice today, said I should invest in a S & P Index fund. He suggested Fidelity. Anyone have an opinion on this? Always been probably too conservative, muni bonds, certificates of deposits, etc..

Happy holidays
Don't do anything. It's probably not bad advice, but when you say you're thinking about doing something because your brother-in-law suggested it, that tells me you need to educate yourself.

Start here: https://www.bogleheads.org/wiki/Bogl...e_To_Investinghttps://www.bogleheads.org/wiki/Bogl...e_To_Investing
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Old 12-26-2017, 08:38 AM   #17
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Well true, I didn't take a poll so it should have been Many folks would consider a balanced fund to be approximately 50% in Stock type investments.

By the way I checked OP's planned retirement date, so either he is old or rich, or has very very low expenses.
Thanks for the advice, should have put in some more details Early 50's. DW late 50's.

No pension
Savings non retirement accounts 5.8M , 70% in taxable CD's / 20% in fed tax free muni bonds (individual) / 5% muni bond fund / 5% fixed annuities

Retirement accounts: 650K mostly in fixed annuities / CD's paying about 3.5%

Couple of rental homes

No real big expenses (except health insurance)

I will probably not be retiring anytime soon, but am enjoying life along the way. Get very restless. Really just looking for some other avenue of investment to get a better return on futures savings. The CD"S and Munis kick off about 150K a year and would like another place to park the money. I guess studying investments may become a hobby. Thanks for any advice
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Old 12-26-2017, 09:47 AM   #18
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... I guess studying investments may become a hobby. Thanks for any advice
Well, I agree that you should be more engaged but I'd suggest viewing it as a spectator sport rather than a hobby. As Warren Buffet said:"“The stock market is a device for transferring money from the impatient to the patient.” The way I say this is similar: "It took me 30 years to figure out that the more I played with my food, the less food I had."

For me it's a great spectator sport and the discussions here are both fun and educational. But in the last 15-20 years I can probably count the "strategy" trades we've made on my fingers. This last week of the year we'll be looking, as we do every year, at the portfolio to see if there are any strategic changes we want to make. Most years there are none.

Here's a good book to start with: "The Coffehouse Investor" by Bill Schultheis. I met Bill on a trip where we were evaluating investment managers for a small nonprofit. He is the real deal, not some huckster who makes his/her living selling books and pontificating in the media. His viewpoint is not unique, but it is solid and will provide you with a good beginning perspective on this engaging spectator sport.
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