Help please...Fidelity Roth IRA choices

[OtisIL]

Looooong time lurker and first time poster. Any help from you guys would be greatly appreciated.

Looking for info on what funds to choose as I am opening a Roth IRA at Fidelity. Looking over all their info makes my head spin.

A little background info that may help with suggestions in regards to funds and allocations:

40 years old, wife is 38. We both contribute to company 401ks to get the company matches (10% of total income each after company match). We have 19 rental units that are not paid for but cash flow well. We plan to pick up another 2-3 rental units per year for the next 12 years. Then at that point the cash flow will provide for us to just work in our rental business.

We plan on maxing our the Roth IRA each year, then also adjust our 401ks to put more in them as well. I like the idea of the Roth IRA due to no RMD’s and it would be something that we contribute to and wouldn’t pull money from until we get tired of working in the rental business and sell everything. So it will pretty much just sit and hopefully keep growing.

Again any help is greatly appreciated. I’m obviously more of a tangible assets type of guy as real estate has done awesome for me over the last 7 years. I just get lost trying to pick and choose through Fidelity’s funds.

 

[VanWinkle]

First remember there is a 196,000 income limit as Married Filing Jointly for the Roth IRA. You can get around that with Back Door conversions if needed.

At you're ages, I would just put the funds in a Total Stock fund with the lowest expense ratio and call it a day. There is even a Zero expense ration fund at Fidelity you can use.

Congrats on your rental business and savings.

VW

 

[OtisIL]

For the total stock funds, are you referring to US stock funds or something that includes foreign stocks also?

My thinking was doing about 90% in FZROX and 10% in FXNAX (but not opposed to being 100% in a stock fund). In our 401k’s, we have those invested aggressively at about the same 90/10 or 80/20 ratio.

Sorry if these questions seem elementary to most, but just trying to find the best place to just keep stuffing money into and leaving it while we keep growing the rental business.

 

[VanWinkle]

For the total stock funds, are you referring to US stock funds or something that includes foreign stocks also?

My thinking was doing about 90% in FZROX and 10% in FXNAX (but not opposed to being 100% in a stock fund). In our 401k’s, we have those invested aggressively at about the same 90/10 or 80/20 ratio.

Sorry if these questions seem elementary to most, but just trying to find the best place to just keep stuffing money into and leaving it while we keep growing the rental business.

I do not keep any Bonds in my Roth as I am going for maximum impact and 100% stocks. I would keep the entire 10%/20% of bonds in your 401K as it is tax-deferred instead of tax free as a Roth. this link may help you with
where to hold your difference types of investments.

Those two funds are fine.

https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

VW

 

[OldShooter]

... At you're ages, I would just put the funds in a Total Stock fund with the lowest expense ratio ...

Yup. At your age and with other assets, 100% equities is the way to go. I am an advocate of holding significant international equities, though. The US is only half the world in terms of equity markets and over the long term (your long term) it seems almost inevitable that this share will decline. Fido has a zero fee international fund to match its zero fee US fund. IIRC neither is technically a total market fund but the difference is probably just a quibble.

Here are my standard suggestions for considering international equities:

Dr. Kenneth French on home country bias: https://famafrench.dimensional.com/videos/home-bias.aspx (short video)

Vanguard on internationals: "Global equity investing:The benefits of diversification and sizing your allocation" https://www.vanguard.com/pdf/ISGGEB.pdf

 

[Animorph]

FZROX and FXNAX are both funds I use and would recommend.

I also use FSGGX or FSPSX for international, with FSGGX being the primary. FZILX should be the zero fee version of FSGGX but wasn't around when I started this portfolio structure.

FZROX + FZILX + FXNAX would be a great diversified portfolio in any percentages you feel comfortable with. With no Roth withdrawals being planned in the near-term, 100% equities or something close is reasonable. I keep 15% FXNAX in our Roths to allow a little rebalancing. I keep 25% of our overall AA in FXNAX because we are currently making withdrawals. In a down market we can take withdrawals from FXNAX and not sell any stocks.

Making Roth contributions now instead of extra 401k cotributions (if possible) depends on how your income tax brackets look now versus in the future. Particularly if you retire early with little income (which may not apply to you with constant RE income) and when RMD's and Social Security and pensions hit.

 

[mrfeh]

For the total stock funds, are you referring to US stock funds or something that includes foreign stocks also?

My thinking was doing about 90% in FZROX and 10% in FXNAX (but not opposed to being 100% in a stock fund). In our 401k’s, we have those invested aggressively at about the same 90/10 or 80/20 ratio.

Sorry if these questions seem elementary to most, but just trying to find the best place to just keep stuffing money into and leaving it while we keep growing the rental business.

You need to look at your portfolio as a whole, not account by account.

https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

 

[jazz4cash]

You need to look at your portfolio as a whole, not account by account.



https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

^^^THIS!