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Old 08-05-2014, 09:01 AM   #1
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Im new to retirement (62) and started with a managed plan with Fidelity for my accumulated assets. Since Im really conservative Ive set up a 30/70 split.

I have had lots of free time of course and get to read ad infinitum on the web about approaches. The number 1 being take the money out of Fidelity's hand and do it yourself....same if not better results.

Before I do that though I realize that Id need an actionable plan. And I guess I have a hard time shaking my number 1 goal is capital preservation.

So Im trying to come up with the best approach for peace of mind to get 3-4% relatively safely. I hear fixed annuities, dividend stock portfolio, immediate annuity, safe haven ETFs, REIT investments, etc.....

I really welcome any input. Even if someone can recommend a retirement advisor who might point me in a direction. (I do like the Fidelity guys but they seem to have only 1 approach). My head hurts from trying to manage this....enlisting Fidelity was obviously my way of deferring it for now.

Thanks for listening and any advice


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Old 08-05-2014, 09:18 AM   #2
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Originally Posted by wfobrien View Post
And I guess I have a hard time shaking my number 1 goal is capital preservation.
One of the greatest difficulties for those of us who are "conservative investors" is understanding (both intellectually and emotionally) that you have to take some risk in order to 'preserve capital.' And that investing not to loose money (via CD's, annuities, etc.) is a guaranteed way to see capital eaten away by inflation.

Numbers is hard

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Old 08-05-2014, 09:26 AM   #3
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I found my financial advisor on Dave Ramsey Homepage - - He has a list of ELP's for all areas of your life.
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Old 08-05-2014, 09:50 AM   #4
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We use a 60/40 AA. The expected net (of taxes) real return = 4.4%. For our equities = 7.6%. For our fixed income = -0.5%.

To get this expected return we are willing to lose 30% of our port's value to do so.

IMHO, the minimum allocation to equities for the most conservative of investors = 20%.

This very conservative allocation would give us an expected net real return = 1.1%. You must be prepared to lose up to 10% of your port's value to get this meager expected return.
AA = 60/35/5. Expected CAGR = 5.7%. GSD (5y) = 7.8%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.5%. Net Port Yield = 1.7%. Term = 36 yr. FI Duration = 4.9 yr. Portfolio survival probability = 86%.
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Old 08-05-2014, 10:02 AM   #5
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i can't vouch for Fidelity. but folks on this forum seem to like it very well. I see no reason you can't use them to accomplish most if not all of what you want to do. If you are currently comfortable with 30/70, I see no reason you can't continue to use FIDO. I don't know what kind of "managed plan" you have, but I would think, within FIDO, you could move to a self directed plan - and still end up with 70/30 or whatever AA you wish to have.

Personally, I use Vanguard and "do it myself" as far as the various funds are concerned. Of course, I don't use them exclusively. Some of my stash remains at Megacorp's 401(k) (primarily, my stable value fund and what little remains of my matching stock funds.)

WHERE you put your money should probably be based on who you trust and also who has lower overall costs. HOW you structure your AA is still up to you. The only suggestion I have is to diversify enough to give you a chance to weather the inevitable storms. But don't diversify so much you can't track everything.

Pointed out by REWahoo, inflation is a major problem. One OTHER way to "beat it" is to start with so much in your stash, that "normal" inflation will not make a difference in your life style when you are 72, 82, and 92 (maybe, after that, who cares)

I too consider myself very conservative. I know I have given up a lot of gains by not using the stock market more (I'm also in the 30/70 range). I made up for some of that by having a larger stash "than I need"- I hope. Another thing I have done is to work on maximizing my income streams from outside sources (I stayed a bit longer to get the max pension. I'm waiting until 70 to take SS. I will consider buying an annuity if I see value in that when the time comes.) I also have a small investment in precious metals within my portfolio. Most folks here hate PMs and I DO understand all the reasons. However, the theory says the correlation of PMs to "normal" stocks plus bonds is often quite negative (a good thing when stocks AND bonds both go down). I'm sure that's not always true, but it was an amazing thing to see my portfolio rise during the 2007 to 2009 stock market bust.

I'm sure folks on this forum are much better able to suggest an AA for you. Just understand that you are not the only one who prefers a "smooth" ride to a roller coaster ride. I can only tell you what I have done to get a relatively smooth - but not spectacular ride - for the past 9 years of ER. I won't give advice because YMMV.
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Old 08-05-2014, 10:46 AM   #6
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How much are "the Fidelity guys" costing you beyond the fund expenses?
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Old 08-05-2014, 10:48 AM   #7
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Old 08-05-2014, 11:01 AM   #8
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Originally Posted by wfobrien View Post
Typical low expense ratios are 0.2% for ETF's and so you are saying that you might be paying 0.2 + 0.6 = 0.8% ? Then the 0.6% is an advisory fee?

If so, yes you can save yourself some money by DIY or using Fidelity more directly perhaps. BUT you will need to really educate yourself financially and from the OP it sounds like you are still in early learning mode.
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Old 08-05-2014, 11:07 AM   #9
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Yes Im new to a lot to learn
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Old 08-05-2014, 03:48 PM   #10
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Do you have taxable, tax-deferred (IRA or 401k or 403b) and tax-free accounts (Roth IRA or HSAs)? or just tax deferred?

If it is just or mostly tax deferred you can make things easier by buying a good balanced fund that meets your AA.
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Old 08-05-2014, 04:02 PM   #11
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You may want to go to Bogleheads Investing Advice and Info and check out some of the educational information on their wiki. From what I've seen over the years, this web site and Bogleheads are two of the best places on the internet to get good advice about investing/retirement.

From my experience, Fidelity is a solid, reputable organization and the differences in expense rations between some of the Fidelity funds and their Vanguard counterparts are not that great.

I am a little older than you and also interested in capital preservation. I recently had a Vanguard financial plan done and the recommendation was for 50-50 (equities and fixed income.) As I have a pretty good pension and SS, I'm electing not to go all the way to 50-50 and will keep my AA at 40-45% equities, 50-55% fixed and 5% cash.

Disclosure: ALL of my mutual funds are with Vanguard. (I also have CDs and I-Bonds not managed by them.) I'm not an employee of or pitchman for Vanguard.

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