Megacorp switching to Fidelity

[Tetto]

Good Morning all,

I'm currently 53 and working for Megacorp; the company is in the process of switching from Mercer 401K to Fidelity administered 401K. This is a good thing I believe, as it opens up tremendous diversity of choice for where to put my money. I have fairly significant sum in there (~$800k) and was wondering how I should allocate it. Lately, my risk tolerance is going lower and lower with the craziness in politics and world stage. Since i'm looking to FIRE at 62, i'm beginning to think i need to be in something more conservative.

Thanks

Tetto

 

[candrew]

During my days of wage slavery, it was a great day when our mega-corp switched 401K's from Ameriprise to Fidelity. Being a couch potato investor, I ended up going with one of their low fee target date funds. After ER, rolled the entirety into a Fidelity IRA with even lower fee index funds.

 

[Dtail]

What is your current AA?
Do you have a Stable Value type fund in the Fidelity mix?

 

[jazz4cash]

I appreciate Megacorp choosing Fido for our 401k. I’m not familiar with Mercer. How are they mapping old fund/new fund?

Our plan includes several unique funds that mirror traditional mutual funds or ETFs but do not meet the technical specifications to be called mutual funds/ETFs. They are labeled Class K shares or ‘commingled pools’ and carry slightly lower Expense ratios. I retired ~4 yrs ago and expect to be a Fido client for life. The only reason I’ve found to go outside Fido is to diversify High Yield FDIC savings and CD specials.

 

[LRDave]

My last employer switched to Fido as well. I was quite pleased, as that was where my IRA was anyway.

My understanding is that which funds are offered is unique to each company. The choices we had were limited (compared to the full smorgasbord of Fido funds), but fortunately the few offered were mostly low-cost index funds that blended in perfectly to AA strategy.

Do you know which funds will be available for selection?

 

[Jerry1]

Good Morning all,

I'm currently 53 and working for Megacorp; the company is in the process of switching from Mercer 401K to Fidelity administered 401K. This is a good thing I believe, as it opens up tremendous diversity of choice for where to put my money. I have fairly significant sum in there (~$800k) and was wondering how I should allocate it. Lately, my risk tolerance is going lower and lower with the craziness in politics and world stage. Since i'm looking to FIRE at 62, i'm beginning to think i need to be in something more conservative.

Thanks

Tetto

Probably is a good thing, going with Fidelity, but unless you company chooses good funds, you may not have the increased diversity you’re hoping for. Hope for the best. Also, look to see if they’ll allow you to do a self directed account. That will open up the entire market. I like Fidelity, but early on at my company, they only allowed a few funds and they weren’t that great. Toward the end, however, they were much better. Also, I really liked Fidelity’s Retirement Planner. It was a good tool. We also were able to get advice from a Fidelity advisor. Maybe only worth what you pay for it, but still, good to run your ideas by someone who does have knowledge in the area.

 

[foxfirev5]

My company switched to Fidelity about 25 years ago and I remain with them in retirement. One nice feature our plan had was the Brokeragelink option which allowed us choose beyond the standard offerings. This combined with an excellent stable value fund gave me everything I needed until I rolled it into an IRA. However I understand that Fido plans vary considerably. It largely depends on your companies negotiating and selection skills

 

[stephenson]

My megacorp did this at exactly the same time I quit working for them ... while it was painful during the transition, the issues were all relate to the previous financial company's inability to get anything right - much like their previous tenure in this role.

Fidelity has been very, very good - I have funds at Vanguard, as well, but Fidelity is way better in everything, and now have fund fees that are as good as or better than Vanguard. All of us still owe Vanguard for their business case and how it changed the world of investing, but Vanguard, IMO, has been sitting on their previous success - they better get busy.

 

[Spock]

My Fidelity 401K has a stable value fund that pays a meager 3.0x%...
but it also was the highest returning fund out of the 200+ other fund choices in 2018 so I don't lose sleep over it.

 

[corn18]

First thing to do is pick an AA that you are comfortable with. Then look at your entire portfolio and buy what makes sense in your 401k. For example, my Roth IRAs are 100% total stock index funds. This is to maximize growth. My taxable account is 70/30 to minimize cap gains and dividends. My 401k is used to make my 60/40 overall allocation happen, so it is 35/65.

This arrangement spins off minimum taxable income (present) and maximizes growth in my Roth accounts.

I use all low cost index funds. My 401k is with FIDO as are all my Roths and taxable. So I really only have 3 funds: total stock, total bond and total international. Makes life really simple.

 

[Aerides]

Probably is a good thing, going with Fidelity, but unless you company chooses good funds, you may not have the increased diversity you’re hoping for. Hope for the best. Also, look to see if they’ll allow you to do a self directed account. That will open up the entire market.

yes all this, and bolded for emphasis.

 

[mrfeh]

Good Morning all,

I'm currently 53 and working for Megacorp; the company is in the process of switching from Mercer 401K to Fidelity administered 401K. This is a good thing I believe, as it opens up tremendous diversity of choice for where to put my money. I have fairly significant sum in there (~$800k) and was wondering how I should allocate it. Lately, my risk tolerance is going lower and lower with the craziness in politics and world stage. Since i'm looking to FIRE at 62, i'm beginning to think i need to be in something more conservative.

Thanks

Tetto

Choose your asset allocation and then do this: https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

 

[ERD50]

.... Lately, my risk tolerance is going lower and lower with the craziness in politics and world stage. ...

Politics and the world stage have always been crazy. Ignore it, as far as investments.

As others have asked, what is your AA now? What are you thinking of going to?

-ERD50

 

[COZICAN]

We have plenty of Fidelity Target Date Funds in our Fido 401K

 

[candrew]

Politics and the world stage have always been crazy. Ignore it, as far as investments.

+1

IIRC, Fido has a simple risk assessment questionnaire that should help you determine asset allocation.

 

[OldShooter]

... Lately, my risk tolerance is going lower and lower with the craziness in politics and world stage. Since i'm looking to FIRE at 62, i'm beginning to think i need to be in something more conservative. ...

Do not buy the common misconception that volatility is risk and vice-versa. With almost ten years to go, your risk is really that you will be too conservative and miss out on the growth that equities are statistically likely to provide. This is the real risk unless your stash is so large that you can stand ten years of bond returns that basically preserve your purchasing power but do not increase it. Unless you have significant other assets above the $800K I don't think that is the case.

... IIRC, Fido has a simple risk assessment questionnaire that should help you determine asset allocation.

There are lots of those around. Personally, I don't think they are of much value. As Fred Schwed said:

“Like all of life’s rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature. You cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin by words or pictures.”
​

I think that trial by fire, actually riding a downturn, is the only way to really assess one's risk tolerance. YMMV of course.

 

[Bamaman]

My company switched to Fidelity about 25 years ago and I remain with them in retirement. One nice feature our plan had was the Brokeragelink option which allowed us choose beyond the standard offerings. This combined with an excellent stable value fund gave me everything I needed until I rolled it into an IRA. However I understand that Fido plans vary considerably. It largely depends on your companies negotiating and selection skills

My MegaCorp was with Fidelity, and they gave us the choice of about 12 funds, some good and some mediocre. They didn't want employees to step out and get too aggressive with their retirement funds.

When they gave us the Brokeragelink option, I was able to reallocate into some of their very best funds previously unavailable to us. And I ended up with substantially more retirement funds when I retied at 58 years old. I was also fortunate to receive a defined pension where their employees today only have the 401k.

I would say wait until you know what funds will be available to you, and research those funds carefully online. Then make your AA decisions.

 

[candrew]

IIRC, Fido has a simple risk assessment questionnaire that should help you determine asset allocation.

There are lots of those around. Personally, I don't think they are of much value. As Fred Schwed said:

“Like all of life’s rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature. You cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin by words or pictures.”
​

I think that trial by fire, actually riding a downturn, is the only way to really assess one's risk tolerance. YMMV of course.

All I can say is that it worked for me. But then again, I am not nearly as savvy as many of the members are in this forum and have always been somewhat of a simpleton in my approach to saving and investing.

 

[Tetto]

Do not buy the common misconception that volatility is risk and vice-versa. With almost ten years to go, your risk is really that you will be too conservative and miss out on the growth that equities are statistically likely to provide. This is the real risk unless your stash is so large that you can stand ten years of bond returns that basically preserve your purchasing power but do not increase it. Unless you have significant other assets above the $800K I don't think that is the case.

There are lots of those around. Personally, I don't think they are of much value. As Fred Schwed said:

“Like all of life’s rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature. You cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin by words or pictures.”
​

I think that trial by fire, actually riding a downturn, is the only way to really assess one's risk tolerance. YMMV of course.

Thanks; I try not to get too wrapped up in the volatility of the market and seeming connection to current politics but there are days.... I'm currently ~60/40 in the fund at Mercer. Its one of those date to retire funds and has done surprisingly well for me. I have no idea what my company and Fidelity will offer for choice. I can only hope for the best at this point, as we are in a blackout period until July 22.

 

[Tetto]

Politics and the world stage have always been crazy. Ignore it, as far as investments.

As others have asked, what is your AA now? What are you thinking of going to?

-ERD50

Currently ~60/40 in target fund. I'm thinking of a good Vanguard or Fidelity total market type fund.

 

[Tetto]

yes all this, and bolded for emphasis.

Self directed as in leave my 401K and do everything myself? I could see doing something like that after i retire, but not before.

 

[OldShooter]

Thanks; I try not to get too wrapped up in the volatility of the market and seeming connection to current politics but there are days.... I'm currently ~60/40 in the fund at Mercer. Its one of those date to retire funds and has done surprisingly well for me. I have no idea what my company and Fidelity will offer for choice. I can only hope for the best at this point, as we are in a blackout period until July 22.

OK. FWIW I am not keen on blended funds with both fixed income and equities. The reason is that they are impossible to benchmark. When you say "surprisingly well" I'd bet that you have not compared your results to something like a straightforward total market fund. Because it's nearly impossible. Whatever AA you decide on, I think you'll be better off buying a mix of a total US market and a total international market fund as your equity portion.

if you do want to stick with target date funds, remember that there is no reason for the fund's date to match your planned retirement date. If you want to be more conservative, buy a fund with an earlier target date. If you want to be more aggressive, buy a fund with a later date.

Self directed as in leave my 401K and do everything myself? I could see doing something like that after i retire, but not before.

This implies a misconception that investing takes a lot of effort or is time consuming. DW and I look at our portfolio once a year. Some years we even make a trade.

I strongly suggest that you get and read "The Coffeehouse Investor" by Bill Schultheis. He offers the first chapter for free, posted here: https://www.coffeehouseinvestor.com/ Bill will calm your concerns. In the book he also gives you a recipe for pumpkin pie.

 

[Tetto]

OK. FWIW I am not keen on blended funds with both fixed income and equities. The reason is that they are impossible to benchmark. When you say "surprisingly well" I'd bet that you have not compared your results to something like a straightforward total market fund. Because it's nearly impossible. Whatever AA you decide on, I think you'll be better off buying a mix of a total US market and a total international market fund as your equity portion.

if you do want to stick with target date funds, remember that there is no reason for the fund's date to match your planned retirement date. If you want to be more conservative, buy a fund with an earlier target date. If you want to be more aggressive, buy a fund with a later date.

This implies a misconception that investing takes a lot of effort or is time consuming. DW and I look at our portfolio once a year. Some years we even make a trade.

I strongly suggest that you get and read "The Coffeehouse Investor" by Bill Schultheis. He offers the first chapter for free, posted here: https://www.coffeehouseinvestor.com/ Bill will calm your concerns. In the book he also gives you a recipe for pumpkin pie.

Thank you OldShooter, great advice.

 

[Eucerin]

First thing to do is pick an AA that you are comfortable with. Then look at your entire portfolio and buy what makes sense in your 401k. For example, my Roth IRAs are 100% total stock index funds. This is to maximize growth. My taxable account is 70/30 to minimize cap gains and dividends. My 401k is used to make my 60/40 overall allocation happen, so it is 35/65.

This arrangement spins off minimum taxable income (present) and maximizes growth in my Roth accounts.

I use all low cost index funds. My 401k is with FIDO as are all my Roths and taxable. So I really only have 3 funds: total stock, total bond and total international. Makes life really simple.

It sounds like you have all of your investable portfolio in fido. I like fido a lot.
The question is that is it a good idea to put most/all of the portfolio with one basket?