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Ruminating on asset allocations - what if
Old 02-16-2022, 10:24 AM   #1
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Ruminating on asset allocations - what if

Our TIRA and Roth IRA asset are all sitting in Fidelity and have this allocation:

Domestic stock - 39%
Foreign stock - 18%
Bonds - 39%
Short term/other - 4%

These assets are invested in 14 different funds in our Fidelity accounts.

VTV 11.16%
FIPDX 10.40%
FTIHX 10.33%
VBR 9.66%
FUAMX 8.81%
VCIT 7.41%
FXAIX 7.38%
FUMBX 7.31%
VCSH 6.54%
FSKAX 6.04%
FSMAX 5.76%
FNDF 2.99%
VSS 2.46%
SPAXX** 1.95%
FNDC 1.80%


I was lying in bed thinking that I would have been better off just investing like so:

FXAIX - 40% (S&P 500)
FSKAX - 40% (Total stock market)
FIPDX - 20% (TIPS)

I think I would have a higher net return, maybe with greater volatility due to the greater stock exposure, but overall with a higher net gain over time that negates that volatility.

We are retired, me age 62, her age 60. Going to draw SS at age 70.

Thoughts on this?
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Old 02-16-2022, 10:48 AM   #2
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Quote:
Originally Posted by tominboise View Post
Our TIRA and Roth IRA asset are all sitting in Fidelity and have this allocation:

Domestic stock - 39%
Foreign stock - 18%
Bonds - 39%
Short term/other - 4%

These assets are invested in 12 different funds in our Fidelity accounts.

I was lying in bed thinking that I would have been better off just investing like so:

FXAIX - 40% (S&P 500)
FSKAX - 40% (Total stock market)
FIPDX - 20% (TIPS)

I think I would have a higher net return, maybe with greater volatility due to the greater stock exposure, but overall with a higher net gain over time that negates that volatility.

We are retired, me age 62, her age 60. Going to draw SS at age 70.

Thoughts on this?
Your current allocation is 57% Stocks, 39% Bonds, 4% Cash Short term.
You want to move to 80% Stocks, 20% Bonds-TIPS exclusively.

So you want more volatility up-side? What about down-side? And minimum potential to earn interest and only at the inflation rate? The S&P500 is overrepresented in your allocation twice because it is also in the Total Stock Market fund. And you need to understand that most S&P500 stocks also have an international equity exposure because of their international operations.

You lose the dampening value to volatility that corporate bonds and other treasury bonds (other than TIPS) bring to your portfolio.

But run your suggested new portfolio through FIREcalc to see the effect on your portfolio short term and when Social Security kicks in. Also, if you want to see the allocation exposure of these Fidelity funds, get a free Morningstar Account and use the Instant X-Ray tool. (Morningstar then Portfolio then Tools then Instant X-Ray).

- Rita
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Old 02-16-2022, 01:42 PM   #3
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I use FXAIX (S&P 500) and FSMAX (Total Stock Market ex-S&P500) equally (overweighting smaller stocks) for U.S. exposure in our IRA's, and FZROX (TSM which came out later) in our taxable accounts. I add FSGGX for international exposure. For bonds I use FXNAX, a standard total bond index.

The S&P 500 has been outgaining everything for a while, so my diversification hurts a bit right now, but there have been times when my international funds or small-cap funds were the leaders. The bonds have provided a nice stability, with a chance to rebalance, buy extra stocks, or fund expenses over multiple years.

Compare FZROX and FSKAX. They seem similar. It's been a while since I've looked at the similar funds.
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Old 02-28-2022, 07:22 AM   #4
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as a Fidelity customer you can get an asset and sector exposure analysis using the GPS tool. i think Morningstar's might be a bit more consumable layout wise..
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Old 02-28-2022, 09:53 PM   #5
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Quote:
Originally Posted by tominboise View Post
These assets are invested in 14 different funds in our Fidelity accounts.
Why? Without looking up any info, what can you say about each of these 14 funds? Even a bullet point or two.

Is this a newsletter model portfolio? How on earth did you get spread out over 14 funds?
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Old 02-28-2022, 10:32 PM   #6
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I think you have too many funds. If you are trying to cover all markets, might as well do an overall index.

I think you ahould re-work your equity allocation to eliminate overlap.

On your bond piece, are you buying TIPS hoping for inflation protection?

If so I would buy them at issue instead of in a fund. They will not necessarily outperform a conventional bond portfolio.

Right now we are in a rate rise cycle. You want to minimize duration until rates reach closer to steady state. Otherwise you are buying a loss.

T-bills, bank savings accounts and floating rate securities will be safer now in my view.

Best of luck.
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