what percentage for each FIDO fund

[targatom2019]

I am new to index funds and wondering what percentage I should put into each one of these funds. Age 50, I have passive monthly income so I will not need this money for 15 years and I already got two years of emergency money.

Fidelity® 500 Index Fund ( FXAIX )
Fidelity® ZERO Total Market Index Fund (FZROX)
Fidelity® ZERO Large Cap Index Fund (FNILX)
Fidelity® ZERO Extended Market Index Fund (FZIPX)US mid to small companies
Fidelity® ZERO International Index Fund (FZILX)



Thanks

 

[audreyh1]

The Fidelity 500 Index and ZERO large cap index are basically the same thing.

Normally investing at least 80% of assets in common stocks of large capitalization companies included in the Fidelity U.S. Large Cap Index, which is a float-adjusted market capitalization-weighted index designed to reflect the performance of U.S. large capitalization stocks. Large capitalization stocks are considered to be stocks of the largest 500 U.S. companies based on float-adjusted market capitalization.

If you do large cap index and extended market index you don’t need total market index. Total market index is a combination of the two and usually has around 19% exposure to mid-caps and 9% to small caps.

Unless you wanted a small and mid-cap tilt, you could go with just two funds: total market index and international index. Then it would come down to how much international exposure you want. A lot of folks keep this on the smaller side, say 20% of total equity exposure.

Maybe you should review what these different index funds actually own.

 

[DrRoy]

Keep it simple. There is overlap in your list. 80-90% Total and the balance Int'l.

 

[target2019]

55% Fidelity® ZERO Total Market Index Fund (FZROX)
15% Fidelity® ZERO Extended Market Index Fund (FZIPX)US mid to small companies
15% Fidelity® ZERO International Index Fund (FZILX)
15% Fidelity Total Bond

Above AA gives you a tilt to mid & small companies.
Good time to learn about bond index fund in your AA.

 

[Dtail]

I just moved into the Fidelity Zero funds from the non zero version.
Total Market - 80%
Int'l - 20%

 

[targatom2019]

Thank you very much for all the replies regarding the over lap on the funds. Is my new option 1 and 2 about the same ?

option 1

Fidelity® ZERO Total Market Index Fund (FZROX) 80%
Fidelity® ZERO International Index Fund (FZILX) 20%



option 2

Fidelity® ZERO Large Cap Index Fund (FNILX) 60%
Fidelity® ZERO Extended Market Index Fund (FZIPX)US mid to small companies 20%
Fidelity® ZERO International Index Fund (FZILX) 20%

 

[Dtail]

^^^
Since Large Cap and Extended Mkt are effectively encompassed in Tot Mkt, it should be roughly the same results for both options.
Perhaps Option 1 has a slight more tilt to Mid and Small caps.

 

[OldShooter]

The academic gurus, who have no economic interests in decisions like this, would suggest:

Fidelity® ZERO Total Market Index Fund (FZROX) 50%
Fidelity® ZERO International Index Fund (FZILX) 50%

This reflects the fact that the US market cap is about 50% of the world market cap, Said another way, there is no home country bias. More here: https://famafrench.dimensional.com/videos/home-bias.aspx

Vanguard comes at it from a slightly different angle: https://www.vanguard.com/pdf/ISGGEB.pdf but again argues for a fairly high fraction in international.

Part of our portfolio is 50/50 in two funds like above, almost all of the balance is in VT, which mimics holding all the stocks in the world. So we don't have to worry about whether 50/50 is exactly right for the US ratio. (https://advisors.vanguard.com/web/c1/fas-investmentproducts/3141/overview) Their management fee is 10bps, which I consider to be close enough to zero that I don't worry about it.

 

[targatom2019]

I just moved into the Fidelity Zero funds from the non zero version.
Total Market - 80%
Int'l - 20%

Not trying to time the market but do you recommend to put all in at one time or spread it out into couple days, months or weeks ?

 

[Dtail]

Not trying to time the market but do you recommend to put all in at one time or spread it out into couple days, months or weeks ?

There are very different opinions on this concept.
From my perspective from all the articles I have read on this subject, putting it all in at once generally appears to be the best way to go.

 

[targatom2019]

Thank you for all the great suggestions and to simplify things, I kept it simple.

Fidelity® ZERO Total Market Index Fund (FZROX) 80%
Fidelity® ZERO International Index Fund (FZILX) 20%

 

[targatom2019]

Thank you very much for all the replies regarding the over lap on the funds. Is my new option 1 and 2 about the same ?

option 1

Fidelity® ZERO Total Market Index Fund (FZROX) 80%
Fidelity® ZERO International Index Fund (FZILX) 20%



option 2

Fidelity® ZERO Large Cap Index Fund (FNILX) 60%
Fidelity® ZERO Extended Market Index Fund (FZIPX)US mid to small companies 20%
Fidelity® ZERO International Index Fund (FZILX) 20%

just a quick update maybe to help others. I invested in in option 1 and option 2 with same amount of money, same time and they both end up almost to the exact % gain YTD.

 

[LOL!]

55% Fidelity® ZERO Total Market Index Fund (FZROX)
15% Fidelity® ZERO Extended Market Index Fund (FZIPX)US mid to small companies
15% Fidelity® ZERO International Index Fund (FZILX)
15% Fidelity Total Bond

Above AA gives you a tilt to mid & small companies.
Good time to learn about bond index fund in your AA.

One has to be careful with Fidelity bond fund names if one wants to use index funds since Fidelity Total Bond is not an index fund. Fidelity does have bond index funds, but Fidelity Total Bond is not one of them.

I realize the above was probably just a typo or something, but this has come up before and fooled people.

 

[audreyh1]

Right, Fidelity has a US Bond Index Fund which is an intermediate bond fund, and a Short-term Bond Index Fund.

Fidelity Total Bond Fund has a higher expense ratio and lower credit quality than the Fidelity US Bond Index Fund.

 

[KCGeezer]

The Total Bond fund does have a higher expense ratio but also has higher returns than the index fund across all reported periods. That may be due to the increased risk but there does seem to be an increased reward.

 

[targatom2019]

Any recommended bond funds at FIDO I should be looking at ?

 

[audreyh1]

The Total Bond fund does have a higher expense ratio but also has higher returns than the index fund across all reported periods. That may be due to the increased risk but there does seem to be an increased reward.

It also underperforms when equity markets are hit. So if you are looking for diversification against equities, you don’t want a bond fund that does more poorly when equities are down.

 

[OldShooter]

just a quick update maybe to help others. I invested in in option 1 and option 2 with same amount of money, same time and they both end up almost to the exact % gain YTD.

No surprise, really. Those are basically the same portfolio.

Regarding "YTD," that is far too short a time period to draw any conclusions. From time to time I have created test portfolios to use as benchmarks vs other portfolios like the Schwab Robot. My rule is to not even look at a comparison until two years have elapsed. This is actually too short; five would be better and ten better yet.

I have quoted Warren Buffet here before: “The stock market is a device for transferring money from the impatient to the patient.”

If you like the test portfolio idea, I suggest that you set one up like those you have there, but with a much higher international component, like 40 or 50%. That could be interesting in the next couple of years with Brexit, Trump's trade wars, the Euro's struggles, and the oil cartel all in flux. Oh, .... and China as a wild card.

 

[targatom2019]

Thanks Oldsshooter. I tested just to simplify thing by keeping 2 funds vs 3 funds so I can roll over my 401k to Fidelity IRA this July. I got 35 individual stocks in the brokerage account and just to keep up with the news, earnings, etc... for them is a already a PITA.

 

[Steeler75]

There are very different opinions on this concept.
From my perspective from all the articles I have read on this subject, putting it all in at once generally appears to be the best way to go.

Interesting topic, and yes many different opinions on all in at once or DCA. In a similar situation as OP, just converted 457 to IRA and just met with local Fido VP this week.

Advice received was not to go all in on stocks, given the inverted yield curve among other indicators, but to buy individual bonds for 70% until the recession hits, then go all in on equities. I know it’s timing the market but a conservative position to be sure.

I’m also looking at Roth conversion opportunities over the next 6 years so will convert on major pull backs.

 

[OldShooter]

... I got 35 individual stocks in the brokerage account and just to keep up with the news, earnings, etc... for them is a already a PITA.

You are wise. While 35 is pretty much an unmanageable number for an individual investor, it is by far too small a number for good diversification. IMO the only way for us little guys to be diversified is to buy total market (not sector) funds. And BTW an S&P 500 fund is a sector fund, representing only about 40% of the world's invest-able stocks.

More than you wanted to know: https://www.investopedia.com/articles/stocks/11/illusion-of-diversification.asp

Personally, we have moved basically into one fund: VTWSX or the ETF flavor, VT. This is a whole world fund which, surprisingly, Fido does not offer. But 55% US Total Market and 45% International Total Market gets you pretty much the same thing. Fidelity's free international fund is not, IIRC, a total market fund but it is probably a good enough approximation.

William Bernstein on investing for retirement:

“Do you think that by choosing a portfolio of only a few stocks that you hope will score big, you are maximizing your chances of becoming wealthy?

“Indeed you are, but you are also maximizing the chances of a retirement of cat food cuisine”
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