Fidelity FREEDOM FUND 2030

[wrigley]

Hello,

I just turned 50 (yeah...yeah.....I got my AARP card in the mail last week ) and have been invested 100% in this fund for my 401k. The fund is approx 77% stock. I've been told that this fund may be too risky and that I should diversify to roughly 40% bonds. Just soliciting inputs. Thanks

Mike

 

[Dawg52]

Hello,

I just turned 50 (yeah...yeah.....I got my AARP card in the mail last week ) and have been invested 100% in this fund for my 401k. The fund is approx 77% stock. I've been told that this fund may be too risky and that I should diversify to roughly 40% bonds. Just soliciting inputs. Thanks

Mike

How soon do you plan to retire? In 2030? That's the target of the fund. If so, you have 20 years to go so it may be an appropriate allocation. Some people will use the 100 rule to figure their AA. 100 - age = stock allocation. So a 50/50 allocation would be your AA based on this rule, but many feel this is too conservative. During the last market correction, I found it to be a little aggressive for my liking.

 

[ziggy29]

What other sources of retirement income will you have? If you have other sources that can be considered more "bond-like," then this might not be too risky at all.

 

[wrigley]

How soon do you plan to retire? In 2030? That's the target of the fund. If so, you have 20 years to go so it may be an appropriate allocation. Some people will use the 100 rule to figure their AA. 100 - age = stock allocation. So a 50/50 allocation would be your AA based on this rule, but many feel this is too conservative. During the last market correction, I found it to be a little aggressive for my liking.

Full SS for me is 68 years and some change. I currently have no real plans for retirement. Back when the "financial sh^t hit the fan" I was invested in primarily Index and large cap and took a beating. I kept what I had, didn't panic, and it has made a slow recovery to date. From that point on I put it all into the FREEDOM 2030 fund. A well respected acquaintance has recommended the following for me:

50% freedom 2030
10% Fid Contrafund
10% Fid Low price stk
10% Fid Capital and Income...aggressive bonds
10% Pimco real return
10% Fidelity US bond

I'm just picking people's brains to see what they think. I appreciate your input.

Mike

 

[wrigley]

What other sources of retirement income will you have? If you have other sources that can be considered more "bond-like," then this might not be too risky at all.

I have a military pension and a few other investments. Thanks

Mike

 

[REWahoo]

With a military pension and SS in your future I don't see your choice of the 2030 Fund as overly aggressive.

 

[rgarling]

Depending on the alternatives in your 401k, you might be able to roll your own target retirement fund by combining lower cost alternatives. The expense ratio for your fund is ~.75% (a fair amount of drag).

 

[wrigley]

With a military pension and SS in your future I don't see your choice of the 2030 Fund as overly aggressive.

Thank You.

BTW.......did you just use "SS and future" in the same sentence?

Mike

 

[ziggy29]

I have a military pension and a few other investments. Thanks

Then I think this AA is perfectly appropriate.

 

[REWahoo]

Thank You.

BTW.......did you just use "SS and future" in the same sentence?

Mike

Call me optimistic...

 

[travelover]

Depending on the alternatives in your 401k, you might be able to roll your own target retirement fund by combining lower cost alternatives. The expense ratio for your fund is ~.75% (a fair amount of drag).

Agree - downside of Fido managed funds is larger expense ratios than Vanguard. I use Fido, but rolled my own from their Spartan selection.

 

[ziggy29]

Agree - downside of Fido managed funds is larger expense ratios than Vanguard. I use Fido, but rolled my own from their Spartan selection.

True. The folks on this board tend to be far more "hands on" about their self-directed investments than most folks, though. Not everyone has a desire to do their own slice and dice and rebalancing and such, but I suspect [-]control freaks[/-] hands-on folks like me would prefer to have the lower expenses since there's no reason to pay someone to do something redundantly when I'm already doing it myself.

The thing about a 401K as opposed to an IRA is that you often have a very limited subset of Fido's funds. (My 401K is with them also, and we have maybe 20-25 funds in total to choose from.) So when you're talking about a 401K, it's really hard to recommend the right mix of funds because you never know which Fidelity funds are part of the plan.

 

[Dawg52]

Full SS for me is 68 years and some change. I currently have no real plans for retirement. Back when the "financial sh^t hit the fan" I was invested in primarily Index and large cap and took a beating. I kept what I had, didn't panic, and it has made a slow recovery to date. From that point on I put it all into the FREEDOM 2030 fund. A well respected acquaintance has recommended the following for me:

50% freedom 2030
10% Fid Contrafund
10% Fid Low price stk
10% Fid Capital and Income...aggressive bonds
10% Pimco real return
10% Fidelity US bond

I'm just picking people's brains to see what they think. I appreciate your input.

Mike

With a military pension and SS in your future, the above looks fine to me. Looks like this gives you an overall 60/40 blend or near about.

 

[wrigley]

True. The folks on this board tend to be far more "hands on" about their self-directed investments than most folks, though. Not everyone has a desire to do their own slice and dice and rebalancing and such, but I suspect [-]control freaks[/-] hands-on folks like me would prefer to have the lower expenses since there's no reason to pay someone to do something redundantly when I'm already doing it myself.

The thing about a 401K as opposed to an IRA is that you often have a very limited subset of Fido's funds. (My 401K is with them also, and we have maybe 20-25 funds in total to choose from.) So when you're talking about a 401K, it's really hard to recommend the right mix of funds because you never know which Fidelity funds are part of the plan.

Attached are my choices:

The 5 other funds that were suggested to me...some have lower expenses and some have higher expenses than the 2030 fund.

Mike

 

[rgarling]

With that selection I might just go with 50% Spartan 500 and 50% US bond Index and rebalance as necessary. (maybe as high as 70%spartan and 30% bond)

The international choices are not good, unless the fees are waived.

 

[LOL!]

My 401(k) is with Fidelity. You could do worse than a Freedom fund, but you may be able to do better. Freedom funds do not have the lowest expense ratios and are stuffed with actively-managed funds that make the big bucks for Fidelity. Our plan as a few Fidelity Spartan Index funds in them: US index (an S&P500 index), Extended market (the US completion index of mid & small cap), the international index. All of these index funds have a better 1-year return than the actively-managed funds that are available in our 401(k).

So you should be able to roll-your-own better asset allocation if you have these Spartan index funds. For bonds, you can use the the Fidelity bond index fund. Or you may have the Fidelity 4-in-1 fund which has the 3 Spartan funds I mentioned and the bond index fund I mentioned. Just add more of a bond fund to get the stock:bond ratio you want. (That PIMCO fund is not the PIMCO Total Return fund found in everyone's non-Vanguard 401(k).)

There is no point in using Contrafund or Low-priced stock fund or any other stock fund if you have the Fidelity Spartan funds ... except you should note that the Spartan international index fund does not have emerging markets nor does it have mid/small cap international stocks. Get EM and small-cap foreign in your Roth.

If you don't have all the Spartan funds, then the Freedom fund is probably OK.

 

[wrigley]

My 401(k) is with Fidelity. You could do worse than a Freedom fund, but you may be able to do better. Freedom funds do not have the lowest expense ratios and are stuffed with actively-managed funds that make the big bucks for Fidelity. Our plan as a few Fidelity Spartan Index funds in them: US index (an S&P500 index), Extended market (the US completion index of mid & small cap), the international index. All of these index funds have a better 1-year return than the actively-managed funds that are available in our 401(k).

So you should be able to roll-your-own better asset allocation if you have these Spartan index funds. For bonds, you can use the the Fidelity bond index fund. Or you may have the Fidelity 4-in-1 fund which has the 3 Spartan funds I mentioned and the bond index fund I mentioned. Just add more of a bond fund to get the stock:bond ratio you want. (That PIMCO fund is not the PIMCO Total Return fund found in everyone's non-Vanguard 401(k).)

There is no point in using Contrafund or Low-priced stock fund or any other stock fund if you have the Fidelity Spartan funds ... except you should note that the Spartan international index fund does not have emerging markets nor does it have mid/small cap international stocks. Get EM and small-cap foreign in your Roth.

If you don't have all the Spartan funds, then the Freedom fund is probably OK.

Thanks,

The ONLY Spartan fund available to me in our plan is the Spartan 500 index fund.

Mike

 

[target2019]

Hello,

I just turned 50 (yeah...yeah.....I got my AARP card in the mail last week ) and have been invested 100% in this fund for my 401k. The fund is approx 77% stock. I've been told that this fund may be too risky and that I should diversify to roughly 40% bonds. Just soliciting inputs. Thanks

Mike

Mike, you're gonna get a million replies on this. I suggest you spend time at Morningstar for a couple of reasons: they have an x-ray tool, and the forums are finance-focused (sorta). The overall allocation is most important, as is the expense ratios of individual funds. For instance, at 57 I am approx. 60% stocks and 40% bond/fixed. My overall expense ratio is .25. So, you're on the right track. With a pension you can go with more risk.

Include all of your investments in the x-ray, and I think you'll find that you have a higher bond/fixed percentage than you think.

 

[wrigley]

Mike, you're gonna get a million replies on this. I suggest you spend time at Morningstar for a couple of reasons: they have an x-ray tool, and the forums are finance-focused (sorta). The overall allocation is most important, as is the expense ratios of individual funds. For instance, at 57 I am approx. 60% stocks and 40% bond/fixed. My overall expense ratio is .25. So, you're on the right track. With a pension you can go with more risk.

Include all of your investments in the x-ray, and I think you'll find that you have a higher bond/fixed percentage than you think.

Thanks,

55% US stock
19% Foreign stock
19% Bonds
7% Cash

Mike

 

[target2019]

Thanks,

55% US stock
19% Foreign stock
19% Bonds
7% Cash

Mike

If that's all from the FF2030 only, then you could:
- start directing some portion of new contributions to one of the bond income funds, but not the money market
- convert some of the FF2030 to fixed fund
- slice and dice the whole thing, beginning with S&P500, and so on.
Looking backwards, FFFEX lost more than 60% off its high, and that would concern me too. You know, you can pick a more conservative fund, like 2020. Still, that fund had a steep drop, and I'd be worried.

 

[wrigley]

If that's all from the FF2030 only, then you could:
- start directing some portion of new contributions to one of the bond income funds, but not the money market
- convert some of the FF2030 to fixed fund
- slice and dice the whole thing, beginning with S&P500, and so on.
Looking backwards, FFFEX lost more than 60% off its high, and that would concern me too. You know, you can pick a more conservative fund, like 2020. Still, that fund had a steep drop, and I'd be worried.

Actually, I was considering going with 60% Spartan 500 Index (FUSEX) and 40% with US Bond Index (FBIDX) from this point on. I have a large chunk of money sitting in the Spartan 500 Index fund from years ago. Plus, the fees between those 2 funds combined are roughly 1/2 of what I'm paying for the Freedom Fund.

Mike

 

[target2019]

Actually, I was considering going with 60% Spartan 500 Index (FUSEX) and 40% with US Bond Index (FBIDX) from this point on. I have a large chunk of money sitting in the Spartan 500 Index fund from years ago. Plus, the fees between those 2 funds combined are roughly 1/2 of what I'm paying for the Freedom Fund.

Mike

In your first post you mentioned that you are 100% invested in FF2030. I'm thoroughly confused.

To present your investments, try putting everything into M* portfolio for an analysis. Most would recommend that, rather than presenting parts here and there. This is a summary from a homegrown worksheet that summarizes everything.

10% VGTSX Frgn Lg Blend
03% VTRIX Frgn Lg Value
08% VIDMX MSCI EAFE
. . . . . . . . . . . . . . . Int'l Stock: 21%
11% PEOPX S&P 500
07% VTSMX Large Blend
01% VWINX Bal 40% Stock
01% XXXXX Co. Stock
03% VGSIX Specialty R.E.
06% FSLCX Small Blend
09% VEXAX Sm/Mid R2500
02% VISVX Small Value
. . . . . . . . . . . . . . . US Stock: 40%
15% VBMFX Int-Term Bd
00% FIBIX Int-Term Bd
05% VNJTX Long-Term Bd
01% VWINX Bal 60% Bond
. . . . . . . . . . . . . . . IT/LT Bond 22%
17% VWSTX Short Term - TE
00% VWSTX Short Term - TE
. . . . . . . . . . . . . . . ST Bond 17%

 

[wrigley]

In your first post you mentioned that you are 100% invested in FF2030. I'm thoroughly confused.

To present your investments, try putting everything into M* portfolio for an analysis. Most would recommend that, rather than presenting parts here and there. This is a summary from a homegrown worksheet that summarizes everything.

10% VGTSX Frgn Lg Blend
03% VTRIX Frgn Lg Value
08% VIDMX MSCI EAFE
. . . . . . . . . . . . . . . Int'l Stock: 21%
11% PEOPX S&P 500
07% VTSMX Large Blend
01% VWINX Bal 40% Stock
01% XXXXX Co. Stock
03% VGSIX Specialty R.E.
06% FSLCX Small Blend
09% VEXAX Sm/Mid R2500
02% VISVX Small Value
. . . . . . . . . . . . . . . US Stock: 40%
15% VBMFX Int-Term Bd
00% FIBIX Int-Term Bd
05% VNJTX Long-Term Bd
01% VWINX Bal 60% Bond
. . . . . . . . . . . . . . . IT/LT Bond 22%
17% VWSTX Short Term - TE
00% VWSTX Short Term - TE
. . . . . . . . . . . . . . . ST Bond 17%

I am currently putting 100% into the FF2030. Years ago I had a large percentage going into the Spartan index 500 fund, but I stopped that when the market started to tank.

Mike

 

[wcv56]

55% capitalistpig hedge fund
40% SYW hedge fund
5% (maybe bit more) Lone Star Securities oil/gas well partnership in Pennsylvania.

(Life investment)
15% cash with which when I quit my 6 figure tax free (mostly) income next month I will live on it for a couple years in my condo in Costa Rica since I sold the 3 bdrm house in Thailand a couple years ago.
Looking for a party mid 50's and single, last time I had a loan was 1984
to buy a used car so not looking for a hitch up with debt. When I am bored I'll head to USA get in the RV and go pester the kids....