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So I have a 401K through my employer that's managed by Fidelity, and I was reading through the 401K guide under the retirement tab here on the Fool. When I got to step two: slicing up the pie I immediately became confused, as none of the investment choices seem to match what's in the step.
I have asset classes:
Stock Investments
Blended fund investments
Bond investments
Short term investments

Do any of these correspond to the choices in step 2, or do I need to look elsewhere for help deciding on how to best divide my contribution?
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I have asset classes:
Stock Investments
Blended fund investments
Bond investments
Short term investments

Do any of these correspond to the choices in step 2, or do I need to look elsewhere
for help deciding on how to best divide my contribution?

Generally:

  Fidelity                          Motley Fool
Stock Investments               Stock Mutual Funds
Blended fund investments        ? basically bullets 2 & 3
(likely Target Date Funds       on TMF list
mix of bonds & equities) 
Bond investments                Bond mutual funds
Short term investments          Money market funds or stable value accounts

This assumes you only have mutual fund type investments available to you from Fidelity. 

Index funds (both stocks & bonds) are probably the best choice from a fee cost perspective 
if they're available to you. Can you elaborate on what the choices are in each 
of the Fidelity categories or are they the only four funds avaialble for you to choose from?

Personally I'm not a big fan of Target Date Funds as they generally are
more actively managed/balanced that leads to higher fees/trading costs.

If it were me I would compare the costs/fees of a target fund with the combined fees 
of the stock investments & bond investments. 

Generally, your ratio of stocks to bonds should depend on your age. The
younger you are the more stocks you should have compared to bonds.

If you go with a Target Date Fund and want a more aggressive 
mix of stocks to bonds, pick a Target Date fund 10
years beyond your Full Retirement Age (FRA).
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I recently reentered the world of 401ks for the first time in half a decade and my plan is also with Fidelity. After a comprehensive analysis of all the fund offerings, I dismissed all the target date funds as having too high an expense ratio. The target funds are designed for retirement savers who don't have the time or interest to spec out the other fund offerings, which would be the Foolish thing to do.

Fuskie
Who notes if you want to learn more about how to evaluate a mutual fund, there is a mutual fund investing board here at fool.com...
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Can you elaborate on what the choices are in each
of the Fidelity categories or are they the only four funds avaialble for you to choose from?

I don't really understand the question. The four I posted in the OP are the different asset classes assigned to the 25 or so different places I could move my money to.
Currently it's in FID FREEDOM K 2045 (FFKGX) which is a Blended fund investment, but I'm thinking since I'm so far out from retirement (I'm 30) Foolish advice says I should move it to stocks, but are "stock investments" the same as investing in stock?

I don't see target date fund or index fund used anywhere on the page.
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Actually, the Freedom funds are target date funds, with the year (2045) being the target date for retirement. At age 30, you are probably looking 35 years down the road towards retirement (around 65), so 35 years from now would be 2048. So either the Freedom 2050 or Freedom 2045 would be most appropriate. The way it works is that the blended fund is invested mostly in equities (stocks) today but as you age nearer towards your target date, the fund transitions increasingly from growth into income (more aggressive to more conservative).

This type of fund is great for newbie investors who want to be more aggressive with their retirement savings but don't have the time or interest in delving into the inner workings of a mutual fund. But the target funds tend to have high management expenses and since they are so new, not too many years of performance history. There maybe other index or managed mutual funds with better performance, lower expense ratios, higher dividend payouts, etc. As you learn more about what to look for in a mutual fund, you may decide that there are other options within the 401k that offer better potential returns for your retirement savings dollar.

Note that some 401k's let you purchase actual individual company stocks, but there may be steep transaction costs and by their nature, investing in individual companies is riskier than investing in mutual funds as the latter buys portions of many companies while with individual stocks, your performance is tied to the fortunes of just one or a couple of companies.

Fuskie
Who hopes this is a bit more explanatory for you...
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Well I just authorized the exchange of my money from the FID FREEDOM K 2045 to the FID OTC K because all the suggestions seems to say I should focus more on stocks than the target date and the OTC top 10 holdings are made up of companies, six out of the ten, that I use on a daily basis in some form or another and I felt very comfortable with that.
The fee may be a little high with a 0.77% Exp Ratio and a .55% management, so it might not have been a Foolish move, I don't know.

Since these portfolios are made of multiple stocks, does that meet the criteria of a stock mutual fund or is that something else completely?

If it does, does the suggestion mean I should spread my money between more than one of these or pick one and the spreading is done within by the holding of stock in multiple companies?

If it doesn't, then I'm going to go ahead and guess that I don't have access to a stock mutual fund through my 401K.
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I would encourage you to review all 25 or so different places you could move money to to compare fees, costs and type of funds they are. If for no other reason than to find out all your options. You can probably do it on your Company's Fidelity site or on Google or Yahoo Finance sites (which might be easier to get started in your review).

For instance the fund you cited, FFKGX, can be found here:

https://www.google.com/finance?q=MUTF%3AFFKGX&ei=oGREUqi...

or here:

http://finance.yahoo.com/echarts?s=FFKGX+Interactive#symbol=...

Just plug in the appropriate symbol and review them. Google shows it to have a 0.68% expense ratio and while not real high compared to some really active funds on the market, they are probably somewhat higher than the index funds that I would bet you have in that list of 25 or so funds. I would guess the index funds are less than 0.20% expense ratio. Fees matter over time & as Fuskie pointed out target date funds tend to have higher expenses. And there are many examples that most actively managed funds do not outperform index funds.

On the other hand, if it's simplicity you're looking for, go with your target date funds.

Confused?. Keep asking questions, there is TONS of knowledge here at The Fool.

Good Luck!
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Since these portfolios are made of multiple stocks, does that meet the criteria of a stock mutual fund or is that something else completely?

Understand that the Freedom Funds also focus on stocks in their early years. It's just that the fund managers transition from equities to bonds the closer you get to the target date. This is actually desirable, and something you'll want to do to once you get to within 5-10 years of retirement. But yes, a stock mutual fund is a mutual fund that invests in multiple stocks. Also note that the Freedom Fund and OTC K are both mutual funds, not portfolios. The portfolio is the collection of investments in your 401k (you can invest in more than one fund).

does the suggestion mean I should spread my money between more than one of these or pick one and the spreading is done within by the holding of stock in multiple companies?

By their nature, mutual funds invest in multiple companies so by owning shares of a mutual fund, you own a portion of their ownership of the companies in which the mutual fund is invested. You do not directly own shares of the companies invested in by the fund, but own shares of the fund and the fund owns the companies. The fund managers have voting privileges at each company's annual meeting but you do not.

I'm going to go ahead and guess that I don't have access to a stock mutual fund through my 401K.

You are making this more complicated than it really is. A stock mutual fund owns shares of companies. With the exception of bond funds, treasury securities and cash funds, etc. all the mutual funds in your 401k will invest in stocks.

Fuskie
Who notes he is not offering you specific investment advice and does not have direct familiarity with the investment options in your company's 401k...
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You're correct.
The only index fund we have is a treasury bond one (FIBAX if you're interested) which has a .10% exp ratio and a .05% management fee.
I may have some of my future contributions go into this, since it seems to be the only index fund on the list.
In the same asset category as the index fund (bond investments) we have PTTRX and a "Managed Income Portfolio II - Class 4".
I have no idea what either of those are, but the latter seems to be an index fund of index funds maybe?

I've reviewed most of the stock investments, avoiding the higher fee ones, and I really liked the FOCKX. It doesn't have the low turnover that Fool likes, but I like that it invests in companies I use on a daily basis and know have quality products, which was another piece of Foolish advice, so I figure the two offset each other.
All of our target funds have fees in the same range (.50-.60) and sicne I'm so far out from retiring, I think they're not really for me at this time. If you feel differently please tell me, you obviously know much more about this than I do.

I'm not really looking for simplicity, I enjoy doing research and learning. I just need to know what I need to research
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Generally, I steer away from any fund with a turnover of 50% or higher and look for funds with expense ratios under 1.0. However, just because the fund tracks an index or has a low expense ratio does not mean it's a good investment. At age 35, I would not put too much money into a bond index fund, maybe 5-10% of your portfolio. And an expense ratio of .50 to .60 is not bad, especially for a managed fund that automatically adjusts your risk/reward balance as you approach retirement.

Fuskie
Whose only concern with high turnover rates is that the fund doesn't hold on to a company long enough for it to perform, limiting fund growth...
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"Understand that the Freedom Funds also focus on stocks in their early years. It's just that the fund managers transition from equities to bonds the closer you get to the target date. This is actually desirable, and something you'll want to do to once you get to within 5-10 years of retirement."

I see, so they basically do all the work for me that I'm trying to do on my own right now.
I think I'd rather be more hands on than that.

"By their nature, mutual funds invest in multiple companies so by owning shares of a mutual fund, you own a portion of their ownership of the companies in which the mutual fund is invested. You do not directly own shares of the companies invested in by the fund, but own shares of the fund and the fund owns the companies."

I understand that part, but my question was if the suggestions the article was trying to make meant that my money should be spread out, is it considered spread out if I invest in the stock mutual fund that in turn spreads it's money throughout these companies, or is that still considered all my eggs in one basket?


Forgive me for my continuous referencing, but the article also says that stock index funds are where I should look to put my money for a foundation. Since the only index fund option in my choices I can find is a treasury bond index fund, is it fairly safe to say I don't have a stock index fund to invest in or could it be called something else?

I appreciate the answers guys, thanks for helping and I don't hold anyone liable for my investing decisions by myself!
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Generally speaking, index funds are good starter funds if you don't go with a target fund and aren't interested in analyzing different funds. Usually a 401k has a S&P 500 or Total Stock Market index fund. You may have those just by a different name. Mutual funds by their nature achieve the diversity your article describes.

Fuskie
Who thinks if you are unsure of what a fund is, you should call Fidelity and get some free advice on any of the funds you do not understand...
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Usually a 401k has a S&P 500 or Total Stock Market index fund.

Or look for a large cap fund if you have neither of the above.

It's great that you got the message about funds with high expense ratios and management fees. But keep in mind that is most useful if you are trying to decide between similar funds. Performance is far more important in selecting a mutual fund. Performance can get your 20% or more per year; expense ratio tends to cost you 1% or so.

Performance can be difficult to predict, and past history does not predict the future. But a well managed fund should be able to consistently beat the averages. Performance history is a good start provided you are talking about broad fund. Sector funds can over concentrate and have good numbers for a while and then fade.
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I recently reentered the world of 401ks for the first time in half a decade and my plan is also with Fidelity. After a comprehensive analysis of all the fund offerings, I dismissed all the target date funds as having too high an expense ratio. The target funds are designed for retirement savers who don't have the time or interest to spec out the other fund offerings, which would be the Foolish thing to do.

I went through the same thing recently. I have a few 401ks from various jobs over the years. Some of my accounts I was able to invest in the Vanguard target date funds. Others only had the Fidelity Freedom funds.

As you noticed, the expense ratios on these funds are far higher than they ought to be. Competitors funds are all very low cost, so I can only assume that Fidelity must have these funds as the only target date options in a ton of plans.

What really irritates me is that my current employer's plan only offers low cost index options for some of the asset classes I would need to replicate a target date fund. Sigh.
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I would encourage you to spend some quality time reading the MF's basic, background. Maybe even read one of their early books, and some books by others that they recommend. (Their early books are somewhat old, but the basic principles hold true.) It sounds like you're interested in doing that type of thing, so it will be easy -- especially since the Gardners write in a fun, easy style.

It seems that you don't yet have a complete handle on the basics of investing. The choices you make today for your 401k allocations won't matter much -- you can readjust after you've learned more. That fact that you're learning so early in your professional career, however, will pay huge benefits years from now when you're set to retire. 20-30+ years of informed investing can pay off huge!

If your plan has 25 Fidelity options, I'm sure that there are a number of them that fit will with the MF strategy advice. You just need to do some more reading to understand it all and tailor that strategy to what you're comfortable with.

All best!
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