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Author: OpenToAdviceGuy Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25265  
Subject: Armchair advisors: Review my 401k Date: 11/13/2002 1:14 PM
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Ok, I'm a newbie (26 yrs. old). I had my parents advisor review my 401k and she says leave it alone. But, since she's about 70 and my parents are as well, I thought I'd let some of you folks give me your 2 cents:

Here's the scoop:

I've been a good boy so far, I contribute 20% and my company matches up to 6%. Being young I thought I might get more aggressive, especially now. Long-term I'll become more moderate. Anyway, it's through Fidelity and here's the breakdown:

Current Allocations:

Fidelity Aggr Growth - 3%
Fidelity Blue Chip - 23%
Spartan US Equity Index - 25%
Fidelity Intl Grth & Inc - 19%
Fidelity Balanced - 31%

Current balance: $24,000

Other fund choices available to me:

Fidelity OTC Port
Fidelity Low PR Stk
Fidelity Divers Intl
Fidelity US BND Index
Fidelity MGD INC PORT


Any suggestions are greatly appreciated....
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Author: MarleysGhost Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15533 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/13/2002 1:19 PM
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Hey, it looks good to me. There's nothing in your available choices that I'd add yet. Add some Bond index in about 15 years or so.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15534 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/13/2002 1:51 PM
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I agree. Your fund selection is reasonably well diversified. Diversification seems to be in style right now. You choices are also very conservative. They are OK.

So what's your investment style? Are you conservative? Reluctant to take risks?

For a person of your age, you probably have a long time for your money to grow. Your balanced fund probably has a significant bond position. That is not usually necessary for those far from retirement (unless you are risk averse). Your blue chip fund is also conservative. Those are the sturdiest stocks, but they are also least likely to grow.

Your international fund implies international diversification. That strategy has been discredited. Internatioanal funds do not provide much protection because all global companies compete in the same markets. Trading partners mean when our economy slows down, others do too.

Your aggressive growth position is so small in a small account, it hardly seems worth the bother.

In short, Fools believe you should be 100% in stocks. Your Spartan US Equity Index is Fidelity's S&P 500 Index fund. Thats the one Fools think you should begin with.

Stocks are down right now. Its a great time to be buying stocks in a steady series of purchases like those in most 401K plans.

Best of luck to you.

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Author: OpenToAdviceGuy Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15535 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/13/2002 2:11 PM
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Thanks. I kinda figured I'd be ok. I've actually been surfing around TMF Advisor for awhile, getting a feel or the Groups and areas. I really like it. I'm on the free trial right now but I'm going to sign up for the year, I think. Anyway, thanks and see ya around....

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Author: Hyperborea Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15537 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/13/2002 2:53 PM
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I'll take a slightly different take on it than you've gotten already. Your fund choices look to be almost identical to the ones that I have in my 401k. Just about everyone of Fidelity's funds have some good sized fees attached to them except for the Spartan fund.

I have 100% of my 401k allocation in the Spartan US Equity Index (S&P500) fund. For diversification I have allocated my rollover IRAs (old 401ks), spousal IRAs, and taxable accounts in ways to bring my overall portfolio into balance. I am using lower cost funds to do this than are provided through Fidelity (i.e. Vanguard).

As to the issue of international diversification, some would like to believe that they can simplify their portfolio by ignoring this and you can but to do so you will likely have to be willing to tolerate more volatility and giving up a likely 1% or 2% long term growth advantage (with rebalancing).

Hyperborea

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15539 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/13/2002 3:24 PM
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Current Allocations:

Fidelity Aggr Growth - 3%
Fidelity Blue Chip - 23%
Spartan US Equity Index - 25%
Fidelity Intl Grth & Inc - 19%
Fidelity Balanced - 31%


If the volatility doesn't bother you, it looks ok to me.

Over the long run, stocks are likely to be the best investment to grow one's money, but over the short run there may be a lot of volatility.

I think a little bond expsure is good, but I think the 11% bond exposure in your portfolio is probably appropriate for a 35-year (or more) investment horizon. (The Fidelity Balanced is 35% bonds.)

Being young I thought I might get more aggressive, especially now.

Yes, if you want, and if inceased volatility (including deeper lows as well as higher highs) doesn't bother you, reducing the bond exposure (less "Balanced") and increasing equity exposure, such as Equity index and International, could be a nice choice.

Risk isn't always rewarded, and different fund managers have different ideas on what is meant by "aggressive growth," so one may want to investigate what "Fidelity Aggressive Growth" is investing in before deciding to make it a substantial portion of your portfolio. This is the Morningstar quicktake: http://quicktake.morningstar.com/Fund/snapshot.asp?Country=USA&Symbol=FDEGX

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Author: FuskieFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15542 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/13/2002 6:34 PM
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Fidelity Balanced - 31%

If you really want to be agressive, consider dropping or reducing this. Personally, I do not linke balanced funds because I think they have an identity crisis. Their growth tends to be consistent because either bonds or stocks usually take the lead. But they don't perform an any direction well since one often cancels out the other.

First of all, I would reduce your bond component to 10-20%. At your age, some might even suggest 100% stocks, but I am not one of them. Find your comfort zone and settle in.

Second, growth and income funds sometimes have that same schitzoid complex - what is their purpose, to grow share price or earn dividend income? The last few years have not shown much growth potential, but the market may be turning around (or not). On the other hand, reinvested dividends increase your base tax free and can help you accumulate more shares now that will take advantage of better growth later.

Personally, I like Fidelity's Low PR Stock fund. I have divided into small, medium and large cap (primarily small and large), and in the last year it seems that small cap has outperformed large cap, but that could always change.

The best recommendation I can give is to use Fidelity's on-line tools (they are very good) to establish your retirement goals and develop an investment strategy. Then use the Foolish material here to learn how to evaluate mutual funds, research the funds Fidelity offers, and make the best choices for you.

My Fidelity 401K has lost value, but not nearly as bad as my Roth and taxable investments so I must have done something right there.

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Author: MEG Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15547 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/15/2002 6:25 AM
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It looks pretty good for a long term approach
if you can get into the Fidelity Convertible Securities Fund,
do so you'll be pleased with what that fund can do .
Cut your international to about 15% of your account.

MEG


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Author: MEG Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15548 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/15/2002 6:31 AM
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Yes Sign on!1
It's the best thing you can do
You'll always have a friend with information
if you become a Fool.

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Author: anuvaka Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15549 of 25265
Subject: Re: Armchair advisors: Review my 401k Date: 11/16/2002 4:53 PM
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OpentoAdviceGuy,
another opinion is added....

I had my parents advisor review my 401k and she says leave it alone. But, since she's about 70 and my parents are as well, I thought I'd let some of you folks give me your 2 cents:

"age brings wisdom" my 2 cents.

I contribute 20% and my company matches up to 6%. Being young I thought I might get more aggressive, especially now. Long-term I'll become more moderate. Anyway, it's through Fidelity and here's the breakdown:

Excellent! you will retire in style, i predict! have you also considered a Roth IRA on the side?

Current Allocations:
Fidelity Aggr Growth - 3%
Fidelity Blue Chip - 23%
Spartan US Equity Index - 25%
Fidelity Intl Grth & Inc - 19%
Fidelity Balanced - 31%

Current balance: $24,000

Other fund choices available to me:
Fidelity OTC Port
Fidelity Low PR Stk
Fidelity Divers Intl
Fidelity US BND Index
Fidelity MGD INC PORT

Fidelity Diverse International has better long term results than Intl G&I. I am not a fan of International investing, it appears you are. so compare one against the other and choose.

OTC Port and Low Price Stock deal with more with Small Cap stocks as well as more Growth oriented. they are risky funds that could have great gains. before you get into these, look at some year by year comparisons vs the SP500. understand the risk involved. you could put 10% or less into these funds, rebalance (their profits)2x a year and do well. but their performance in recent times has been awful.

MGD INC PORT sort of a balanced fund designed to create income for a retired person. and it has done that, well ... ok in the current market. this is not an agressive fund, but more of a turtle. (and you remember who won that race?) you might want to consider this fund, but it is not what you said you were looking for.

Fidelity US BND Index- you have no bonds? even a little bit of bonds adds stability to a portfolio. this is highly reccomended, even if this is a poor time to start buying into a bond fund. you most likely will choose to keep <10% in bonds in light of your age.

i see nothing wrong with your choices and you are contributing a good amount. you could move 5 or 10% around and have no bad affect. I now have a Fidelity 401k with some of the same choices. If you wish to be more agressive you could do it outside the 401k in a Roth or Traditional IRA. but agressive does not always make long term dollars, just wows you at the year end returns.

Know your long term risks before you change.

joeC


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