Had a 403 at work from 2005 to 2009. They offered fidelity mutual funds. when i left the job i moved it to fidelity.I have them invested in FDIVX(17%fidelity investment grade), FBNDX(8%diversified international), FSLCX(25%small cap), FUSEX(50% spartan large cap).Since moving the account I have not touched them. In my current job i have 403b and did not contribute to this account.My question is do i leave them as is? I have another 15 yrs to retirement.should I sell the FDIVX and reinvest when interest rates go up?Should I sell the FBNDX and invest in what? has gone up the least.Thanks to all of you smart people who help the clueless like me
I purchased a significant amount of FDIVX (Fidelity Diversified International) in early January after selling some Long Term Bonds (Long Term Bonds did exceptionally well in 2011).As you may have noticed, FDIVX has done fairly well lately.Not sure why one would sell right now.I'm actually planning on holding FDIVX until after interest rates go up. It will probably be a year or so until rates go up.Bonds move opposite interest rates.That is since rates are so low right now, bonds will take it on the chin when rates go up. Hence bonds are now risky. FDIVX on the other hand should do well with rising interest rates.Of course my strategy could be totally wrong.
First, note that you flipped FDIVX and FBNDX. FDIVX is the international fund; FBNDX is the bond fund. Did you also flip the percentages?What you have is reasonable. You don't have enough bonds to make much difference, but I don't think you need them this far out unless you are risk averse. I'd wait til at least 10 yrs.We all hope that the economic recovery continues. So equities is the place to be. FUSEX is up 10% for the last 90 days and doing fine. This could be a great year for equities if noone stubs their toe.FBNDX has done well because interest rates are low and turmoil in the rest of the world causes global investors to seek out US fixed income investments for safety. Bernanke wants to keep interest rates low for the next few years, but some "experts" think he should gradually raise rates to gain some tools to deal with the economy. Your bond fund is probably safe while interest rates are stable, but personally I think the 3% yield is hardly worth the trouble. Equities are doing better for now.International funds have lagged due to global turmoil, but they should be coming back if economic recovery continues and the recession in Europe is mild. Small cap is higher risk but OK.You could do quite a bit better if you did etfs or individual stocks. If you are stuck with Fidelity funds, I would trim the bond fund and invest more in equities (and hope for a great year).
....help the clueless like me ...Since you asked the question you have got a clue, you just don't know what the answer is.One option for the "clueless" would be to use the targeted retirement funds where they try to select an asset allocation of several mutual funds that is appropriate for someone retiring in 2025, 2030, etc. Fidelity calls theirs "freedom funds" like the "freedom fund 2030". Fidelity's expense ratios on these funds are a bit higher than would be best but not too outrageous. An alternative would be to move the account to Vanguard to get lower expenses One thing to look at is the composition of the assets in these funds and then select either an earlier or later dated based on the rest of you situation. For example if you will retire in 2030 and you already have some stocks in a different account, then you might want less stocks in your IRA so you could buy the 2025 or 2020 fund Since this money came for a 403 I would assume that it is now in an IRA. There are tax issues with these types of targeted funds which makes them best in accounts like IRA's and not a taxable account.There are some other pros and cons but overall they are an OK. You might be able to learn and handle a few other simple way to tweak your portfolio to slightly improve on this but sometimes keeping it simple has a lot of advantages. You might be are able to do something a bit more complicated now but by the time you are 70 or 80 you might be prone to making mistakes which is a common problem. Just having one targeted retirement fund would help avoid age related mistakes.
Would you suggest such a fund for someone 60 and about to retire? Curious what has beenitsreturn for last 5 years?
Thank you. Yes I did flip the 2 funds you mention. I can do ETf but mutual funds were the ones available in the 403. DO you think it is wise to sell the mutual funds and go to ETF?I do like the idea of trimming the bond fund. That goes along with my thinking of selling them now when interest rates are low.Does this make sense?Thanks again
Thanks.I do have some money in the fidelity 2030.So looks like I can leave the rest alone, except for may be trimming the bond fund as such suggested by another response
DO you think it is wise to sell the mutual funds and go to ETF?It's all about returns. So if you can find funds or etf's that perform better, that is what you should do. Otherwise, I would sell the bond fund and put those funds into your best performing equity fund.But fundamentally I think you can do better in individual stocks if the sums are large enough to make commissions a minor factor and you have the time to manage them.Funds and etfs tend to own baskets of stocks. Index funds are often recommended as they have low turnover and tend to do better than expensive managed funds. But any list of stocks, index or otherwise, tends to include winners and losers. Index funds did poorly in the 2008 meltdown as it took several years for mortgage companies, banks, auto companies, auto parts supplier, home builders, and home improvement industries to go all the way down. If you owned an index fund you rode all those losers all the way down counting on the other stocks to make up the difference and give you net overall gains.You can usually do better than the fund simply by taking the list of stocks and buying the ones that are performing well and avoiding the losers. At least that is my theory, that is where I am coming from, and that is what works for me.
DO you think it is wise to sell the mutual funds and go to ETF?The only "gotcha" is which ETF. Do your research. Some ETFs only invest in futures, rather than actual stocks/bonds. Some people who were into energy ETFs a few years back found that they'd bought an ETF that was into high-priced futures, rather than actual stocks. When the price of oil came down the futures weren't worth much.I have no idea what your age is, but at a certain point buying individual bonds makes a lot more sense than holding a fund. It's typically best when close to retirement age that buying bonds makes sense.As others mentioned on this thread, if you would consider individual stocks, do you have the time and skills to research them before buying?PM
I am 52 I do not have the skills to do the research. I try my best but feel lost.I have bought some of the stocks in SA and made some money
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