Fidelity Retirement Savings Account Investment Strategy

Submitted by Such_Occasion_5760 t3_10qakhh in personalfinance

29 yo

After seeing a lot of posts from people from FI sub who amassed a few million by just investing using a 2 or 3-fund portfolio, I realized, maybe I should do the same, which should save me expense ratio costs.

I have FIDELITY RET SAVINGS which has an investment strategy selected that decides how to pick a bunch of funds for my 401k account.

Can I just sell all the funds and put all of them into 2 funds as below, given these are conservative funds, should I continue with the planning dashboard which, hopefully, has better returns than this 2-fund portfolio, not paying anything?

FZROX: 80%

FZILX: 20%

I use a similar approach for Roth-IRA, HSA, and Taxable brokerage accounts. I understand it's not a taxable event given my account is tax-deferred and I won't be able to rollover my funds if I wanted to at some point in the future given these funds are specific to Fidelity, at which point, I could just roll over to Fidelity's RothIra.

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CQME t1_j6ouvg2 wrote

>FZROX: 80%

>FZILX: 20%

This will work. The main ingredient in the success stories you've been hearing is time. With time and this allotment, you should achieve similar results. Not everyone is fortunate enough to have the stability necessary for this to work, caveat emptor, i.e. the results are not guaranteed if you have extreme life-altering events between now and retirement.

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Such_Occasion_5760 OP t1_j6ov9ae wrote

True! We can't control the life-altering events anyway. All we can do is, assume, everything works out well and invest in an as better way possible.

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Cruian t1_j6owhf2 wrote

>given these are conservative funds,

Is this referring to the employer account fine being conservative or FZROX + FZILX?

>FZROX: 80%

>FZILX: 20%

That's half the global market cap weight of FZILX. What's your reasoning on that?

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Such_Occasion_5760 OP t1_j6oxph7 wrote

I was these FZROX + FZILX funds conservative due to their exposure to OVERALL domestic & International instead of just Large carp(FXAIX or SP500) or some blue chip-specific funds. My employer funds are invested in 20-30 funds

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My reasoning to choose is, obviously the total US market(FZROX) and some diversification of my portfolio to the international market through FZILX. Would you recommend All-In on FZROX instead?

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Cruian t1_j6oy7r0 wrote

>I was these FZROX + FZILX funds conservative due to their exposure to OVERALL domestic & International instead of just Large carp(FXAIX or SP500) or some blue chip-specific funds.

But small caps are riskier than large caps (and have better expected long term returns than large caps do). So while you have more holdings, the extra holdings are more aggressive than the more narrow option.

>My employer funds are invested in 20-30 funds

Wow. That's a lot.

>Would you recommend All-In on FZROX instead?

No. I'd go the opposite: basically double FZILX (so 60% FZROX + 40% FZILX), as that is roughly the current global market cap weight.

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Such_Occasion_5760 OP t1_j6oyilq wrote

Would you say FXAIX instead of FZROX?

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Cruian t1_j6oyvyj wrote

No. Did I say something that would suggest that?

FXAIX is more conservative than FZROX and has lower expected long term returns. "Small" is a compensated risk factor, FZROX gives you some exposure to that while FXAIX didn't give you any.

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lucky_ducker t1_j6p7k7n wrote

Great idea, but I'd go 60/40 on the US and international funds, or even 50/50.

US stocks have far outpaced international stocks for over a decade. Given that most trends eventually revert to the mean, it may be time for international stocks to shine. Vanguard seems to think so.

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