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Post by chang on Jan 21, 2023 20:11:45 GMT
I’ve got a niece who did a 401K rollover to a Fido IRA at the end of 2021, and - believe it or not - left it all in cash. Lucky her. She knows zilch about investing, and has zero interest in anything to do with her account.
I congratulated her on missing the bear market, but suggested she should put the money to work NOW.
Only a completely hands-off, autopilot investment will work here. So I’m thinking a target date fund.
Since her IRA is at Fido, I’m thinking about the Fidelity 2050 or 2055 Freedom fund (she’s in her early thirties). I don’t like the fees, and I don’t think Fido’s target date funds are the best, but I see nothing else that would make sense for her.
Thoughts? TIA.
Edit: Fido has Freedom and Freedom Blend funds. They are almost indistinguishable. Anyone know how they differ?
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Post by yogibearbull on Jan 21, 2023 21:08:38 GMT
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Post by chang on Jan 21, 2023 21:11:50 GMT
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Post by Deleted on Jan 21, 2023 21:59:01 GMT
how about VT etf instead?
or 90% VT and 10% BND?
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Post by chang on Jan 21, 2023 22:25:54 GMT
Forget the blend fund. I compared the Freedom 2050 fund FFFHX to the Freedom Index 2050 fund FIPFX over 1-5-10 years. They are virtually identical. And I mean identical. The active fund FFFHX has the tiniest advantage, so it seems the active management just makes up, more or less exactly, for the difference in ER. In a taxable account, the index version would win hands down. But in an IRA, it looks like a toss-up; maybe a slight nod to FFFHX. Although it irritates me that FFFHX hold thirty different funds, many of them ho-hum, 3-star funds. Edit: this MW article also recommends the index version over the active version: www.marketwatch.com/story/target-date-wars-fidelity-vs-fidelity-2019-08-07I have to admit, I favor actively managed funds in IRAs when I can choose them, and hopefully choose the best ones, but it seems that the actively managed target date funds spread their assets over 30 different funds, including a number of obviously mediocre funds. The huge difference in ER is a genuine hurdle that the active version must overcome. |
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Post by chang on Jan 21, 2023 22:26:34 GMT
how about VT etf instead? or 90% VT and 10% BND? Why would this be better than the target date (index) fund? |
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Post by Chahta on Jan 22, 2023 2:20:38 GMT
With managed funds, one needs to manage them from time to time. Sounds like she is not up to that. If she is young enough 100% equities and let it go for 20 years. VTI, SPY, SCHB.
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Post by chang on Jan 22, 2023 2:41:21 GMT
With managed funds, one needs to manage them from time to time. Sounds like she is not up to that. If she is young enough 100% equities and let it go for 20 years. VTI, SPY, SCHB. Well, the target date funds are designed to be hands-off, even the actively managed ones. But I am leaning toward the index version FIPFX. Which I think would be roughly equivalent to your suggestions (except they include foreign equity, which I would agree with). |
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Post by Deleted on Jan 22, 2023 2:51:04 GMT
how about VT etf instead? or 90% VT and 10% BND? Why would this be better than the target date (index) fund? You are right. Performance seem rather similar with FIPFX. |
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Post by chang on Jan 23, 2023 0:29:55 GMT
I went with FIPFX, the index version. I looked at the chart, out of curiosity, and strangely enough the 50dma and 200dma are right on top of each other (with the 50 crossing upward over the 200), and the NAV is also right on top of these, crossing on its way upward. Quite a coincidence.  If the NAV bounces and goes back down, I'll be disappointed. I suppose I should wait a little longer until the trend shows more strength and confirmation, but given we're talking about a 30-year time frame, it won't really matter. |
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Post by steadyeddy on Jan 26, 2023 16:54:14 GMT
Just FYI... I use FFNOX (85/15 aa) and FIKFX (20/80 aa) in my Fido accounts. And I throw a few dollars into one or the other depending on my mood on market outlook.
I did use them to trade in the wild market swings of 2022, and would not hesitate to do so in 2023.
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