New to the forum and could really use some help. My 401k plan recently changed a few things that significantly affected my portfolio. Our plan is with Fidelity. Our Admins recently froze new investments into the Fidelity Specialty funds, which I was a fan of.
The plan Admins also opened up Fidelity Brokerage Link - so I can transfer my holdings into the Brokerage and essentially buy any fund now - so all of a sudden my choices are endless and I'm in a bit of paralysis.
Below is my current holdings. About $150,000. I'm 37, and have a high tolerance for risk, so I'm not interested in a typical stock bond/allocation. I'd like to be heavily invested in equities.
I'd like to be in the healthcare sector, foreign equities (probably focused on Europe), and maybe snatch up some energy funds as they are beaten up. The rest I suppose would be in broader funds.
I could really use some advice on allocating my current portfolio...I can keep the money in any of the funds I have, I just can't put new money into the specialty funds. At the bottom, I listed the funds available in my Fidelity 401k without transferring to the brokerage as well.
Would also be interested in where I should direct future funds in Fidelity as I wait to send them to the Brokerage. How many times a year would you do this to avoid piling up fees?
I'm fairly new to this, so any help or advice would be greatly appreciated. Thanks in advance!
Current Balances as of 01/02/2015
FID BLUE CHIP GR $31,201.28
FID DIVERSIFD INTL $26,483.19
FID SEL HEALTHCARE $35,753.20
FID SEL NATURAL RES $23,927.11
FID SEL TECHNOLOGY $29,929.00
FID FREEDOM 2040 $406.76 - Currently where my money that was going in the specialty funds is being directed - automatically per the plan. Need to change this ASAP.
AVAILABLE FUNDS IN 401K
FID CONTRAFUND (FCNTX)
FID DIVIDEND GR (FDGFX)
SPTN 500 INDEX ADV (FUSVX)
TRP EQUITY INC ADV (PAFDX)
ARTISAN MID CAP VAL (ARTQX)
FID LEVERGD CO STK (FLVCX)
FID LOW PRICED STK (FLPSX)
FID MID CAP STOCK (FMCSX)
SPTN EXT MKT IDX ADV (FSEVX)
LOOMIS SM CAP VAL I (LSSCX)
INVS DEVLP MKTS R5 (GTDIX)
SPTN GLB XUS IDX ADV (FSGDX)
FID FREEDOM INCOME (FFFAX)
FID PURITAN (FPURX)
MIP CL 1
FID INTERMED BOND (FTHRX)
FID STRATEGIC INCOME (FSICX)
INVS HIGH YLD R5 (AHIYX)
PIM TOTAL RT INST (PTTRX)
FID RETIRE MMKT (FRTXX)
Sun Jan 04, 2015 7:41 pm
oldguy Senior Member
Cash: $ 717.80
Joined: 21 May 2006
quote: Below is my current holdings. About $150,000. I'm 37, and have a high tolerance for risk, so I'm not interested in a typical stock bond/allocation. I'd like to be heavily invested in equities.
quote: SPTN 500 INDEX ADV (FUSVX)
I would put everything, past and present, into the SP500 Index. Let me explain:
The broad US Market has a longterm average return of 11%/yr, the response to all US commerce (and most of the world) all combined. That is a risk. If you go 'sector shopping' you add the risk of that sector having an economic failure (eg, autos, financial, energy, international, emerging) to the US risk, ie, one risk superimposed on top of the other. And if you further narrow down to an individual company, you add the risk of the US + the risk of the Sector, + the risk of the company going bk. Ie, 3 risks superimposed.
But the two added risks are "uncompensated risk" - the sectors ultimately go up/down every decade or so - but they average about 11% longterm, ie no reward for the added risk (it makes sense, sector stocks are selected from that same population of stocks. So I fight the temptation to 'time' sectors and companies - and avoid trying to beat the market - simply accept the 11%/yr and use it to your advantage.
The Law of investing - "risk and return are directly proportional." I adjust my risk by changing my top-down mix, NOT by buying risky stocks. Eg, if my mix is 50/50 stocks/bonds, my return goal is 11%/5% - ie, 8%/yr. So if I want to dial up my risk, I move to 75%/25% - ie, a 9.5%/yr goal - and so on. When I was your age I stayed 100% stocks, no bonds.
You've done much of the work already, your $150k fund, at 11%/yr, will be $1,650,000 when you are 60 if you don't add another dime. If you add $5000/yr it will be $2,105,000. If you add $10k/yr it will be $2,555,000 ay 60. And $4.4M at age 65.
Investing in stocks is a dichotomy. 'Theory' involves 1000s of books about beating the market - charting, head & shoulders, standard deviation, puts, calls, options, futures (corn futures were fun!), stocastics, channeling, trending, rate of change algorithms, etc. But when reduced to "practice", it becomes deceptively simple, buy an unmanaged broad market index and leave it alone.
Sun Jan 04, 2015 8:51 pm
Wino Senior Member
Cash: $ 113.80
Joined: 03 Aug 2012
Oldguy's choice for the preferred investment vehicle is right out of the Bogleheads' playbook. It is a very adequate and in comparison to many popular alternatives, a very effective method.
I disagree on putting everything in to it, though. It is a great fund for a beginner fund. I see no reason not to have 80% or more of your retirement there, but I likewise see no reason not to read the news and invest accordingly.
Contrary to your statement, the energy sector are not beaten up. They are still being beaten up. Had you bought into energy when you posted this, you would have had a one-day 5% to 10% loss yesterday. You are trying to "catch a falling knife." Wait until there is a bounce and the start of a rebound if you want energy funds.
All of the above having been said, I see no reason not to invest in sector funds and even individual equities. Just remember that emotions drive the market much more than the financials. I use the front page for my investing much more than I use the financial pages. I use the financials to talk me out of investing, not in to investing. When something is being beaten up, I watch them and invest when I believe the beating up is done.
I work in energy, and I don't think the beating is finished. I hope I am wrong, but I just don't know.