Portfolio/Investing help please

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Topic Author
newinvesting2021
Posts: 31
Joined: Sun Sep 19, 2021 3:22 pm

Portfolio/Investing help please

Post by newinvesting2021 »

Hi all,
This is my first post-I'm new. I believe I have follow the template to post correctly.

Emergency funds: Yes Three to six months of expenses

Debt: no debt

Tax Filing Status: Single, Tax Rate: 24% Federal

Age:55

Taxable at Fidelity
xx% fund name (ticker symbol) (expense ratio)
13% cash
2.5% American Funds American BalancedA(ABALX) (0.58%)
1.6% company
1.3% Fidelity Total Market Index (FSKAX) (0.015%)
1.3% Fidelity 500 Index Fund (FXAIX) (0.015%)
2.0% Fidelity ZEROTotal Market Index (FZROX) (0.00%)this has now been exchanged to FXAIX as os 092021, thank you!

401k
60% company stock

U.S. EQUITY INDEX (AMU03) (0.02%) seeks to replicate the return and risk characteristics of the Russell 3000 Index
INTERNATIONAL EQUITY INDEX (AMU02) (0.04%) seeks to replicate the return and risk characteristics of the MSCI ACWI ex. US Index.
FIXED INCOME INDEX (AMU01) (0.02%) match the risks and returns of the Barclays Capital US Aggregate Bond Index

Roth IRA at Fidelity
xx% fund name (ticker symbol) (expense ratio)
4.0%FIDELITY SELECT IT SERVICES PORTFOLI(FBSOX) (0.72%)

Questions:

*I have $$ to invest into my individual brokerage account, still just do FXAIX and FSKAX?
* my AA about 50 stocks/15 international/35 bonds or cash
Thank you all, you are very generous with your time. I greatly appreciate it. I am learning so much. I never heard of an index fund till this month
Last edited by newinvesting2021 on Tue Sep 28, 2021 8:30 pm, edited 14 times in total.
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David Jay
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Location: Michigan

Re: Portfolio/Investing help please

Post by David Jay »

Welcome to the forum!
newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pm Questions:
1. for my indivual fidelity account where could I put the cash I have to invest, and does the portfolio look ok?
2. for my Roth ira, I know I have a lot of stuff in there-what should I sell and I will be spending down my 401k yearly rollover to stay in the 22-24% tax bracket to Roth ira, what funds should I purchase, and which ones that I currently have should be sold?
You are correct to say that you have far too many funds in the Roth. Any holding that is less than 5% of your total portfolio really doesn't do much - even if it does really well it doesn't represent enough of your portfolio to "move" the portfolio results.

Many here at BH would say that Total Stock and Total International should be the foundation for the stock portion of any portfolio. With Fidelity that would be either FZROX/FSKAX for Total (US) stock. So any stock purchases should probably start with Total Stock. Be advised that FZROX should only be used in a tax-advantaged account because it cannot be transferred to another brokerage. It must be sold (with tax consequences) before any transfer so FSKAX is a better choice for a taxable account.

If it were me, I would literally sell every single high-cost fund in your Roth tomorrow and put it all in FZROX with an expense ratio of ... zero! There are no tax implications inside a Roth. That would dramatically simplify your portfolio.

We teach that the primary "control knob" for portfolio growth versus portfolio stability is the ratio of stocks-to-bonds (includes all fixed income) called asset allocation. The more stocks the more potential growth and the less stocks the lower the volatility of the portfolio. This is a very personal decision, think of stocks as the roller coaster and fixed income as the lazy river. Some people can watch as their account value drops by a third (for example) and not panic. Others start to get uncomfortable when their account value drops more than 5 or 10%. You need to set your AA to match your needs.

It looks like you are about 25% stocks and 75% fixed income/cash, so it could be reasonable to increase your stock percentage a bit. Many here would recommend a stock percentage of 30% to 40% for a retiree to keep ahead of inflation. Moving most of your 13% cash into stocks would bring you into this range. But again, you need to understand yourself and your willingness to see fluctuations in your portfolio balance.

When we talk about AA, we like to discuss the portfolio as a whole, covering all accounts. That is the reason for the format, with percentages being a percentage of the whole.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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David Jay
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Location: Michigan

Re: Portfolio/Investing help please

Post by David Jay »

We also have a complete financial Wiki here at Bogleheads. Two pages that may interest you:

Investing startup kit: https://www.bogleheads.org/wiki/Boglehe ... art-up_kit

Boglehead philosophy: https://www.bogleheads.org/wiki/Boglehe ... philosophy
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
HomeStretch
Posts: 11334
Joined: Thu Dec 27, 2018 2:06 pm

Re: Portfolio/Investing help please

Post by HomeStretch »

Welcome to the forum!

Do you own a home? If yes, what is the equity in your home?

Does or will your retirement income from SS/pension cover 100% of your retirement expenses including healthcare, income taxes and periodic expenses such as a new car or large home repair?

What is your desired asset allocation? Assuming your 401k holding is 100% fixed income/bonds, your current allocation looks to be very conservative at 27% equity and 73% bonds/fixed income/cash. Investing the 13% cash in FAXAIX to get to 40% equity may make sense.

Your 401k:
- Is your current holding AMX01 held 100% in treasuries/fixed income?
- What funds (include ERs) are available in your 401k?

Two immediate steps to consider:
1. In your Roth IRA, exchange everything into FZROX as per David Jay’s post. Or use the longer-established FSKAX 0.015% ER.
2. In your Taxable account, stop investing (including reinvesting dividends) in the proprietary zero fund FZROX and use FXAIX S&P 500 instead. If no large gains, sell the FZROX you currently own.
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Taylor Larimore
Posts: 32839
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Re: Portfolio/Investing help please

Post by Taylor Larimore »

newinvesting2021:

Consider the many benefits of the simple, very diversified, low-cost and tax-efficient Three-Fund Portfolio.

Please read my "Simplicity" link below.

Best wishes.
Taylor
Jack Bogle's words of wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
"Simplicity is the master key to financial success." -- Jack Bogle
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ruralavalon
Posts: 26297
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Portfolio/Investing help please

Post by ruralavalon »

Welcome to the forum :) .

It looks like you are in good shape. It's great to see that you are debt free. The IRA is a mess, but nothing very horrible, just highish expense ratios and actively managed funds (which can easily be switched to very diversified index funds with very low expense ratios).

newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pm13% cash
. . . .
Questions:
1. for my indivual fidelity account where could I put the cash I have to invest, . . .
Fidelity Total Market Index (FSKAX) (0.015%) OR Fidelity 500 Index Fund (FXAIX) (0.015%).

HomeStretch wrote: Mon Sep 20, 2021 8:52 amTwo immediate steps to consider:
1. In your Roth IRA, exchange everything into FZROX as per David Jay’s post. Or use the longer-established FSKAX 0.015% ER.
2. In your Taxable account, stop investing (including reinvesting dividends) in the proprietary zero fund FZROX and use FXAIX S&P 500 instead. If no large gains, sell the FZROX you currently own.
That's very good advice.

What funds are offered in your former employer's 401k plan (60% of your portfolio)? Please give fund names, tickers and expense ratios.

There may be better funds to use than Capitol Preservation (AMX01) (0.24%)

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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bertilak
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Location: East of the Pecos, West of the Mississippi

Re: Portfolio/Investing help please

Post by bertilak »

Sometimes I wish I could add some good advice to threads like this but it has all been said already. I second everything above, in case you are keeping score!

I should emphasize one thing. Follow Taylor's Larimore's advice whenever you can: viewtopic.php?p=6235306#p6235306. Especially read his link to "simplicity," as he urges in his signature. In case he changes his signature, here it is: viewtopic.php?f=10&t=156505
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
Topic Author
newinvesting2021
Posts: 31
Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

David Jay wrote: Mon Sep 20, 2021 8:26 am Welcome to the forum!
newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pm Questions:
1. for my indivual fidelity account where could I put the cash I have to invest, and does the portfolio look ok?
2. for my Roth ira, I know I have a lot of stuff in there-what should I sell and I will be spending down my 401k yearly rollover to stay in the 22-24% tax bracket to Roth ira, what funds should I purchase, and which ones that I currently have should be sold?
You are correct to say that you have far too many funds in the Roth. Any holding that is less than 5% of your total portfolio really doesn't do much - even if it does really well it doesn't represent enough of your portfolio to "move" the portfolio results.

Many here at BH would say that Total Stock and Total International should be the foundation for the stock portion of any portfolio. With Fidelity that would be either FZROX/FSKAX for Total (US) stock. So any stock purchases should probably start with Total Stock. Be advised that FZROX should only be used in a tax-advantaged account because it cannot be transferred to another brokerage. It must be sold (with tax consequences) before any transfer so FSKAX is a better choice for a taxable account.

If it were me, I would literally sell every single high-cost fund in your Roth tomorrow and put it all in FZROX with an expense ratio of ... zero! There are no tax implications inside a Roth. That would dramatically simplify your portfolio.

We teach that the primary "control knob" for portfolio growth versus portfolio stability is the ratio of stocks-to-bonds (includes all fixed income) called asset allocation. The more stocks the more potential growth and the less stocks the lower the volatility of the portfolio. This is a very personal decision, think of stocks as the roller coaster and fixed income as the lazy river. Some people can watch as their account value drops by a third (for example) and not panic. Others start to get uncomfortable when their account value drops more than 5 or 10%. You need to set your AA to match your needs.

It looks like you are about 25% stocks and 75% fixed income/cash, so it could be reasonable to increase your stock percentage a bit. Many here would recommend a stock percentage of 30% to 40% for a retiree to keep ahead of inflation. Moving most of your 13% cash into stocks would bring you into this range. But again, you need to understand yourself and your willingness to see fluctuations in your portfolio balance.

When we talk about AA, we like to discuss the portfolio as a whole, covering all accounts. That is the reason for the format, with percentages being a percentage of the whole.
Thank you David for replying to my post. I am very new at investing....I can save, but I just started to learn about investing this month- and I never knew what an index was. I have added information on my 401k, the index funds that are available to me. I want to rebalance my 401k also to include-this is a guess, I'd take suggestions please: 60/25/15 US Equity index/International index/Fixed income index. I dont plan on withdrawing any (after I fix my Roth mess) for at least 10 years, but I will be adding to my individual via cash and Roth ira via 401k roll over distributution. Thank you again. I'd appreciate any help.
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:55 pm, edited 1 time in total.
Topic Author
newinvesting2021
Posts: 31
Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

David Jay wrote: Mon Sep 20, 2021 8:44 am We also have a complete financial Wiki here at Bogleheads. Two pages that may interest you:

Investing startup kit: https://www.bogleheads.org/wiki/Boglehe ... art-up_kit

Boglehead philosophy: https://www.bogleheads.org/wiki/Boglehe ... philosophy
Thank you David you are very kind. I'm learning!
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:55 pm, edited 1 time in total.
Topic Author
newinvesting2021
Posts: 31
Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

HomeStretch wrote: Mon Sep 20, 2021 8:52 am Welcome to the forum!

Do you own a home? If yes, what is the equity in your home?

Does or will your retirement income from SS/pension cover 100% of your retirement expenses including healthcare, income taxes and periodic expenses such as a new car or large home repair?

What is your desired asset allocation? Assuming your 401k holding is 100% fixed income/bonds, your current allocation looks to be very conservative at 27% equity and 73% bonds/fixed income/cash. Investing the 13% cash in FAXAIX to get to 40% equity may make sense.

Your 401k:
- Is your current holding AMX01 held 100% in treasuries/fixed income?
- What funds (include ERs) are available in your 401k?

Two immediate steps to consider:
1. In your Roth IRA, exchange everything into FZROX as per David Jay’s post. Or use the longer-established FSKAX 0.015% ER.
2. In your Taxable account, stop investing (including reinvesting dividends) in the proprietary zero fund FZROX and use FXAIX S&P 500 instead. If no large gains, sell the FZROX you currently own.
Thank you for the welcome!
I do not own a home
I have no pension, on SS and no it will not cover everything. I will use my invidual brokerage account and Roth ira
I am not sure of allocation was thinking 60/25/15 stock/international/bonds....would take some suggestions please

401k is fixed income
I have added other funds to my new post...index and the descriptions I would like to purchase 60/25/15 in US equity index/International equity index/Fixed income index
I have exchanged my FZROX to FXAIX today
Thank you for all your help! I'd apprecaite any other insight, while I try to learn the "ropes"
Last edited by newinvesting2021 on Tue Sep 28, 2021 5:25 am, edited 1 time in total.
Topic Author
newinvesting2021
Posts: 31
Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

Taylor Larimore wrote: Mon Sep 20, 2021 9:07 am newinvesting2021:

Consider the many benefits of the simple, very diversified, low-cost and tax-efficient Three-Fund Portfolio.

Please read my "Simplicity" link below.

Best wishes.
Taylor
Jack Bogle's words of wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
Thank you Taylor for sending the information and link, I was thinking of the 60/25/15 stock/international/bond
Topic Author
newinvesting2021
Posts: 31
Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

bertilak wrote: Mon Sep 20, 2021 10:39 am Sometimes I wish I could add some good advice to threads like this but it has all been said already. I second everything above, in case you are keeping score!

I should emphasize one thing. Follow Taylor's Larimore's advice whenever you can: viewtopic.php?p=6235306#p6235306. Especially read his link to "simplicity," as he urges in his signature. In case he changes his signature, here it is: viewtopic.php?f=10&t=156505
thank you, LOL I am not keeping score. yes my Roth scares me! So I am hoping with all the amazing information I have recieved that I can do this sooner than later, I have already started!
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:55 pm, edited 1 time in total.
HomeStretch
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Re: Portfolio/Investing help please

Post by HomeStretch »

newinvesting2021 wrote: Mon Sep 20, 2021 2:26 pm … I am not sure of allocation was thinking 60/25/15 stock/international/bonds....would take some suggestions please …
Asset allocation (AA) is a personal decision. You may find the BH wiki page about it helpful if you haven’t come across it already:
https://www.bogleheads.org/wiki/Asset_allocation

You current AA is 27/73. Going to 85/15 is a big change in your equity %. But perhaps that suits your risk tolerance. You could consider moving to an intermediate AA (for example 60/40) to see how that “feels” before moving fully to 85% equity.
Topic Author
newinvesting2021
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Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

HomeStretch wrote: Mon Sep 20, 2021 2:37 pm
newinvesting2021 wrote: Mon Sep 20, 2021 2:26 pm … I am not sure of allocation was thinking 60/25/15 stock/international/bonds....would take some suggestions please …
Asset allocation (AA) is a personal decision. You may find the BH wiki page about it helpful if you haven’t come across it already:
https://www.bogleheads.org/wiki/Asset_allocation

You current AA is 27/73. Going to 85/15 is a big change in your equity %. But perhaps that suits your risk tolerance. You could consider moving to an intermediate AA (for example 60/40) to see how that “feels” before moving fully to 85% equity.
thank you homestretch...right...it will be a big change, and I may do it like you say. I will look at your link, thank you for sending that to me
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:56 pm, edited 1 time in total.
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ruralavalon
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Location: Illinois

Re: Portfolio/Investing help please

Post by ruralavalon »

newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pm U.S. EQUITY INDEX (AMU03) (0.02%) seeks to replicate the return and risk characteristics of the Russell 3000 Index
INTERNATIONAL EQUITY INDEX (AMU02) (0.04%) seeks to replicate the return and risk characteristics of the MSCI ACWI ex. US Index.
FIXED INCOME INDEX (AMU01) (0.02%) match the risks and returns of the Barclays Capital US Aggregate Bond Index
Those are excellent total market index funds to use in your employer's 401k plan, replacing the higher expense (0.24%) managed fund.

Each is very diversified (reducing your risk) with a very low expense ratio (to increase your net returns).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
newinvesting2021
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Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

ruralavalon wrote: Mon Sep 20, 2021 5:25 pm
newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pm U.S. EQUITY INDEX (AMU03) (0.02%) seeks to replicate the return and risk characteristics of the Russell 3000 Index
INTERNATIONAL EQUITY INDEX (AMU02) (0.04%) seeks to replicate the return and risk characteristics of the MSCI ACWI ex. US Index.
FIXED INCOME INDEX (AMU01) (0.02%) match the risks and returns of the Barclays Capital US Aggregate Bond Index
Those are excellent total market index funds to use in your employer's 401k plan, replacing the higher expense (0.24%) managed fund.

Each is very diversified (reducing your risk) with a very low expense ratio (to increase your net returns).
Thank you, they just added these < a year ago. Just trying to figure out how much to put in each. I appreciate the help.
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:56 pm, edited 1 time in total.
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ruralavalon
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Re: Portfolio/Investing help please

Post by ruralavalon »

newinvesting2021 wrote: Mon Sep 20, 2021 5:32 pm
ruralavalon wrote: Mon Sep 20, 2021 5:25 pm
newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pm U.S. EQUITY INDEX (AMU03) (0.02%) seeks to replicate the return and risk characteristics of the Russell 3000 Index
INTERNATIONAL EQUITY INDEX (AMU02) (0.04%) seeks to replicate the return and risk characteristics of the MSCI ACWI ex. US Index.
FIXED INCOME INDEX (AMU01) (0.02%) match the risks and returns of the Barclays Capital US Aggregate Bond Index
Those are excellent total market index funds to use in your employer's 401k plan, replacing the higher expense (0.24%) managed fund.

Each is very diversified (reducing your risk) with a very low expense ratio (to increase your net returns).
Thank you, they just added these < a year ago. Just trying to figure out how much to put in each. I appreciate the help.
Mila
newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pmDebt: no debt
Sold home last year, not paying rent either

Tax Filing Status: Single
newinvesting2021 wrote: Mon Sep 20, 2021 2:26 pmI do not own a home (sold last year, do not have rental costs either :)
I have no pension, on SS and no it will not cover everything.
. . . . .
I am not sure of allocation was thinking 60/25/15 stock/international/bonds....would take some suggestions please
About how long until expected retirement? Do you have any dependents?

Asset allocation is a very personal decision which must be based on your own individual ability, willingness and need to take risk.

At age 55, debt free, single, with no pension I suggest an asset allocation with around 30-40% in bonds or other fixed income investments (like CDs, savings accounts, Stable Value Fund, money market fund). This is expected to substantially reduce portfolio volatility (risk). Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio", link;
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?", link;
5) White Coat Investor (9/23/2016), "In Defense of Bonds", link; and
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?", link.

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities", available as an archived pdf. Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). The diversification benefit has varied over time. (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).

That works out to about 35% bonds, 15% international stocks, and 50% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
newinvesting2021
Posts: 31
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Re: Portfolio/Investing help please

Post by newinvesting2021 »

ruralavalon wrote: Tue Sep 21, 2021 11:11 am
newinvesting2021 wrote: Mon Sep 20, 2021 5:32 pm
ruralavalon wrote: Mon Sep 20, 2021 5:25 pm
newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pm U.S. EQUITY INDEX (AMU03) (0.02%) seeks to replicate the return and risk characteristics of the Russell 3000 Index
INTERNATIONAL EQUITY INDEX (AMU02) (0.04%) seeks to replicate the return and risk characteristics of the MSCI ACWI ex. US Index.
FIXED INCOME INDEX (AMU01) (0.02%) match the risks and returns of the Barclays Capital US Aggregate Bond Index
Those are excellent total market index funds to use in your employer's 401k plan, replacing the higher expense (0.24%) managed fund.

Each is very diversified (reducing your risk) with a very low expense ratio (to increase your net returns).
Thank you, they just added these < a year ago. Just trying to figure out how much to put in each. I appreciate the help.
Mila
newinvesting2021 wrote: Sun Sep 19, 2021 9:25 pmDebt: no debt
Sold home last year, not paying rent either

Tax Filing Status: Single
newinvesting2021 wrote: Mon Sep 20, 2021 2:26 pmI do not own a home (sold last year, do not have rental costs either :)
I have no pension, on SS and no it will not cover everything.
. . . . .
I am not sure of allocation was thinking 60/25/15 stock/international/bonds....would take some suggestions please
About how long until expected retirement? Do you have any dependents?

Asset allocation is a very personal decision which must be based on your own individual ability, willingness and need to take risk.

At age 55, debt free, single, with no pension I suggest an asset allocation with around 30-40% in bonds or other fixed income investments (like CDs, savings accounts, Stable Value Fund, money market fund). This is expected to substantially reduce portfolio volatility (risk). Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio", link;
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?", link;
5) White Coat Investor (9/23/2016), "In Defense of Bonds", link; and
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?", link.

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities", available as an archived pdf. Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). The diversification benefit has varied over time. (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).

That works out to about 35% bonds, 15% international stocks, and 50% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.
thank you! my children are adults and on their own. I have an anticipated AA 50 stocks/15 international and 35 bonds or cash.
still trying to figure out where to put my 200k cash in my individual brokerage account....I appreciate all the help!
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:56 pm, edited 1 time in total.
Topic Author
newinvesting2021
Posts: 31
Joined: Sun Sep 19, 2021 3:22 pm

Re: Portfolio/Investing help please

Post by newinvesting2021 »

Tax Filing Status: Single[/quote]
newinvesting2021 wrote: Mon Sep 20, 2021 2:26 pmI do not own a home (sold last year, do not have rental costs either :)
I have no pension, on SS and no it will not cover everything.
. . . . .
I am not sure of allocation was thinking 60/25/15 stock/international/bonds....would take some suggestions please
About how long until expected retirement? Do you have any dependents?

Asset allocation is a very personal decision which must be based on your own individual ability, willingness and need to take risk.

At age 55, debt free, single, with no pension I suggest an asset allocation with around 30-40% in bonds or other fixed income investments (like CDs, savings accounts, Stable Value Fund, money market fund). This is expected to substantially reduce portfolio volatility (risk). Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio", link;
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?", link;
5) White Coat Investor (9/23/2016), "In Defense of Bonds", link; and
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?", link.

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities", available as an archived pdf. Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). The diversification benefit has varied over time. (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).

That works out to about 35% bonds, 15% international stocks, and 50% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.
[/quote]

thank you! my children are adults and on their own. I have an anticipated AA 50 stocks/15 international and 35 bonds or cash.
still trying to figure out where to put my 200k cash in my individual brokerage account....I appreciate all the help! I dont anticpate retiring before 10 years/taking money out etc....if I go back to work it will be part time etc.
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:57 pm, edited 1 time in total.
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ruralavalon
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Re: Portfolio/Investing help please

Post by ruralavalon »

newinvesting2021 wrote: Tue Sep 21, 2021 12:28 pmthank you! my children are adults and on their own. I have an anticipated AA 50 stocks/15 international and 35 bonds or cash.
still trying to figure out where to put my 200k cash in my individual brokerage account....I appreciate all the help! I dont anticpate retiring before 10 years/taking money out etc....if I go back to work it will be part time etc.
Mila
In the taxable brokerage account either Fidelity Total Market Index (FSKAX) (0.015%) OR Fidelity 500 Index Fund (FXAIX) (0.015%) would be a good choice in my opinion.

It is often better to treat all accounts together as a single unified portfolio. It is not necessary to have all elements of the desired asset allocation in each account.

With your "Tax Rate: 24% Federal, 7% State" use only very tax-efficient stock index funds, rather than bond funds, in your taxable brokerage account.

Ordinarily bond funds are not very tax-efficient. It's usually better to put the entire bond allocation in tax-advantaged accounts, preferably a tax-deferred account like a traditional 401k account.

In your employer's 401k plan "FIXED INCOME INDEX (AMU01) (0.02%) match the risks and returns of the Barclays Capital US Aggregate Bond Index" is an excellent bond fund to use.

Wiki article Tax-efficient Fund Placement.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Roth ira FZROX, FXAIX, FNILX? for tax advantage

Post by newinvesting2021 »

[Thread merged into here --admin LadyGeek]

hi all!

I want to purchase and sell existing funds in my Roth ira, trying to decide between: FZROX, FXAIX, FNILX? Since it is in my no tax account I'd like to maximize that. I'd appreciate any help. Thank you all for reading!
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:57 pm, edited 1 time in total.
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Re: Portfolio/Investing help please

Post by LadyGeek »

newinvesting2021 - In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.

(Thanks to the member who reported the post and provided a link to this thread.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: Roth ira FZROX, FXAIX, FNILX? for tax advantage

Post by ruralavalon »

newinvesting2021 wrote: Wed Sep 22, 2021 6:50 am [Thread merged into here --admin LadyGeek]

hi all!

I want to purchase and sell existing funds in my Roth ira, trying to decide between: FZROX, FXAIX, FNILX? Since it is in my no tax account I'd like to maximize that. I'd appreciate any help. Thank you all for reading!
Mila
Roth IRA.
In a Roth IRA at Fidelity I suggest a combination of:
1) Fidelity® Total Market Index Fund (FSKAX) ER 0.015%; and
2) Fidelity® Total International Index Fund (FTIHX) ER 0.06%.


Fund selection.
In selecting funds to use strive for a combination of both broad diversification (to reduce risk) and low expense ratios (to increase net returns).

In general to easily achieve those twin goals I suggest a simple, easy to manage, three-fund type portfolio.

Wiki article Three-fund portfolio.

Forum discussion, The Three-Fund Portfolio.

Taylor Larimore post, Updated list of 3-Fund Portfolio articles.



Fund placement & general considerations.
It is often better to treat all accounts together as a single unified portfolio. It is not necessary to have all elements of the desired asset allocation in each account.

With your "Tax Rate: 24% Federal, 7% State" use only very tax-efficient stock index funds, rather than bond funds, in your taxable brokerage account.

Ordinarily bond funds are not very tax-efficient. It's usually better to put the entire bond allocation in tax-advantaged accounts, preferably a tax-deferred account like a traditional 401k account.

Wiki article Tax-efficient fund placement.

To make portfolio management easier it is best to have at least one large tax-advantaged account which contains all elements of your desired asset allocation. That would be your 401k account.


Annual contributions & priority.
Establishing a high rate of contributions is the most important investing decision you can make.

You are "Age:55".

I suggest maximum annual employee contributions to your 401k as the top priority. Your employer's 401k plan offers excellent, very diversified funds, with very low expense ratios. "If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA." Prioritizing Investments, "Other considerations" .

The maximum annual employee contribution to a 401k is $26k when over age 50. Any employer match or employer contribution does not count toward the maximum employee limit, it is extra.

I suggest the maximum contribution to your Roth IRA as the second priority. The maximum annual IRA contribution is $7k when over age 50.

In general make maximum annual contributions to all tax-advantaged accounts as a priority over contributions to the taxable brokerage account.

Wiki article, Prioritizing investments.



Example portfolio.
Here is an overall portfolio idea you could consider. The asset allocation is 50% U.S. stocks, 15% international stocks, and 35% bonds.

The percentages given are percentages of the total plortfolio, not percentages of any particular account. I suggest switching both the current balances and the new annual contributions to the funds indicated.

Taxable account @ Fidelity (22% of total portfolio)
22%, Fidelity® 500 Index Fund (FXAIX) (0.015%)
(You said you already made this switch. That was a good move, I see no good reason to undo that.)

401k account (60% of total portfolio)
20%, U.S. EQUITY INDEX (Russell 3000 Index, a total U.S. stock market index) ER 0.02%
05%, INTERNATIONAL EQUITY INDEX (MSCI ACWI ex-U.S. Index, developed markets only) ER 0.04%
35%, FIXED INCOME INDEX (Bloomberg Barclays U.S. Aggregate Bond Index) ER 0.02%

Roth IRA @ Fidelity (18% of total portfolio)
08%, Fidelity® Total Market Index Fund (FSKAX) ER 0.015%
10%, Fidelity® Total International Index Fund (FTIHX) ER 0.06%


Rebalancing.
Because the funds will grow at different and unpredictable rates you will need to rebalance every few years in order to maintain your desired asset allocation.

Wiki article Rebalancing.

Simply adjust by exchanging between funds inside your 401k account. Don't adjust by exchanging between funds inside the taxable brokerage account, that would create unnecessary income tax liability.


Education.
To quickly educate yourself I suggest that you read the wiki article Bogleheads® investment philosophy, and Dr. Bernstein's short free pdf book "If You Can".

I suggest you also read one or two other good books on investing. Wiki article Book recommendations and reviews.

. . . . .

I hope that this helps.

If you have any questions just ask.

Ask in this thread, to keep everything together in one place.

Edits for grammar, punctuation and spelling.
Last edited by ruralavalon on Wed Sep 22, 2021 10:17 am, edited 4 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Re: Portfolio/Investing help please

Post by Taylor Larimore »

ruralavalon:

Excellent post!

Taylor
Jack Bogle's Words of Wisdom: “Learn every day, but especially from the experience of others. It’s cheaper.”
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Portfolio/Investing help please

Post by ruralavalon »

Taylor Larimore wrote: Wed Sep 22, 2021 9:44 am ruralavalon:

Excellent post!

Taylor
Jack Bogle's Words of Wisdom: “Learn every day, but especially from the experience of others. It’s cheaper.”
Thanks for the compliment.

It's enjoyable helping others avoid making some mistakes I made when younger.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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newinvesting2021
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Re: Portfolio/Investing help please

Post by newinvesting2021 »

LadyGeek wrote: Wed Sep 22, 2021 7:21 am newinvesting2021 - In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.

(Thanks to the member who reported the post and provided a link to this thread.)
Thank you LadyGeek! sorry I am new with posting here, I apprecaite you adding it here
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:58 pm, edited 1 time in total.
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Re: Roth ira FZROX, FXAIX, FNILX? for tax advantage

Post by newinvesting2021 »

ruralavalon wrote: Wed Sep 22, 2021 8:00 am
newinvesting2021 wrote: Wed Sep 22, 2021 6:50 am [Thread merged into here --admin LadyGeek]

hi all!

I want to purchase and sell existing funds in my Roth ira, trying to decide between: FZROX, FXAIX, FNILX? Since it is in my no tax account I'd like to maximize that. I'd appreciate any help. Thank you all for reading!
Mila
Roth IRA.
In a Roth IRA at Fidelity I suggest a combination of:
1) Fidelity® Total Market Index Fund (FSKAX) ER 0.015%; and
2) Fidelity® Total International Index Fund (FTIHX) ER 0.06%.


Fund selection.
In selecting funds to use strive for a combination of both broad diversification (to reduce risk) and low expense ratios (to increase net returns).

In general to easily achieve those twin goals I suggest a simple, easy to manage, three-fund type portfolio.

Wiki article Three-fund portfolio.

Forum discussion, The Three-Fund Portfolio.

Taylor Larimore post, Updated list of 3-Fund Portfolio articles.



Fund placement & general considerations.
It is often better to treat all accounts together as a single unified portfolio. It is not necessary to have all elements of the desired asset allocation in each account.

With your "Tax Rate: 24% Federal, 7% State" use only very tax-efficient stock index funds, rather than bond funds, in your taxable brokerage account.

Ordinarily bond funds are not very tax-efficient. It's usually better to put the entire bond allocation in tax-advantaged accounts, preferably a tax-deferred account like a traditional 401k account.

Wiki article Tax-efficient fund placement.

To make portfolio management easier it is best to have at least one large tax-advantaged account which contains all elements of your desired asset allocation. That would be your 401k account.


Annual contributions & priority.
Establishing a high rate of contributions is the most important investing decision you can make.

You are "Age:55".

I suggest maximum annual employee contributions to your 401k as the top priority. Your employer's 401k plan offers excellent, very diversified funds, with very low expense ratios. "If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA." Prioritizing Investments, "Other considerations" .

The maximum annual employee contribution to a 401k is $26k when over age 50. Any employer match or employer contribution does not count toward the maximum employee limit, it is extra.

I suggest the maximum contribution to your Roth IRA as the second priority. The maximum annual IRA contribution is $7k when over age 50.

In general make maximum annual contributions to all tax-advantaged accounts as a priority over contributions to the taxable brokerage account.

Wiki article, Prioritizing investments.



Example portfolio.
Here is an overall portfolio idea you could consider. The asset allocation is 50% U.S. stocks, 15% international stocks, and 35% bonds.

The percentages given are percentages of the total plortfolio, not percentages of any particular account. I suggest switching both the current balances and the new annual contributions to the funds indicated.

Taxable account @ Fidelity (22% of total portfolio)
22%, Fidelity® 500 Index Fund (FXAIX) (0.015%)
(You said you already made this switch. That was a good move, I see no good reason to undo that.)

401k account (60% of total portfolio)
20%, U.S. EQUITY INDEX (Russell 3000 Index, a total U.S. stock market index) ER 0.02%
05%, INTERNATIONAL EQUITY INDEX (MSCI ACWI ex-U.S. Index, developed markets only) ER 0.04%
35%, FIXED INCOME INDEX (Bloomberg Barclays U.S. Aggregate Bond Index) ER 0.02%

Roth IRA @ Fidelity (18% of total portfolio)
08%, Fidelity® Total Market Index Fund (FSKAX) ER 0.015%
10%, Fidelity® Total International Index Fund (FTIHX) ER 0.06%


Rebalancing.
Because the funds will grow at different and unpredictable rates you will need to rebalance every few years in order to maintain your desired asset allocation.

Wiki article Rebalancing.

Simply adjust by exchanging between funds inside your 401k account. Don't adjust by exchanging between funds inside the taxable brokerage account, that would create unnecessary income tax liability.


Education.
To quickly educate yourself I suggest that you read the wiki article Bogleheads® investment philosophy, and Dr. Bernstein's short free pdf book "If You Can".

I suggest you also read one or two other good books on investing. Wiki article Book recommendations and reviews.

. . . . .

I hope that this helps.

If you have any questions just ask.

Ask in this thread, to keep everything together in one place.

Edits for grammar, punctuation and spelling.
thank you for all your information (I'm not sure if I am quoting this post correctly)

responses:
Thank you for lettting me know to keep it all in this thread, I hope it is not confusing-seems like it is getting too long and I don't want to overwhelm people who are reading through this war and peace post. I have read-JLcollins, chosse FI and a boat load of youtubes.... If I should do something different, can someone please let me know. thank you all for your time and suggestions, I would like one day also to be able to contribute!
Last edited by newinvesting2021 on Tue Sep 28, 2021 8:27 pm, edited 2 times in total.
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ruralavalon
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Re: Portfolio/Investing help please

Post by ruralavalon »

newinvesting2021 wrote: Wed Sep 22, 2021 10:32 amYes I did make the transfer from my FZROX to FXAIX in my individual brokerage account.
I also have 200K cash to invest in my individual account? put that all in FXAIX also?
Yes.

That will change the percentage of the overall portfolio which is in each account, and xo you need adjust the example I gave to reflect that.


newinvesting2021 wrote: Wed Sep 22, 2021 10:32 am Thank you for lettting me know to keep it all in this thread, I hope it is not confusing-seems like it is getting too long and I don't want to overwhelm people who are reading through this war and peace post. I have read-JLcollins, chosse FI and a boat load of youtubes.... If I should do something different, can someone please let me know. thank you all for your time and suggestions, I would like one day also to be able to contribute!
Don't do investing research on YouTube, Facebook or similar websites. JL Collins is a good resource. Anything by Mr. Bogle is a good resource.

Its unusually best to coordinate the investments over all accounts treating all accounts together as a single unified portfolio, rather than treat each account separately. That's why it's best to keep everything together a single discussion even if it becomes lenghty.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Re: Portfolio/Investing help please

Post by newinvesting2021 »

ruralavalon wrote: Wed Sep 22, 2021 10:45 am
newinvesting2021 wrote: Wed Sep 22, 2021 10:32 amYes I did make the transfer from my FZROX to FXAIX in my individual brokerage account.
I also have 200K cash to invest in my individual account? put that all in FXAIX also?
Yes.

That will change the percentage of the overall portfolio which is in each account, and xo you need adjust the example I gave to reflect that.


newinvesting2021 wrote: Wed Sep 22, 2021 10:32 am Thank you for lettting me know to keep it all in this thread, I hope it is not confusing-seems like it is getting too long and I don't want to overwhelm people who are reading through this war and peace post. I have read-JLcollins, chosse FI and a boat load of youtubes.... If I should do something different, can someone please let me know. thank you all for your time and suggestions, I would like one day also to be able to contribute!
Don't do investing research on YouTube, Facebook or similar websites. JL Collins is a good resource. Anything by Mr. Bogle is a good resource.

Its unusually best to coordinate the investments over all accounts treating all accounts together as a single unified portfolio, rather than treat each account separately. That's why it's best to keep everything together a single discussion even if it becomes lenghty.
thank you again ruralavalon! and everyone else who helped me. I will me moving a lot of money around in the next couple of months (401k to roth ira, yearly to spend down, cash to brokerage account and selling off most of my Roth ira funds to invest in an index fund)...Sorry if this is so long, I do appreciate everyone's help, it's nice to know I'm not alone in this!
Last edited by newinvesting2021 on Thu Sep 23, 2021 1:59 pm, edited 1 time in total.
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Re: Portfolio/Investing help please

Post by ruralavalon »

Taxable at Fidelity
. . . . .
13% cash (200k)
I was wrong in my last post. Investing the $200k cash in the taxable account will not change the percentages of the overall portfolio that are in each account. Its already included.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Re: Portfolio/Investing help please

Post by newinvesting2021 »

ruralavalon wrote: Wed Sep 22, 2021 5:08 pm
Taxable at Fidelity
. . . . .
13% cash (200k)
I was wrong in my last post. Investing the $200k cash in the taxable account will not change the percentages of the overall portfolio that are in each account. Its already included.
Thank you ruralavalon! kind of you to take the time to reply to me....again.....I so appreciate it. I am reading choose FI blog, so exciting! So glad I found this site, such great people who give of their time to help others. I'm going to read jlcollins again, a few chapters in there had a lot of info! have a great day!
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Re: Portfolio/Investing help please

Post by newinvesting2021 »

ruralavalon wrote: Mon Sep 20, 2021 10:03 am
Questions:
1. for my indivual fidelity account where could I put the cash I have to invest, . . .
Fidelity Total Market Index (FSKAX) (0.015%) OR Fidelity 500 Index Fund (FXAIX) (0.015%).


Thank you! Will FXAIX have more capitol gains distributions in a taxable acccount?
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Re: Portfolio/Investing help please

Post by ruralavalon »

newinvesting2021 wrote: Thu Sep 23, 2021 10:06 pm
ruralavalon wrote: Mon Sep 20, 2021 10:03 am
Questions:
1. for my indivual fidelity account where could I put the cash I have to invest, . . .
Fidelity Total Market Index (FSKAX) (0.015%) OR Fidelity 500 Index Fund (FXAIX) (0.015%).


Thank you! Will FXAIX have more capitol gains distributions in a taxable acccount?
You can look up the history of distributions on the Fidelity website for Fidelity® 500 Index Fund (FXAIX).

I just searched for "FXAIX distributions" .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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newinvesting2021
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Re: Portfolio/Investing help please

Post by newinvesting2021 »

ruralavalon wrote: Fri Sep 24, 2021 6:39 am You can look up the history of distributions on the Fidelity website for Fidelity® 500 Index Fund (FXAIX).

I just searched for "FXAIX distributions" .
[ quote fixed by admin LadyGeek]

Thank you again for all your help!
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