calling all investors: suggestions for 401k mutual fund?

[LordSnailz]

I know I know, asking for investment advice on a msg board is prob. a dumb move but this is the all knowing AT! Plus Fidelity Growth is really sucking, and I want out.

Below are my distributions, any suggestions on what fund I should invest in? Actually, I don't even think I'm doing all that well in general

50% FID CONTRAFUND
25% FID GROWTH COMPANY
13% VANG INST INDEX PLUS
12% FID GROWTH & INCOME

 

[Taggart]

Get some international exposure. I invest in Vanguard Total International Stock Index for my IRA.

 

[Slew Foot]

Contrafund is doing exceptionally well.
Go to the Fidelity Selects Sector based funds, it's pretty easy to see which funds are doing well (energy and gold)

Select energy, Natural Resources, and Gold are all up about 40% the past year.

 

[FelixDeCat]

VEXMX

 

[batchusa]

Age? Years till retirement?

 

[kranky]

Fidelity Growth is up about 7% this year alone. What are you expecting?

 

[LordSnailz]

Sorry, 27yrs old, thinking I should be some what aggressive since I'm still young with no kids.
The other reason for getting out of Fidelity Growth is because they actually closing the fund, http://news.morningstar.com/article/article.asp?id=161217&pgid=wwhome1a

Good point on energy and the international exposure ... I'll take a look at those.

Any other suggestions? Is fool.com a good place to join, it's about $150/yr

 

[kranky]

If they close the fund, it's still likely you can continue to invest. Usually funds only close to new investors, but people who already hold it can continue to buy shares. That they are closing it is not, by itself, a reason to move out of the fund.

Do some research on asset allocation.

If you go for sector funds, be prepared to get your butt kicked. It's very risky. If you are investing for retirement, avoid that strategy.

 

[Slew Foot]

Originally posted by: kranky

If you go for sector funds, be prepared to get your butt kicked. It's very risky. If you are investing for retirement, avoid that strategy.

I beg to differ on that.
Fideltiy sector funds

Out of the 40 funds, ALL are up this year, ALL are up the past 3 years, and only 2 are down over 5 years.

Edit: crap the link doesnt link correctly. CLick on mutual funds, browse Fidelity Mutual Funds, and then click Sector- Fidelity Select Portfolios. That will take you to the overview page.

 

[JacobJ]

Go to http://www.fundx.com and sign up for their free trial. Their services have been very good to me.

 

[dullard]

I see basically only large American company stocks. Heck, it is almost all large growth stocks. Where are your small stocks? Where are your foreign stocks? Where are your value stocks?

 

[Slew Foot]

Heck, Ill just screenshot it for you.

1st half
2nd half

 

[LordSnailz]

Originally posted by: dullard
I see basically only large American company stocks. Heck, it is almost all large growth stocks. Where are your small stocks? Where are your foreign stocks? Where are your value stocks?

Seriously don't know how to answer that question, basically when I graduated and started my job, I randomnly picked them and went with it.

 

[kranky]

I won't argue, but I am quite confident in saying that anyone who invests retirement money in sector funds is taking on huge, unnecessary risk.

Some people want to actively manage their investments and choose to take on that risk, and that's fine for them. It's certainly not the right solution for the vast majority of people, and it's irresponsible to recommend it to people who do not have advanced investing knowledge AND are not willing and able to spend a lot of time following markets.

I'm happy for your success, though.

 

[JS80]

if you're going to actively switch around 401k funds, go with what's hot at the moment (energy, international).

if you're just going to let it accrue for 50 years, put it in Small Cap and Mid Cap funds.

 

[spliffstar69]

Go with one good asia-pac fund high risk/return

Big things are coming for that region for the next few years In my opinion .

 

[rufruf44]

You pretty much got all your egg in one basket (US Large Cap). I know the analyst are predicting large cap to make a comeback, but they've been saying that for some time now...

 

[LordSnailz]

Originally posted by: spliffstar69
Go with one good asia-pac fund high risk/return

Big things are coming for that region for the next few years In my opinion .

Any suggestions on which ones in particular I should look/research?

I prob. going to setup a meeting with a fidelity rep. to review my portfolio, guess some of the folks on the board is thinking I should go with energy, asia-pac and large cap?

 

[dullard]

Originally posted by: LordSnailz
Seriously don't know how to answer that question, basically when I graduated and started my job, I randomnly picked them and went with it.
...
Any suggestions on which ones in particular I should look/research?

I prob. going to setup a meeting with a fidelity rep. to review my portfolio

Do set up a meeting. Then tell your rep that you have funds which cover the same stocks - mostly US large growth stocks. Tell your rep that you want to diversify (you don't want all your eggs in this one basket). Your rep should help guide you.

You have only 4 funds, but they are all roughly the same thing (so you can think of it as just 1 big fund). If that one basket falls, you've broke your entire nest egg. Instead, spread the wealth around. If you put your money in 10 places, and one fails completely, you only lost 10% of your money. As it is, if large US stocks fail completely, you'll lose everything. True, no fund will fail completely, but you get the idea.

Ask for fund recommendations that include small companies. Ask if you are diversified among value companies and growth companies. Then ask for fund recommendations that include foreign versions of those combinations (large value, large growth, small value, and small growth). That'll net you 8 funds (US and foreign of each of those categories). Make foreign stocks about half the value of your US stocks. Eight funds may be too much to start with, but eventually that should be your goal (it may take several years to reach this goal).

Once you get the main stock categories filled, then you can move on. Ask for a bond fund (don't put too much in this yet).

Then once that is good, move on to the little things: have a little real estate (REIT) a little bit of commodities (gold, oil, etc). Have only a small percentage (maybe 3%) of each of these. It may take you decades to reach this point. But eventually it should be your long term goal. I personally wouldn't start with these until you have the basics covered.

 

[wyvrn]

Check out Scott Burns Margarita Protfolio . It has a nice mix of domestic, international, and inflation protected security funds. There is an analysis of performance on the link.

You have to register, but it's free, and easy to use a dummy account.

 

[rufruf44]

Originally posted by: dullard

Originally posted by: LordSnailz
Seriously don't know how to answer that question, basically when I graduated and started my job, I randomnly picked them and went with it.
...
Any suggestions on which ones in particular I should look/research?

I prob. going to setup a meeting with a fidelity rep. to review my portfolio

Do set up a meeting. Then tell your rep that you have funds which cover the same stocks - mostly US large growth stocks. Tell your rep that you want to diversify (you don't want all your eggs in this one basket). Your rep should help guide you.

You have only 4 funds, but they are all roughly the same thing (so you can think of it as just 1 big fund). If that one basket falls, you've broke your entire nest egg. Instead, spread the wealth around. If you put your money in 10 places, and one fails completely, you only lost 10% of your money. As it is, if large US stocks fail completely, you'll lose everything. True, no fund will fail completely, but you get the idea.

Ask for fund recommendations that include small companies. Ask if you are diversified among value companies and growth companies. Then ask for fund recommendations that include foreign versions of those combinations (large value, large growth, small value, and small growth). That'll net you 8 funds (US and foreign of each of those categories). Make foreign stocks about half the value of your US stocks. Eight funds may be too much to start with, but eventually that should be your goal (it may take several years to reach this goal).

Once you get the main stock categories filled, then you can move on. Ask for a bond fund (don't put too much in this yet).

Then once that is good, move on to the little things: have a little real estate (REIT) a little bit of commodities (gold, oil, etc). Have only a small percentage (maybe 3%) of each of these. It may take you decades to reach this point. But eventually it should be your long term goal. I personally wouldn't start with these until you have the basics covered.

If the main goal is balanced diversification, why not just go get one of those Fidelity Freedom/Vanguard Lifecycle funds? One fund portfolio that covers all.

 

[dullard]

Originally posted by: rufruf44
If the main goal is balanced diversification, why not just go get one of those Fidelity Freedom/Vanguard Lifecycle funds? One fund portfolio that covers all.

Their defintion of diversification may not meet yours. I just clicked on the first Fidelity Freedom Fund I saw, FFFFX. Then I put it into Morningstar's X-Ray. Results:
[*]78.6% US and Canada stocks, 21.4% other. Historically, a 66%/34% ratio has performed much better.
[*]Growth dominated Value nearly 2:1. Historically, you did much better with a more even mix.
[*]Large to small ratio is nearly 20:1. Historically, you did much better with a much more even mix.
True, historical pasts may never be repeated.

Other reasons
[*]$2500 minimum - difficult to do when you are just starting.
[*]Lack of timing. For example if you know you want into gold eventually, maybe now is not the best time to buy in at >$600/oz. Wait until the price plummets then get in.
[*]Lack of rebalancing ability. If you personally to rebalance, you can't if you just have one fund. Rebalancing properly gives you a substantial gain without any knowledge needed.

Hey, they are good funds if you want no involvement at all. But with just a little work on your own part, you could do better for your personal needs. One sledgehammer doesn't work for all tasks.

 

[Engineer]

Do you have access to Fidelity Diversified International? If so, it's been solid for several years now (up over 11% so far year to date).

Also, I personally think Fidelity Growth has been solid to say the least.