Retirement-Era |OT| How to Invest For Retirement

FliXFantatier

Master of the Reality Stone
Avenger
Oct 25, 2017
3,357
Los Angeles
So earlier in this thread (probably a few months ago), I asked the question on whether I should switch from my retirement target account (.05% expense ratio) to an alternative fund that was generating better returns (spare me the lecture - I know that past returns don't guarantee future performance!)

Well... I just realized today that my 401K has FXAIX (the Fidelity S&P 500 index) as an option. Now I swear that this was not an option before (or I really just completely missed out on it?).

Any thoughts on selling all of my existing positions and allocating the majority to this fund? I would also need to confirm the int'l funds/US bonds they have available. It's likely I'd be investing this for another 20 to 35+ years (I want early retirement to be an option for me if I decide which my target retirement date fund probably won't align with from an allocation standpoint).
As I am also on the FIRE train, target date funds don't work for me. You can definitely do worse thatn FXAIX, I have that one in my mix too. :)
 

reKon

Member
Oct 25, 2017
3,909
As I am also on the FIRE train, target date funds don't work for me. You can definitely do worse thatn FXAIX, I have that one in my mix too. :)
The only thing here is that I want to make sure that down the road, I don't mess up the process of my portfolio allocation as I near my retirement. I've had a separate ROTH IRA account that I will need to properly manage the same way anyways. I guess I won't be sure until I know whether early retirement is a sure thing. It will depend on a ton of factors, but for me I think it would most likely be at age 50 to 55 which is 20 to 25 years from now for me.

I'm really just trying to work towards getting my retirement accounts to a level for which if I drastically decreased contributions in 3 years, the balance would be still large enough to grow by its self to support my future retiement.

I'd like to enjoy my life as much as possible from 30 to 50s. This retirement account is literally just a way to survive on a fairly comfortable income in event I don't have a family that can support me.

During this period of reduced contributions, I would be focusing more on rental investment property, downpayment for my Mom's house, and other family related items.
 

Linkura

Member
Oct 25, 2017
15,296
Speaking of savings accounts, my 2.50% savings account with the local bank already went down to 2.41%. Still better than virtually anything else on the market and there's instant transfers with checking, so I'm staying put for now. If it gets below 2%, I'll start looking again.
 

reKon

Member
Oct 25, 2017
3,909
So for my 401k plan under fidelity I do have the option of the following:

Fidelity® 500 Index Fund
Vanguard Institutional Total International Stock Market Index TRUST
Vanguard Institutional Total Bond Market Index TRUST

I called Fidelity and they confirmed that I wasn't going crazy - they just started offering all these in April. I think I'm going to go with the 65% US, 25% Int'l, and 10% bond allocation on these (similar to my ROTH IRA account with fidelity).

The trust versions of the last two funds are apparently exactly the same as the fund, except the expense ratio is slightly lower.

I think I'm going to to pull the trigger today and be done with it.
 

tokkun

Member
Oct 27, 2017
1,418
So earlier in this thread (probably a few months ago), I asked the question on whether I should switch from my retirement target account (.05% expense ratio) to an alternative fund that was generating better returns (spare me the lecture - I know that past returns don't guarantee future performance!)

Well... I just realized today that my 401K has FXAIX (the Fidelity S&P 500 index) as an option. Now I swear that this was not an option before (or I really just completely missed out on it?).

Any thoughts on selling all of my existing positions and allocating the majority to this fund? I would also need to confirm the int'l funds/US bonds they have available. It's likely I'd be investing this for another 20 to 35+ years (I want early retirement to be an option for me if I decide which my target retirement date fund probably won't align with from an allocation standpoint).
Target Date funds work just fine with early retirement. Just set the retirement date to whatever matches your desire glide path for bond allocation. There can be some complications with making adjustments if it is a taxable account, but since you are talking about a 401K that isn't really an issue.

The value in going with a single-fund approach is that it creates fewer openings for making behavioral errors. Once you understand the basics, it's those behavioral errors that really hurt your returns, and they don't show up when looking at historical fund returns.
 
Oct 30, 2017
574
Reading the OP, yeah it’d be nice for me to buy ETFs, but they are all expensive. I work for Raymond James Financial, and we have a list of securities regulated in regards to what we can buy/cannot buy. Cannot hold outside brokerage accounts too.

Are mutual funds really that bad due to expense ratios? They’re cheaper per share wise and netting some great returns lately.

I don’t want to buy into the market yet due to how bad the Q3 earnings report will potentially be. Everyone is beating their 52 week highs, too.
 

reKon

Member
Oct 25, 2017
3,909
Target Date funds work just fine with early retirement. Just set the retirement date to whatever matches your desire glide path for bond allocation. There can be some complications with making adjustments if it is a taxable account, but since you are talking about a 401K that isn't really an issue.

The value in going with a single-fund approach is that it creates fewer openings for making behavioral errors. Once you understand the basics, it's those behavioral errors that really hurt your returns, and they don't show up when looking at historical fund returns.
I have already changed my election. I can always switch back down the road to a different target date if I have second thoughts. I’m still 35 to 27 years off from my “normal“ retirement
 

Blergmeister

Member
Oct 27, 2017
86
I'm looking for a High Yield Savings Account to stash my emergency fund into. Is Wealthfront safe? They offer 2.57% and FDIC insurance which... seems high?


Any thoughts on this or your experiences with high yield savings accounts?
 

reKon

Member
Oct 25, 2017
3,909
I'm looking for a High Yield Savings Account to stash my emergency fund into. Is Wealthfront safe? They offer 2.57% and FDIC insurance which... seems high?


Any thoughts on this or your experiences with high yield savings accounts?
Yep, that's what they're going for. I'd say go for it.
 

UraMallas

Member
Nov 1, 2017
2,282
Iowa
I can't seem to get a good answer to this online.

I have a 401k and a pension (401a?) that combined will go over the 19500 limit this year but won't if they are separate. So, are they separate or do I need to put less into the 401k?
 

Cyborg009

Member
Oct 28, 2017
266
So currently my money is in VANGUARD FEDERAL MONEY MARKET FUND (Settlement Fund) and I wanted to move it to something that would return more. Since I'm in my late 20's I kind of want to just dump the money somewhere and just forget about it. Someone here told me that VTSAX or VTI is a good way. Does anyone else have any other opinions ?
 

vypek

Member
Oct 25, 2017
4,046
Recently got hit by a wave of unexpected expenses while also taking care of some other things and my emergency savings have plummeted. Also recently found out that I'll need to move. I think there is unfortunately a possibility that I'll need to raid my Roth IRA to make sure I can cover a first month and security deposit for wherever I end up unless I can pull something off. Still reaaaaally hopeful I wont have to. Only just started the IRA this year. Don't want to have to essentially start all over again next year
 

Marz

Member
Oct 30, 2017
1,310
Recently got hit by a wave of unexpected expenses while also taking care of some other things and my emergency savings have plummeted. Also recently found out that I'll need to move. I think there is unfortunately a possibility that I'll need to raid my Roth IRA to make sure I can cover a first month and security deposit for wherever I end up unless I can pull something off. Still reaaaaally hopeful I wont have to. Only just started the IRA this year. Don't want to have to essentially start all over again next year
I think you can take out contributions for this year and then put them back in before april.

You can also take out contributions at any time penalty free, just not earnings. Obviously not recommended but the option is there.
 

vypek

Member
Oct 25, 2017
4,046
I think you can take out contributions for this year and then put them back in before april.

You can also take out contributions at any time penalty free, just not earnings. Obviously not recommended but the option is there.
Thank you. That's good to know should it come down to this. If it does, I think I can probably get it back in by April of next year if I really push for it. I had been under the impression that since it's a Roth that I could take out anything out at any time, including earnings. So it's great to be aware of this beforehand
 

Marz

Member
Oct 30, 2017
1,310
Thank you. That's good to know should it come down to this. If it does, I think I can probably get it back in by April of next year if I really push for it. I had been under the impression that since it's a Roth that I could take out anything out at any time, including earnings. So it's great to be aware of this beforehand
If you take out earnings before 59 1/2 you pay an early withdrawal penalty.

Exception I believe is you can take out up to 10,000 for a first time home purchase.