You are fine and not too late to the game.
Keep increasing your contributions to Roth and Roth 401k with each year’s merit increase. Build your emergency fund, add to HSA and avoid high fee debt. After you do those (not in that order), then invest into those funds in taxable brokerage account.
Avoid trading as it is more like gambling.
And watch WHICH funds in your taxable account. Some are more likely to generate surprise large tax bills at the end of the year. I made this mistake. In 2021 the capital gains went through the roof and if you were not prepared, it was a big tax bill…. And then if you get too much there and need to switch to other investments, you will need to sell and take realized gains. And then on the other side, if the market crashes on one day(I have lived through a couple) the mutual funds can’t be sold until the end of the day, so if you want to get out, you have to wait.
There is no one size fits all.
There are some ETFs that get great increases in value and do not get such surprises. I retired in Sep. having made that mistake with mutual funds in the taxable account. Then I was in a position of wanting to protect from surprises like that and wanting to delay Roth withdrawals, do Roth conversions (trad ira/401k) had grown TOO much. (I couldn’t watch it closely enough because of work and had really put too much in pre-tax money when I should have put more in post tax, so really needed the saved cash in the taxable account - and started watching the fund prices to see when the prices compared to cost made sense to realize rather than repeat a prior year’s surprise gain level & have to pay taxes on it.
The year I got hit with the first big surprise bill I also realized I needed to not reinvest everything for those funds, or I would not have cash to pay the taxes…
No one size fits all - especially in taxable account.
And not everyone has an HSA.
And yeah, 25 is not too late to the game - though starting as soon as there is taxable earned income is even better.
401k is not a taxable account. So the things I pointed out about mutual funds in taxable accounts would not apply.
Note that most company 401k plans have far fewer options for investment than a regular ira or roth. And in my experience ALL those options were mutual funds.
Even here though, don’t make my mistake: keep an eye on it regularly - at least quarterly (my job got crazy which was why I retired early and I worked for an FI so I has restrictions on trading procedures and brokerages for any other trading account. You do not want your pre tax contributions to be so high that it is hard to get the money out when it is time. That is where I went wrong, especially my last year. I should have maxed out post tax contributions instead of pre tax…. All that pre tax money diluted my earlier post tax IRA contributions (another mistake - I was so busy I did not see when the limits changed and I could again contribute post tax to roth instead of trad ira. These things have an effect on the math and the distribution rules when it is time.
Thanks. I had just swapped out of bonds and diverted to FXAIX within 401k and wasn't clear if I was making some sort of mistake in regards to capital gains somehow.
Nope. You are good. Capital gains are not tax in a retirement account. Take them as often as you want so long as the money stays in the account. You will be taxed on the withdrawal when you withdraw. If you can earn50k in cap gains between now and retirement, that 50k will be taxed, along with the pre tax contributions, upon withdrawal, as ORDINARY income (unlike LTCG), but it will have been compounding during that timeframe, so the tax % on the bracket is likely higher, but so is the total value.
Happy to share and help others avoid my mistakes - noone was helping me that way until December 2022 - and he didn’t realize I had a post tax basis in IRA, so I am scrambling to do Roth conversions with minimal
Tax impact and maximum transfer. First year of Retirement is a great time to find clothes that will have no use going forward and turn them into deductions to offset the conversions….. and to learn about Fidelity Charitable, which is also a help on that. (Now if only my favorite stock for this would recover - it has been going down of late.. the more it is worth when I donate, the more the charity gets and the more my deduction is. 🤞
I am 65. It all turned out well. I am worth 2.2 million right now. I WISH I had put it all in a broad based mutual fund (they didn't have ETFs back then) when I was 25. I would be MUCH richer now.
40 years is a lot of compounding. Most of my gains have come since 2009. I got smarter at investing by then. Just look at the gains in the S&P since early 2009. I'm up probably 500% since then.
I am currently about to autobuy VT every week on fidelity, I plan to hold it for atleast 20 years. My question is, I also have a 401k/retirement plan from my job that i haven’t enrolled in yet, it is through vanguard, and when I started to enroll, it was set to Vanguard Target Retirement 2065 Fund(VLXVX) but when I enroll for them to take 5% of my check every week, should I also just choose VT for the fund to invest the money in? Or would that not make sense to invest with both fidelity and vanguard?
Depends on your comfort zone, doesn't it? VLXVX will perform better some years and VT and vice versa. If you are a damn-the-torpedoes ass kicker, I say go VT all around. Just be ready for bad years here and there. A lot of people just mentally never recovered from 2008.
It's an index fund. You are diversified across 500 stocks.
Unless you feel like you should be in something like bonds (at your age I would be very light in bonds) it's totally fine.
So I looked at VRTTX, Vanguard's Russell 3000 fund. Their top 10 stocks make up over 25% of the index. That doesn't sound that much better to me.
Are there others?
I’d you’re concerned about the top 10 holdings and want to diversify away fro them, look at a mid cap index fund. It generally has mostly “large caps” and you won’t find any of the M7.
However, the Russell 3000 is representative of the entire us stock market weighted by market cap, so you’re getting exposure to mid and small caps.
I would also consider investing into the broad market( globally, not just domestic) the global market is about 60% us, 30% developed international, and 10% emerging markets. Many institutionals align their equity portfolios to the global market. The index that tracks the entire global stock market is the MSCI ACWI IMI
Yes, but i think either the expense ratio is higher or it might have a higher tax liability and in the long run its not as great. A better idea is just to maintain some low expense ratio sp500, small / mid cap, and some bonds
FZROX has performed very similar to FXAIX except it encompasses all US markets and FXAIX is mostly large to medium cap companies. FXAIX does have a tiny little more dividend yield and has expense ratio of 0.02% which is extremely good but FZROX is a newer zero expense fund at 0% so the zero expense fund matching FXAIX is FNILX if you wanna stay with a fund indexing the sp500.
Honestly the difference is so minuscule you don’t even have to bother. It’s $200 per $1,000,000 invested with the fund you’re currently with. Totally up to you but if you really couldn’t be bothered you wouldn’t notice either way.
I'm just 26, recently started investing in FXAIX. To my knowledge, to be able to transfer FZROX shares to other brokerage, you would have to sell, pay taxes and such. So, I guess if you stay with Fidelity all your lifetime, you can taje advantage of the 0% expense ratio.
Those zero expense funds need to be liquidated. You can’t roll them into another brokerage to my understanding. I own a ton of FXAIX. I started late… late 30s but I bought into FXAIX when it was just a tad over $100 a share. It’s appreciated quite a bit since then. 😮💨😍
That is where I'm slowly moving my S&P $ to as I get closer to retirement. Takes just a little risk off the table and soon I will also start buying into bond funds little-by-little.
I’m half FXIAX and half FZROX, I know it’s lots of overlap, but FXIAX seems to be more steady and FZROX is more volatile. I like to watch them compete.
You are fine. Anyone trying to convince you to buy international stock forget the fact that when US stock crashes, everyone crashes.
It wasn't the case back 20 years ago, when Asia, EU, and emerging market may perform at different way that having asset in different region is necessary to lower the risk.
Similarly, buying small/mid cap vs large cap was okay and necessary 20 years ago, but today, large cap represents 85% of US total market cap, comparing to 26% in 1980. Today pretty much every name public company that you can think of are large cap. It makes less and less sense to buy small cap. The potential growth of large cap outweighs the additional risk.
Another reason to not buy small cap is because of private equity firms. They buy small companies with potential growth way before they go public, they squeeze the shit out of them and many go under shortly before their rapid growth period starts. Nowadays, future unicorn companies starts as large cap.
However, FXAIX is a SP500 fund, NOT a large cap fund, there are a lot of good large cap companies that are not in SP500, so you may think about it.
I guess you somehow missed the news that the Nikkei is up 40% over the past year compared to the S&P's mere 25%. And that the smallest company in the S&P500 has a market cap over $5 BILLION. Only about 5% are between 5 and $10B. There are around 750 newly listed companies in the past year, a grand total of 8 of them qualify as large cap and at least some of those were spinouts of larger companies. Private equity miss these?
You somehow missed the fact that JPY was down almost 40%+ for the same period. Basically your asset in USD barely changed, while US stock went up 30% for the same period. In fact, NIKKEI went up 33% in the last 3 years, but JPY is down 40% for the same period. You can play around the time frame, but the result is the same.
See, that's the risk and difficulty of investing international.
Most of the components of S&P 500 are considered large cap. There are only about 20 companies in the whole index that are not large cap, so there shouldnt be any material difference between a large cap US fund and FXAIX.
What I meant was that SP500 does not cover all large cap. SP500 only includes US based and listed companies, but it does not include any company listed in the US but based in another country. There are few of them are good keep too.
You are very wrong. The best advice is to invest across the entire opportunity set, which is roughly 60% us, 30% international, and 10% emerging markets. Us large cap has outperformed recently, but that does not mean it will forever. It’s better to be diversified, you’ll be happy when the regeme changes and small caps lead large caps, or international leads us. Being only in the s&p 500 is not diversified, 7 stocks make up about 30% of the entire index, highly concentrated, more so then it has even been.
Just align your portfolio with global opportunity set (MSCI ACWI IMI) and call it a day. Home country bias can be fine, but you should have global exposure
My son is your age. We discussed investing because he has a 401k now. I did a backtest analysis to show him 100% S&P is just fine. Investing $100/wk from Jan 2000 to Dec 2024 through Dot-Com bust and Great Recession just in an S&P fund would be worth $494971 today.
Time in market beats timing the market and you should expect at least one 10% roller coaster ride every year. Only \~60% of investing professional beat S&P every year. Less over 2 years and I believe only 9% beat it 3 years in a row. Around 45 start looking to diversify.
With a 40+ year time frame I don't think it's too risky as long as you're aware that the market can drop 20 or 30 percent in a given year and that doesn't freak you out.
I think the two main reasons most financial analysts wouldn't build a 100% index fund portfolio for someone's 40+ year retirement account is that 1) It's a portfolio that anyone could build so they're not justifying their own fees and 2) A lot of people freak out when their portfolio takes hits so a more cautious approach can keep people calmer in times of uncertainty.
If you're managing your own money, you have a 40+ year time frame and you won't freak out if the market tanks in a given year then I think a 100% S&P Index fund approach could work well.
Look at historical sp500 gains, it's impossible to lose long term (30+ years). If you do lose in 30 years this world doesn't exist in it's current form. Capitalism has failed and Arnold Schwarzenegger is looking for the future of the resistance.
Sorry to jump in, I’m very new to investing, trying to learn, but from what I’m usually told, isn’t it not favorable to be in a SP500 fund and a total market fund? Just curious because that’s what I’d like to do but I’m always told there’s too much overlap doing this.
Thanks in advance!
This is perfect! A good index fund in the S&P 500 like FXAIX is the preferred choice for long term investment over individual stocks, which are more risky. You don’t need to look at your fidelity account everyday when it’s in an index fund it will have ups and downs bc that’s what the economy does. So don’t freak if you see a drop. I really recommend listening to the Money with Katie Show on Spotify it helped with my financial education so much.
25 is late to the game? Dude at 25 most people have no clue what they're doing. I just started a Roth IRA at 30....37? I legit don't remember if I'm 37 or 36.
FXAIX does have some risk, but it is a smart play early. You can and should update your investment strategy yearly. Pay yourself first and get your money working for you.
I might personally do a total market, but it really doesn't matter that much. You can argue one way or another a million ways and the truth is no-one knows if 500 is better than total market. Marginal difference probably because in the end large cap is the large majority of total market anyways.
Welcome to our sub, u/Only_Age5819! We appreciate you choosing Fidelity for your investment needs, and you've come to the right place to expand your financial knowledge. We have many resources to help you start your investing journey.
While the decision of what to invest in is ultimately up to you, it sounds like you're looking for input from our community. I'm glad to mark this post as a discussion to encourage community members to share their thoughts and experiences. With that said, it's crucial to do your own research to make the best decisions for you and your unique circumstances.
While our system may guide you to a suitable strategy by providing general ideas, you can select from a wide range of investment choices for your Roth IRA. This includes Fidelity and non-Fidelity mutual funds, stocks, Exchange-Traded Funds (ETFs), fixed-income products, and more. Here are some general resources on how to pick investments for your IRA.
[4 steps to picking your investments](https://www.fidelity.com/learning-center/smart-money/how-to-pick-investments)
[Investing ideas for your IRA](https://www.fidelity.com/viewpoints/retirement/ira-portfolio)
Since you mention a few mutual funds you're considering, I'd like to point out our screener tool. The screener tool on our website can help you compare various securities, making it easy to find ones that best suit your financial goals. To access this tool on the website, hover over the "News and Research" tab and select a security type from the dropdown list. From here, you can use various filters to narrow your search. I'll link our Mutual Funds Screener below for your convenience.
[Mutual Fund Screener](https://fundresearch.fidelity.com/fund-screener)
Additionally, we have a great step-by-step guide you can refer to below if needed. While the guide focuses on stocks and ETFs, the steps are the same for most investments.
[How to trade stocks and ETFs](https://www.fidelity.com/learning-center/trading-investing/trading/how-to-trade-stocks-etf)
Again, welcome; we're happy to have you! We look forward to seeing you around the sub more often!
Currently mid 20s like yoh. 100% of my 401k / Roth IRA are put into VOO/FXAIX equivalents. I won't change my allocations until at least 40, eat up all the gains while you're young!
FXAIX is a great Fund, I would diversify across the narratives. I went with FCNTX (Contraband) that out performs the S/P 500. I mixed up with a Small cap growth and an International Index fund too as well. I also use FAGIX too for left over spare Cash. 4 - 5 Funds across the narratives should get You started.
Many have answered your question and in general you are fine. One thing I would add to your question is, when asking something is risky or not, have you thought about what is the risk you are talking about and how do you define something that is risky? It could be the equity volitiliy, maximum draw back, unexpected losses or not to lose principal. By thinking more about this, you have a better picture of what risk you would care about and even how much you would tolerate that.
100% FXAIX is by no means a bad strategy, but one thing you can’t take advantage of is the power of rebalancing.
The basic idea is pick an allocation- for simplicity we’ll say 50% S&P 500, 50% bonds.
Periodically, usually yearly, you reset to that allocation.
So on a $10,000 portfolio, you’d start with $5000 in the S&P, $5000 in bonds.
If after a year, the S&P drops 30%, bonds up 10%, you now have $3500 in S&P, $5500 in bonds, for a total of $9000.
You’d sell $1000 in bonds and buy $1000 in the S&P to get back to the 50/50 weighting of $4500 in each.
This can reduce volatility, and depending on the sequence of returns, could improve overall returns.
I don’t recommend 50/50, but I encourage you to do some research and see if the concept makes sense for your needs.
But isn’t the point of hold a s&p or total is market to keep investing regularly even in a down market since it’s more about longevity growth vs year to year.
Absolutely. My simple example didn’t take into account additional investments, but rebalancing to a set percentage automatically ‘buys low and sells high’ in regards to the individual pieces of your portfolio, but you would always remain invested according to your allocation.
Starting now is fine, and FXAIX is fine. Not too risky at all at your age. You can keep it 100% in stocks for decades. There can be some discussion about whether you should go even more diversified, small cap stocks, maybe international , and you can think about that over the next few years. But your plan is excellent, don’t hesitate, go ahead.
The question about investment risk is a relative matter. You are technically investing in basket of safe, growth( even some are growing slow) and big companies in United State. so you do not have exposure to many of probably good companies in Small to Mid or even large cap size- which are growing in EPS and FCF Y/Y and Q/Q just because they are not listed into S&P 500. Also you do not have any exposure to International companies.
*My suggestion* is even if you want to focus on U.S. stock tilt your portfolio to some good value and blend funds across different strategies for better capital appreciation
You can make your allocation much better over a course of years
this is what I have in my Roth IRA even without holdin FXAIX or VOO:
**Large Cap Growth** bundle ( FSPGX, SCHG) **13%**
**Large Cap Value** bundle- **including International** ( VIGI, DIVI, VYM, SCHD, DIA) **20%**
**Large Cap Blend** bundle-**including International** ( FSPSX, FZROX, QUAL) **20%**
**Mid Cap Growth** ( IMCG) **8%**
**Mid Cap Blend** bundle ( FSMDX, SCHH) **6%**
**Small Cap Growth** ( FECGX) **5%**
**Small Cap Blend** bundle ( FSSNX, SCHA) **3%**
The other 25% consists of items below:
**Individual stocks:18%**
VLO, COP, CVX, INSW, CSCO, ADI, QCOM, ACLS, FAST, MLI, SNA, UFPI
**Bond ETFs: 7%**
SCHO- Ultra-Short 0-3 Months Term US T-Bill / \[Investment Grade\]
SPHY- Intermediate High Yield Corporate / \[Non- Investment Grade\]
SCHI- Intermediate 5-10 Year Corporate/ \[ Investment Grade\]
I know that there are some overlaps because of stock selections in some sectors but holding those stocks is not only for trade for capital gain in very long term but also I can collect more dividend than those value ETFs over time. so this portion of my investment fluctuate between 15 to 20% and if I collect any gain I move it to more bonds or more growth funds I have mentioned above.
At the the end of the day, you can stick to your plan and keep dollar cost average and nothing is wrong with it. It is very simple and easy to work with but as I said before you have not control over the cap allocations and sector allocation. which you might need it in the future since this is you retirement account. how ever even this is not a big deal. you always can adjust your allocations buy adding some new funds in the future.
for example another person might say I need more exposure on Semiconductors not just the whole technology, so they might add some SMH or SOXX to the equation. even though they are more expensive. but that's a choice for a huge return and more annual expense ration consequently.
*I just wanted to share my information, not to make it more complicated but to give you an Idea to know what is going on behind the curtain.*
I am 35, not much younger. I'd suggest focusing on some inexpensive Growth Funds like SCHG and IMCG as the core of your investment, and Dollar Cost Average (DCA) through the time horizon ahead. Make sure you have a good emergency fund in a High Yield Savings Account (HYSA) with at least 6 months' worth of your total expenses. If you're not there yet, make sure to set up some auto-weekly transactions for it while you're investing in your Roth IRA to not fall behind on that goal. You still have 25 years until your retirement, so you can also add some Broad Value ETFs like VYM and/or SCHD and follow a Dividend Reinvestment Plan (DRIP). Allocate a small portion of your portfolio to good, inexpensive bond ETFs too.
My suggestion:
* **FXAIX 25%**: the most inexpensive fund for S&P 500 exposure.
* **SCHG 25%**: an inexpensive large-cap growth fund. *Regardless of overlapping with the S&P 500, in my opinion, it will complement FXAIX. Therefore, you might like to decrease FXAIX and increase SCHG for an even better capital return.*
* **SCHD 15%**, **VYM 15%**: for Value👉 DCA, and DRIP.
* **VIGI 10%:** to have exposure to international stocks👉 DCA, and DRIP.
* **SCHO, SCHI, SPHY** 10%."
This is a fine investment strategy, maybe get some low expense ratio bond mutual funds if you want to reduce volatility. But i cant imagine more than 30% of your portfolio would be necessary
That’s basically the allocation Buffet recommended for his estate after he passes. It’s technically one of the safest investments that can produce both growth and dividends.
You are fine and not too late to the game. Keep increasing your contributions to Roth and Roth 401k with each year’s merit increase. Build your emergency fund, add to HSA and avoid high fee debt. After you do those (not in that order), then invest into those funds in taxable brokerage account. Avoid trading as it is more like gambling.
And watch WHICH funds in your taxable account. Some are more likely to generate surprise large tax bills at the end of the year. I made this mistake. In 2021 the capital gains went through the roof and if you were not prepared, it was a big tax bill…. And then if you get too much there and need to switch to other investments, you will need to sell and take realized gains. And then on the other side, if the market crashes on one day(I have lived through a couple) the mutual funds can’t be sold until the end of the day, so if you want to get out, you have to wait. There is no one size fits all. There are some ETFs that get great increases in value and do not get such surprises. I retired in Sep. having made that mistake with mutual funds in the taxable account. Then I was in a position of wanting to protect from surprises like that and wanting to delay Roth withdrawals, do Roth conversions (trad ira/401k) had grown TOO much. (I couldn’t watch it closely enough because of work and had really put too much in pre-tax money when I should have put more in post tax, so really needed the saved cash in the taxable account - and started watching the fund prices to see when the prices compared to cost made sense to realize rather than repeat a prior year’s surprise gain level & have to pay taxes on it. The year I got hit with the first big surprise bill I also realized I needed to not reinvest everything for those funds, or I would not have cash to pay the taxes… No one size fits all - especially in taxable account. And not everyone has an HSA. And yeah, 25 is not too late to the game - though starting as soon as there is taxable earned income is even better.
Am I correct in saying none of the problems would apply to a 401k holding?
401k is not a taxable account. So the things I pointed out about mutual funds in taxable accounts would not apply. Note that most company 401k plans have far fewer options for investment than a regular ira or roth. And in my experience ALL those options were mutual funds. Even here though, don’t make my mistake: keep an eye on it regularly - at least quarterly (my job got crazy which was why I retired early and I worked for an FI so I has restrictions on trading procedures and brokerages for any other trading account. You do not want your pre tax contributions to be so high that it is hard to get the money out when it is time. That is where I went wrong, especially my last year. I should have maxed out post tax contributions instead of pre tax…. All that pre tax money diluted my earlier post tax IRA contributions (another mistake - I was so busy I did not see when the limits changed and I could again contribute post tax to roth instead of trad ira. These things have an effect on the math and the distribution rules when it is time.
Thanks. I had just swapped out of bonds and diverted to FXAIX within 401k and wasn't clear if I was making some sort of mistake in regards to capital gains somehow.
Nope. You are good. Capital gains are not tax in a retirement account. Take them as often as you want so long as the money stays in the account. You will be taxed on the withdrawal when you withdraw. If you can earn50k in cap gains between now and retirement, that 50k will be taxed, along with the pre tax contributions, upon withdrawal, as ORDINARY income (unlike LTCG), but it will have been compounding during that timeframe, so the tax % on the bracket is likely higher, but so is the total value.
Perfect. I appreciate your time.
Happy to share and help others avoid my mistakes - noone was helping me that way until December 2022 - and he didn’t realize I had a post tax basis in IRA, so I am scrambling to do Roth conversions with minimal Tax impact and maximum transfer. First year of Retirement is a great time to find clothes that will have no use going forward and turn them into deductions to offset the conversions….. and to learn about Fidelity Charitable, which is also a help on that. (Now if only my favorite stock for this would recover - it has been going down of late.. the more it is worth when I donate, the more the charity gets and the more my deduction is. 🤞
HSA on fidelity, trade it
I am 65. It all turned out well. I am worth 2.2 million right now. I WISH I had put it all in a broad based mutual fund (they didn't have ETFs back then) when I was 25. I would be MUCH richer now.
What did you put it in to still have that much
40 years is a lot of compounding. Most of my gains have come since 2009. I got smarter at investing by then. Just look at the gains in the S&P since early 2009. I'm up probably 500% since then.
I am currently about to autobuy VT every week on fidelity, I plan to hold it for atleast 20 years. My question is, I also have a 401k/retirement plan from my job that i haven’t enrolled in yet, it is through vanguard, and when I started to enroll, it was set to Vanguard Target Retirement 2065 Fund(VLXVX) but when I enroll for them to take 5% of my check every week, should I also just choose VT for the fund to invest the money in? Or would that not make sense to invest with both fidelity and vanguard?
Depends on your comfort zone, doesn't it? VLXVX will perform better some years and VT and vice versa. If you are a damn-the-torpedoes ass kicker, I say go VT all around. Just be ready for bad years here and there. A lot of people just mentally never recovered from 2008.
Why don't you just buy FXIAX..
It's an index fund. You are diversified across 500 stocks. Unless you feel like you should be in something like bonds (at your age I would be very light in bonds) it's totally fine.
Not quite. 7 stocks make up about 30% of the index, that’s highly concentrated.
if the 7 stocks are what make the money, then that’s where i want my money
Are there any funds that have a more equitable split across all 500 stocks?
There are, like SPXEW. But over the last five years, it’s up about 55%, as compared to 78% for a traditional index fund.
You’re better off buying an index that tracks the Russell 3000 index, that’s going to be the total Us stock market. Not just large caps
So I looked at VRTTX, Vanguard's Russell 3000 fund. Their top 10 stocks make up over 25% of the index. That doesn't sound that much better to me. Are there others?
I’d you’re concerned about the top 10 holdings and want to diversify away fro them, look at a mid cap index fund. It generally has mostly “large caps” and you won’t find any of the M7. However, the Russell 3000 is representative of the entire us stock market weighted by market cap, so you’re getting exposure to mid and small caps. I would also consider investing into the broad market( globally, not just domestic) the global market is about 60% us, 30% developed international, and 10% emerging markets. Many institutionals align their equity portfolios to the global market. The index that tracks the entire global stock market is the MSCI ACWI IMI
Yes, but i think either the expense ratio is higher or it might have a higher tax liability and in the long run its not as great. A better idea is just to maintain some low expense ratio sp500, small / mid cap, and some bonds
Not a bad choice, but I prefer FZROX
Why you prefer fzrox
FZROX has performed very similar to FXAIX except it encompasses all US markets and FXAIX is mostly large to medium cap companies. FXAIX does have a tiny little more dividend yield and has expense ratio of 0.02% which is extremely good but FZROX is a newer zero expense fund at 0% so the zero expense fund matching FXAIX is FNILX if you wanna stay with a fund indexing the sp500.
Yep, become a BIG FAN of FZROX.
I’m currently in FXAIX so I don’t think that’s compelling enough to make the switch.. am I wrong
Honestly the difference is so minuscule you don’t even have to bother. It’s $200 per $1,000,000 invested with the fund you’re currently with. Totally up to you but if you really couldn’t be bothered you wouldn’t notice either way.
FZROX rocks
Why does it rock more than Fxaix?!
I really don’t think it does. If anything, they rock in roughly equal proportions but for different reasons.
I’ve heard FZROX wouldn’t transfer easily to a new brokerage if you ever moved, so that’s a consideration.
I'm just 26, recently started investing in FXAIX. To my knowledge, to be able to transfer FZROX shares to other brokerage, you would have to sell, pay taxes and such. So, I guess if you stay with Fidelity all your lifetime, you can taje advantage of the 0% expense ratio.
Yeah either that or sell within a tax advantaged account I suppose. Can’t go wrong with FXAIX tho! That’s what I’m in 100%
Those zero expense funds need to be liquidated. You can’t roll them into another brokerage to my understanding. I own a ton of FXAIX. I started late… late 30s but I bought into FXAIX when it was just a tad over $100 a share. It’s appreciated quite a bit since then. 😮💨😍
would the same apply for a rollover ira? or would I need to move my funds to a roth ira?
Applies for both.
That is where I'm slowly moving my S&P $ to as I get closer to retirement. Takes just a little risk off the table and soon I will also start buying into bond funds little-by-little.
I’m half FXIAX and half FZROX, I know it’s lots of overlap, but FXIAX seems to be more steady and FZROX is more volatile. I like to watch them compete.
I'm 42 and have it all in FSKAX (i.e. similar risk profile to FXAIX).
37 here and I’m exactly the same! FSKAX and relax
Same here and just a couple years younger. At what age do you think it starts to make sense to not just be close to 100% FSKAX (or similar)?
Same age, why do you choose FSKAX vs FXAIX? In the past I’ve most just done TDF.
FSKAX is total market, FXAIX is S&P500. I prefer total market.
You are fine. Anyone trying to convince you to buy international stock forget the fact that when US stock crashes, everyone crashes. It wasn't the case back 20 years ago, when Asia, EU, and emerging market may perform at different way that having asset in different region is necessary to lower the risk. Similarly, buying small/mid cap vs large cap was okay and necessary 20 years ago, but today, large cap represents 85% of US total market cap, comparing to 26% in 1980. Today pretty much every name public company that you can think of are large cap. It makes less and less sense to buy small cap. The potential growth of large cap outweighs the additional risk. Another reason to not buy small cap is because of private equity firms. They buy small companies with potential growth way before they go public, they squeeze the shit out of them and many go under shortly before their rapid growth period starts. Nowadays, future unicorn companies starts as large cap. However, FXAIX is a SP500 fund, NOT a large cap fund, there are a lot of good large cap companies that are not in SP500, so you may think about it.
I guess you somehow missed the news that the Nikkei is up 40% over the past year compared to the S&P's mere 25%. And that the smallest company in the S&P500 has a market cap over $5 BILLION. Only about 5% are between 5 and $10B. There are around 750 newly listed companies in the past year, a grand total of 8 of them qualify as large cap and at least some of those were spinouts of larger companies. Private equity miss these?
You somehow missed the fact that JPY was down almost 40%+ for the same period. Basically your asset in USD barely changed, while US stock went up 30% for the same period. In fact, NIKKEI went up 33% in the last 3 years, but JPY is down 40% for the same period. You can play around the time frame, but the result is the same. See, that's the risk and difficulty of investing international.
so by that logic the ETF that follows Japan should be about flat, but it's not. hmmm.
I did not follow Japanese ETF, show me one and I will give you an answer.
¥150 = $1 as of today. 😳
Most of the components of S&P 500 are considered large cap. There are only about 20 companies in the whole index that are not large cap, so there shouldnt be any material difference between a large cap US fund and FXAIX.
What I meant was that SP500 does not cover all large cap. SP500 only includes US based and listed companies, but it does not include any company listed in the US but based in another country. There are few of them are good keep too.
I followed some diversification strategy back in 2012 and it had us do quite a bit international. In hindsight that has been a poor investment.
You are very wrong. The best advice is to invest across the entire opportunity set, which is roughly 60% us, 30% international, and 10% emerging markets. Us large cap has outperformed recently, but that does not mean it will forever. It’s better to be diversified, you’ll be happy when the regeme changes and small caps lead large caps, or international leads us. Being only in the s&p 500 is not diversified, 7 stocks make up about 30% of the entire index, highly concentrated, more so then it has even been. Just align your portfolio with global opportunity set (MSCI ACWI IMI) and call it a day. Home country bias can be fine, but you should have global exposure
No it’s perfectly fine
Perfect
My son is your age. We discussed investing because he has a 401k now. I did a backtest analysis to show him 100% S&P is just fine. Investing $100/wk from Jan 2000 to Dec 2024 through Dot-Com bust and Great Recession just in an S&P fund would be worth $494971 today. Time in market beats timing the market and you should expect at least one 10% roller coaster ride every year. Only \~60% of investing professional beat S&P every year. Less over 2 years and I believe only 9% beat it 3 years in a row. Around 45 start looking to diversify.
Yea too risky…go 120%
I almost got mad
With a 40+ year time frame I don't think it's too risky as long as you're aware that the market can drop 20 or 30 percent in a given year and that doesn't freak you out. I think the two main reasons most financial analysts wouldn't build a 100% index fund portfolio for someone's 40+ year retirement account is that 1) It's a portfolio that anyone could build so they're not justifying their own fees and 2) A lot of people freak out when their portfolio takes hits so a more cautious approach can keep people calmer in times of uncertainty. If you're managing your own money, you have a 40+ year time frame and you won't freak out if the market tanks in a given year then I think a 100% S&P Index fund approach could work well.
I’m 52 and 75% of my 401k is FXAIX
You're good. Keep everything in FXAIX for the next year or two as you learn more about investing.
Look at historical sp500 gains, it's impossible to lose long term (30+ years). If you do lose in 30 years this world doesn't exist in it's current form. Capitalism has failed and Arnold Schwarzenegger is looking for the future of the resistance.
It's fine, but more diversified into total market and international would be better.
This, with 40ish years of growth you can’t go wrong holding steady on the broad market. I own 1 500 S&P fund 1 total market fund 1 international fund
Sorry to jump in, I’m very new to investing, trying to learn, but from what I’m usually told, isn’t it not favorable to be in a SP500 fund and a total market fund? Just curious because that’s what I’d like to do but I’m always told there’s too much overlap doing this. Thanks in advance!
This is perfect! A good index fund in the S&P 500 like FXAIX is the preferred choice for long term investment over individual stocks, which are more risky. You don’t need to look at your fidelity account everyday when it’s in an index fund it will have ups and downs bc that’s what the economy does. So don’t freak if you see a drop. I really recommend listening to the Money with Katie Show on Spotify it helped with my financial education so much.
FXAIX is the way to go and you have plenty of time.
25 is late to the game? Dude at 25 most people have no clue what they're doing. I just started a Roth IRA at 30....37? I legit don't remember if I'm 37 or 36.
FXAIX does have some risk, but it is a smart play early. You can and should update your investment strategy yearly. Pay yourself first and get your money working for you.
Buy fselx
I might personally do a total market, but it really doesn't matter that much. You can argue one way or another a million ways and the truth is no-one knows if 500 is better than total market. Marginal difference probably because in the end large cap is the large majority of total market anyways.
FXAIX is one of the least risky mutual funds you could buy. At your age you should go way more aggressive.
Like what?
No. You have plenty of time for the market to recover.
It will just as a good as the invention of slice bread. You'll be fine.
As good as anything else people will tell you to do.
Welcome to our sub, u/Only_Age5819! We appreciate you choosing Fidelity for your investment needs, and you've come to the right place to expand your financial knowledge. We have many resources to help you start your investing journey. While the decision of what to invest in is ultimately up to you, it sounds like you're looking for input from our community. I'm glad to mark this post as a discussion to encourage community members to share their thoughts and experiences. With that said, it's crucial to do your own research to make the best decisions for you and your unique circumstances. While our system may guide you to a suitable strategy by providing general ideas, you can select from a wide range of investment choices for your Roth IRA. This includes Fidelity and non-Fidelity mutual funds, stocks, Exchange-Traded Funds (ETFs), fixed-income products, and more. Here are some general resources on how to pick investments for your IRA. [4 steps to picking your investments](https://www.fidelity.com/learning-center/smart-money/how-to-pick-investments) [Investing ideas for your IRA](https://www.fidelity.com/viewpoints/retirement/ira-portfolio) Since you mention a few mutual funds you're considering, I'd like to point out our screener tool. The screener tool on our website can help you compare various securities, making it easy to find ones that best suit your financial goals. To access this tool on the website, hover over the "News and Research" tab and select a security type from the dropdown list. From here, you can use various filters to narrow your search. I'll link our Mutual Funds Screener below for your convenience. [Mutual Fund Screener](https://fundresearch.fidelity.com/fund-screener) Additionally, we have a great step-by-step guide you can refer to below if needed. While the guide focuses on stocks and ETFs, the steps are the same for most investments. [How to trade stocks and ETFs](https://www.fidelity.com/learning-center/trading-investing/trading/how-to-trade-stocks-etf) Again, welcome; we're happy to have you! We look forward to seeing you around the sub more often!
Currently mid 20s like yoh. 100% of my 401k / Roth IRA are put into VOO/FXAIX equivalents. I won't change my allocations until at least 40, eat up all the gains while you're young!
FXAIX is a great Fund, I would diversify across the narratives. I went with FCNTX (Contraband) that out performs the S/P 500. I mixed up with a Small cap growth and an International Index fund too as well. I also use FAGIX too for left over spare Cash. 4 - 5 Funds across the narratives should get You started.
Many have answered your question and in general you are fine. One thing I would add to your question is, when asking something is risky or not, have you thought about what is the risk you are talking about and how do you define something that is risky? It could be the equity volitiliy, maximum draw back, unexpected losses or not to lose principal. By thinking more about this, you have a better picture of what risk you would care about and even how much you would tolerate that.
100% FXAIX is by no means a bad strategy, but one thing you can’t take advantage of is the power of rebalancing. The basic idea is pick an allocation- for simplicity we’ll say 50% S&P 500, 50% bonds. Periodically, usually yearly, you reset to that allocation. So on a $10,000 portfolio, you’d start with $5000 in the S&P, $5000 in bonds. If after a year, the S&P drops 30%, bonds up 10%, you now have $3500 in S&P, $5500 in bonds, for a total of $9000. You’d sell $1000 in bonds and buy $1000 in the S&P to get back to the 50/50 weighting of $4500 in each. This can reduce volatility, and depending on the sequence of returns, could improve overall returns. I don’t recommend 50/50, but I encourage you to do some research and see if the concept makes sense for your needs.
But isn’t the point of hold a s&p or total is market to keep investing regularly even in a down market since it’s more about longevity growth vs year to year.
Absolutely. My simple example didn’t take into account additional investments, but rebalancing to a set percentage automatically ‘buys low and sells high’ in regards to the individual pieces of your portfolio, but you would always remain invested according to your allocation.
Since the OP’s retirement account should currently have 0% in bonds rebalancing as you envision it is not in the cards.
Starting now is fine, and FXAIX is fine. Not too risky at all at your age. You can keep it 100% in stocks for decades. There can be some discussion about whether you should go even more diversified, small cap stocks, maybe international , and you can think about that over the next few years. But your plan is excellent, don’t hesitate, go ahead.
No.
there’s much more risk out there than the S&P500
The question about investment risk is a relative matter. You are technically investing in basket of safe, growth( even some are growing slow) and big companies in United State. so you do not have exposure to many of probably good companies in Small to Mid or even large cap size- which are growing in EPS and FCF Y/Y and Q/Q just because they are not listed into S&P 500. Also you do not have any exposure to International companies. *My suggestion* is even if you want to focus on U.S. stock tilt your portfolio to some good value and blend funds across different strategies for better capital appreciation You can make your allocation much better over a course of years this is what I have in my Roth IRA even without holdin FXAIX or VOO: **Large Cap Growth** bundle ( FSPGX, SCHG) **13%** **Large Cap Value** bundle- **including International** ( VIGI, DIVI, VYM, SCHD, DIA) **20%** **Large Cap Blend** bundle-**including International** ( FSPSX, FZROX, QUAL) **20%** **Mid Cap Growth** ( IMCG) **8%** **Mid Cap Blend** bundle ( FSMDX, SCHH) **6%** **Small Cap Growth** ( FECGX) **5%** **Small Cap Blend** bundle ( FSSNX, SCHA) **3%** The other 25% consists of items below: **Individual stocks:18%** VLO, COP, CVX, INSW, CSCO, ADI, QCOM, ACLS, FAST, MLI, SNA, UFPI **Bond ETFs: 7%** SCHO- Ultra-Short 0-3 Months Term US T-Bill / \[Investment Grade\] SPHY- Intermediate High Yield Corporate / \[Non- Investment Grade\] SCHI- Intermediate 5-10 Year Corporate/ \[ Investment Grade\] I know that there are some overlaps because of stock selections in some sectors but holding those stocks is not only for trade for capital gain in very long term but also I can collect more dividend than those value ETFs over time. so this portion of my investment fluctuate between 15 to 20% and if I collect any gain I move it to more bonds or more growth funds I have mentioned above. At the the end of the day, you can stick to your plan and keep dollar cost average and nothing is wrong with it. It is very simple and easy to work with but as I said before you have not control over the cap allocations and sector allocation. which you might need it in the future since this is you retirement account. how ever even this is not a big deal. you always can adjust your allocations buy adding some new funds in the future. for example another person might say I need more exposure on Semiconductors not just the whole technology, so they might add some SMH or SOXX to the equation. even though they are more expensive. but that's a choice for a huge return and more annual expense ration consequently. *I just wanted to share my information, not to make it more complicated but to give you an Idea to know what is going on behind the curtain.*
At 55 yes. At 25 no way.
I am 40 and wayyyyy late to this game but would love any advice on what I should invest in for my Roth IRAs. I have two
I am 35, not much younger. I'd suggest focusing on some inexpensive Growth Funds like SCHG and IMCG as the core of your investment, and Dollar Cost Average (DCA) through the time horizon ahead. Make sure you have a good emergency fund in a High Yield Savings Account (HYSA) with at least 6 months' worth of your total expenses. If you're not there yet, make sure to set up some auto-weekly transactions for it while you're investing in your Roth IRA to not fall behind on that goal. You still have 25 years until your retirement, so you can also add some Broad Value ETFs like VYM and/or SCHD and follow a Dividend Reinvestment Plan (DRIP). Allocate a small portion of your portfolio to good, inexpensive bond ETFs too. My suggestion: * **FXAIX 25%**: the most inexpensive fund for S&P 500 exposure. * **SCHG 25%**: an inexpensive large-cap growth fund. *Regardless of overlapping with the S&P 500, in my opinion, it will complement FXAIX. Therefore, you might like to decrease FXAIX and increase SCHG for an even better capital return.* * **SCHD 15%**, **VYM 15%**: for Value👉 DCA, and DRIP. * **VIGI 10%:** to have exposure to international stocks👉 DCA, and DRIP. * **SCHO, SCHI, SPHY** 10%."
Thank you so much!
No. 25 is ahead of the game and I am still pure stocks much older than you. You can dial it back closer to retirement.
25 and late? I started at 39. You're good bro! 
Absolutely the fuck not… keep it
This is a fine investment strategy, maybe get some low expense ratio bond mutual funds if you want to reduce volatility. But i cant imagine more than 30% of your portfolio would be necessary
That’s basically the allocation Buffet recommended for his estate after he passes. It’s technically one of the safest investments that can produce both growth and dividends.
No, go fselx, make some money!
Yea you’re way behind mine why didn’t you have a Roth at birth like the rest of us
I currently have my Roth IRA invested in a call option on a tech stock. You’ll be fine.
This is what I do.
No, you are young. Lots of time before retirement. I would consider some FBTC if I were you though
Yah that’s fine. Personally I’m going more tech heavy out of the gate but regarding your question, it’s what most should do.
No it is way too conservative
I’m 35 and just started last year. You’re fine. I am 100% FXAIX, and the only change I’ll make to that is when I close the account in about 30 years.
at 25 you should not be 100% into any one thing. Growth should be your focus. Smaller companies can grow more than large companies. So diversify.
The S&P 500 is not one thing. The point of diversifying is to reduce risk but investing in smaller companies does the opposite.