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Hi. I'm looking for any recommendations on fidelity funds for retirement for my wife. My default choice is to go with one of the Fidelity Freedom funds (target retirement date), which are not the greatest performers but safe bets. Anyone have other ideas? Looking for no transaction fee funds only through fidelity. Thanks.
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I would go for the spartan index funds myself. -
Your question leads to more questions than answers... like wife's age, how many years of contributions without interruption, her risk factor, DCA or lump sum annual contribution, transferring from elsewhere, can it mesh with your holdings like have an International segment if you don't have that etc. As you can see, markets change, Europe is currently a mess but looked healthier 10 years ago, USA was dreadful 08,09,10 but was 'on sale' for people like me who only glanced at monthly statements and kept DCA-ing month after month knowing we have a long time to accrue before retirement withdrawals begin.
If your wife is a new MF investor, I suggest looking up Morningstar's 5 Star [Fidelity] funds and try to sort out wife's risk factor. For example, Dividend Funds are wa-aay less risky than Medical or Tech Funds. Having selected a plausible fund, look at the top 10 holdings. Ask yourself, if you had pots of money to buy a significant position in each...would you buy those stocks/bonds? Next step compare Fidelity's holding to another major 5 star MF in the same category and see if they hold the same/similar top 10.
You can divy up contributions or change for example Income fund Jan.- April, May - Sept. Dividend fund [buy when everyone else is selling], Oct. - Dec. Index and repeat depending on market conditions. Finally, if you hold Fidelity, why not set your wife up in Vanguard? It gives you something the measure your holdings against and wife's portfolio measured against Fidelity.Comment
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Although definitely a place to start, I wouldn't rely too much on Morningstar ratings, especially the 5 stars.Originally posted by snafu View Post
To me what that means, if looking at the short term, is a fund that's done really well lately and probably won't perform as good in the future. Looking longer term (5 yrs.) Fidelity has only 6 funds that are rated 5 stars. Two are bond funds, one tech, one nat'l resources, one small cap and one large growth. Not a very diversified group there. If you extend it out to 10 years, the two bond funds drop off and you're left with 4 5-star funds.
I'm not saying their star system is worthless. It's a good place to start and comparing similar funds is a great place to start, just don't let the "star system" totally guide you.
Just look the Vanguard index funds. Most of them get 3 or 4 stars (I haven't seen one get 5) and I'm sure most of them beat the 5-star funds in the long run.The easiest thing of all is to deceive one's self; for what a man wishes, he generally believes to be true.
- DemosthenesComment
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This. If you're stuck with Fidelity, their Spartan 500 Index Fund is actually a fantastic fund...I think it might even be cheaper than the Vanguard 500 Index Fund. If you go for this with domestic, a hopefully not ridiculously overpriced bond fund and one international fund, it should keep the costs down. Although my wife has Fidelity through her work and her bond index fund is 0.85% expenses....not sure if you have anything better but I hope so.Originally posted by Petunia 100 View PostComment
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Freedom funds are easy to use, so you don't have to do much upkeep. I see no issue with using them.
If you're wanting to choose the funds yourself, they have plenty.
If you're looking for index funds, they have them. List of Fidelity index funds:
Fidelity Investments: Site Search
Keep in mind though that most seem to have $10k minimums.
To avoid that, they have free index ETFs w/ ERs between 0.2% and 0.67%
Fidelity InvestmentsComment
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I would either go for a target date fund or a value based index fund.Comment
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Well, the problem with most target date funds is for the time period, the stock percentage is too high, there's usually high-cost garbage in there and they're not indexed. In the end, you get a fund which is risky, has mediocre return and is still 50% stocks or more when you retire. The only target date funds worth a look in my opinion are Vanguard's...and they still have the same problem of being too overly invested in stocks when close to retirement.Originally posted by chrisburke21 View PostComment
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Actually, studies show that higher stock allocations at the beginning of retirement lead to higher probabilities of retirement success at various withdrawal rates (aka not running out of money)Originally posted by scubatim84 View Post
See table 1:
Sustainable Withdrawal Rates: The Historical Evidence on Buffer Zone StrategiesComment
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Interesting. This could be why Vanguard allocates their target date funds so heavily in stocks until only 5-10 years out from retirement. Still, what happens if there's a big market crash such as in 2008? You're basically screwed at that point because you have to wait for the market to rebound over the next 3-5 years before you can retire.Originally posted by jpg7n16 View PostComment
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I'm not a fan of any of their freedom funds. Personally, I like Fidelity Diversified Intl K, Fidelity low priced stk K, Spartan 500, Spartan External Market. I've got about a 12% rate of return on my Fidelity funds which I think is pretty good, especially for a 32 year old who just started learning anything about this stuff within the last couple of years. I too defaulted to the freedom funds til I could figure it out, once I did my rate of return was much much higher.Comment
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Fidelity announced this week that they're lowering expense fees on many Spartan funds.Comment
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