Retirement savings suggestions?

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I'm a Fidelity fan dyed and green. But I too, cannot recommend
the Fidelity Freedom Funds simply for the pi~~ poor performance. I fail to see what these fund buy for a long or short term investor. Way better off with one of Fidelity's super low cost index funds such as FSTMX or FSEMX with 0.10% fees! Then divide a portion of your assets into an above 5% MM account to simulate a bond fund to alleviate some of the risk depending on your time horizon.

The Vanguard fund looks OK. 0.21% is good, but I see some "garbage fees" for lower balances.
 
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Thanks for all the info so far.

As far as Roth IRA, I also have to specify how that money will be invested. Let's say for example, that I want to invest the money that goes into Roth IRA in T-Rowe Price's Retirement 2035 Fund, but I want to invest more than the $4000/year that Roth IRA allows. How do I do that? Do I need to open two different accounts then, even if both of them will be invested in the same Retirement 2035 Fund? Or will everything above $4000/year sit in the same account except that the earnings from the amount above $4000 will not be tax-free?

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You should call T. Rowe Price. I think they have 24/7 phone reps, but their retirement reps are only business hours last I checked. Anyway, they can help you with the details.

Just a general note about foreign and global funds. Of all the funds out there, I know of only one that does not speculate in currency: Tweedy Brown Global Value. Tweedy hedges every dollar invested in currency contracts to counter the currency speculation that is inherent in foreign investing.

Another thought, you get some global exposure with U.S. companies that have big foreign operations/investments.

Also don't want too many funds of same type. If you have two growth funds and one is selling Microsoft while the other is buying it, you get a net loss for transaction fees. 4 to 6 mutual funds should suffice for a portfolio. Hey, that gives you about 500 to 1000 stocks overall.

The only reason to own more than one fund is fund type or fund manager diversification.

Legg Mason Opportunity is a great fund, though rather expensive (so is LM Value Trust).
 
Many of the "family" of funds are held in retirement accounts, 401's 457's etc, that give employees a "selection" of funds to pick from. The whole idea of whoever set up this group to choose from was conservative. They didn't want anyone to lose their savings. So even though some funds might be consider a "growth" fund , the returns are relatively low because the risk is low. I believe the Fidelity Freedom family of funds may be like this. It's like that by design, not from poor management.
 
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Many of the "family" of funds are held in retirement accounts, 401's 457's etc, that give employees a "selection" of funds to pick from. The whole idea of whoever set up this group to choose from was conservative. They didn't want anyone to lose their savings. So even though some funds might be consider a "growth" fund , the returns are relatively low because the risk is low. I believe the Fidelity Freedom family of funds may be like this. It's like that by design, not from poor management.

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To a degree yes. The life cycle funds start out much more risky and non-conservative for the years preceding their inception, then reallocate with time as you near your retirement age. So if you're young right now and pick a 2045 fund, it's not a conservative mix. But if you pick a 2010 fund, it will have majority fixed income/bonds/money market type investments.

They're good in theory, but they're so new it's hard to get a read on how they'll do in the long run as most were started during the downturn of the early 2000s but have now rebounded in the past few years. No 10 year avg annual return to look at.
 
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As far as Roth IRA, I also have to specify how that money will be invested. Let's say for example, that I want to invest the money that goes into Roth IRA in T-Rowe Price's Retirement 2035 Fund, but I want to invest more than the $4000/year that Roth IRA allows. How do I do that? Do I need to open two different accounts then, even if both of them will be invested in the same Retirement 2035 Fund?

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In general, yes.

What would likely happen, is that one account would be setup as a ROTH IRA and get your $4000 investment (which you could add to in future years, by up to whatever that year's ROTH limits are), and be under ROTH IRA rules for taxes and taking the money out. By putting the maximum amount (per year) into your ROTH IRA, you maximize the amount of favorable tax treatment that ROTH IRAs have for retirement savings.

Then, if you wanted to invest even more that year, you could put the money in a 2nd "normal" taxable account (i.e. unlike the ROTH, it wouldn't technically be a "retirement account", but you could certainly use to to save for anything you want, including your retirement). This 2nd account would then be under the tax rules of a normal investment account (i.e. the money is yours to pull out whenever you feel like it, but you also pay taxes on that account each year). Even if this "normal" account is invested in the exact same securities with the exact same company, it still need to be a different account than the ROTH IRA, because it is handled under different tax rules. So you need to keep the accounts "separate" (if only separated by the fact that they have a different account number with the same financial institution).

BTW: I 2nd the suggestion (another poster made) of http://www.tiaa-cref.org . TIAA-CREF has a long track-record (well over 50 years) of solid fund management, and their fees are very low. In fact, until a few years ago, you couldn't even sign up with TIAA-CREF unless you worked for a University/College that was affiliated with TIAA-CREF (they started out as a "tax free" retirement plan for people in higher education). But a few years ago the laws changed, and therefore TIAA-CREF was able to open up some of their funds to the general public.
 
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Unfortunately Fidelity charges fees on their freedom funds in addition to the fees the individual funds that are in the freedom fund charge.

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Drew, are you sure about that? I looked at the Prospectus for their Freedom Funds (FFTHX) and don't see any additional management fees. The overall fees are 0.75% though. How bad is it?
 
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Unfortunately Fidelity charges fees on their freedom funds in addition to the fees the individual funds that are in the freedom fund charge.

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Drew, are you sure about that? I looked at the Prospectus for their Freedom Funds (FFTHX) and don't see any additional management fees. The overall fees are 0.75% though. How bad is it?

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Really? I thought they did. I had just read an older piece on morningstar.com that the fidelity freedom funds charge an extra fee. Maybe they used to. My bad. Maybe it was extra expenses on top of the expenses from the individual funds. Expenses and fees are different; the .75% expense ratio isn't bad; try and avoid over 1%. Expense are taken out of the fund as a whole by the fund managers; fees and loads are charged directly to you and should be avoided. I'm not to fond of international funds myself; too volatile for my taste. I like consumer staple funds and healthcare funds (dammit why did Vanguard close their healthcare fund - 19% avg annual return for it's life!) myself, along with a good solid balanced fund like fidelity spartan or balanced fund. Fidelity balanced fund looks to be a great fund, riding the last recession as good as any. Kicked the craap out of the freedom funds.
 
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Fidelity balanced fund looks to be a great fund, riding the last recession as good as any.

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Do you remember its abbreviation symbols? I just opened a Roth IRA with Fidelity and put some money into the Freedom 2035 fund, but could invest some more in another fund, too.

EDIT: I think I found it: it's FBALX, right?
 
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Fidelity balanced fund looks to be a great fund, riding the last recession as good as any.

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Do you remember its abbreviation symbols? I just opened a Roth IRA with Fidelity and put some money into the Freedom 2035 fund, but could invest some more in another fund, too.

EDIT: I think I found it: it's FBALX, right?


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Are you joking? One of those managed year end retirement accounts. Jeez they are so conservative.
dunno.gif
 
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Fidelity balanced fund looks to be a great fund, riding the last recession as good as any. Kicked the craap out of the freedom funds.

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Sorry for coming back to this, but I'm comparing the two, and for the last 3 years (that's how old the 2035 fund is I guess), they've been doing pretty much the same - a little over 10% per year. Where's the craap kicking?
 
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Fidelity balanced fund looks to be a great fund, riding the last recession as good as any. Kicked the craap out of the freedom funds.

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Sorry for coming back to this, but I'm comparing the two, and for the last 3 years (that's how old the 2035 fund is I guess), they've been doing pretty much the same - a little over 10% per year. Where's the craap kicking?

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2035 is too young to compare, but look at the other freedom funds that went through the 2000 to 2003 timeframe, like the 2030 fund. It dropped quite a bit, like pretty much all things did, but the balanced fund didn't. Another good balanced one with low volatility is fidelity Puritan.

Another option, like Pablo indicated, is S&P index funds, because the expenses are so low, the after expense returns exceed 90% of all mutual funds. The S&P beats 90% of all mutual funds!

I too am totally risk averse; that's why I like funds that ride out the bad times well.

msparks, what are some of your favorite funds?

By the way, I'm in no way an expert and I wouldn't take my advice as anything other than one investor trying to help out another with some ideas.
 
There are index funds and there are index funds - not necessarily non-risky, but one of the best rewarding is the S&P 400 mid cap. Do your own research. Check out IJH. I've been buying on market dive days. I sold some of my mutual fund mid caps and am switching into this ETF.
 
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I too am totally risk averse; that's why I like funds that ride out the bad times well.


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For stock funds, the best risk averse funds I know of are the two Tweedy Browne funds. When the marked took a big hig in the early 2000s my Tweedy funds were level.

Another good fund for risk averse is Oakmark Equity and Income. It is a balanced fund that performs like a stock fund.

As always, look at the past performance to see how these funds performed in bad times before investing.
 
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