Hello,
I have recently started contributing to an Fidelity IRA and want to diversify but am conflicted about how to go about doing that. Do I invest in an asset mgr, freedom fund, large, med, or small cap?
How does one create a diversified portfolio before the account has had a chance to grow? In other words if I have only contributed the max for the last two years or 10K, and plan to max each year, I am somewhat limited because of minimum investment limits.
I have a few funds that I am interested in and one that I have invested in but kind of want to make the best decision first to minimize selling around ideas to reach my goal. I will be converting100% to Roth each year for the next several years (5-10) if that matters. (I can not contribute directly to a Roth)
Does that make sense?
Thanks for the thoughts.
DPN
Comments
Saving for the future ALWAYS makes sense! The best of luck to you.
Fidelity offers some lower minimums in their IRA accts.I would suggest dollar cost averaging @$100.00 per month in 4-6 funds.
$500.00 initial investments:Gold funds- DWGOX or TGLDX Asian funds-any Matthews Fund including MAINX for bond exposure. Also, DWUGX for aggressive growth.
$1000.00 initial investments; small caps -SATMX and SSSFX .PRPFX for precious metals exposure.
$2000.00 initial investments;any Wasatch, especially WAEMX which is closing on Feb.24th and FMLSX a long/short fund of which I think most people should have up to 5-10 % exposure to.
For bond exposure,DBLTX and DBLEX are well managed, but have $5000.00 minimums through Fidelity,
Disclosure; I own DWGOX ,TGLDX,MAINX and 3 other Matthews funds,SATMX,WAEMX and one other Wasatch fund and DBLEX. I am dollar cost averaging all these except TGLDX .I invest $100.00 in DWGOX twice monthly,14 days apart, because precious metal funds are very volatile.In over 35 years of mutual fund investing I've never owned a large cap fund.If you are so inclined,get an index fund! Good luck and don't let the inevitable bear market change your course.
Thanks for the suggestions. They seem like a good starting point. I will continue with my due diligence.
Ryan, I don't see any minimum investment at Fidelity for less than $2500 retirement or other. It would be great if there were. Do you know of specific funds with a lower min at Fido?
I am interested in Fido index funds but again, the min at 10K is an entry obstacle for now.
When all else fails, it is sometimes not too bad of an idea to call up the company and speak to a rep. Generally, people who work for the company know the ins and outs (although sometimes they need a bit of coaching).
Many companies allow you to invest with lower minimums, if you commit to a monthly plan. E.g. - A fund may have a $2,500 minimum, however, you may get this waived, if you commit to a monthly plan where you "promise" to invest a specified monthly amount. You may be able to say I want to commit $250/ month for such and such fund and they may let you buy shares at an initial $250 purchase thus waiving the minimum.
Once again - it may behoove you to speak to a Fidelity Rep. at 1-800-Fidelity.
Several companies have done away with this option because it was creating a "paperwork hassle" for small account balances.
http://personal.fidelity.com/products/trading/What_You_Can_Trade/WYCT_ETFs_Category.shtml
First of all, congratulations on starting an IRA and also converting it to a Roth ASAP.
Initial IRAs are always difficult to work into a nice Asset Allocation because of contribution limits and mutual fund minimums. Per force, this will be a dynamic labor of love. If you don't care to spend the time learning the basics, you can go with one of their combination funds - their Fido Asset Mgt or Fido Freedom series of funds. But, hey, that's boring.
If you're working with $5K per year and they have min's of 2.5 you buy two funds initially and each year you broaden your allocation. Think of it like making a stew. You need the meat and potatoes first, then the carrots and onions and celery. Finally come the herbs and spices. As OJ said, Balanced FBALX is a good start as is Strategic Dividend and Income FSDIX. Next year, you can add an international fund and perhaps a small cap. Over time and as your knowledge grows, you'll get to the point, where you throw in a sector fund, or maybe a single country fund.
Good luck,
peace,
rono
GO to your Fidelity IRA acct. and select buy a mutual fund.Enter the symbol and click inside the box and the minimum investment will be shown.Enter that amount and the next screens will advise you if their are additional fees for that particular fund.
I misspoke in my earlier post, SATMX does have a fee @ Fidelity as does the Templeton Fund mentioned in another post.That's why I own SATMX @ Schwab and another great fund ,FPACX @ TD Ameritrade.Same funds,different brokers,different fees,different minimums.It's a broken record.
And some really good funds like BRUFX and OSFDX are not available at any of the discount brokers.So thinking that having one retirement account that includes your best researched ideas under one umbrella sometimes does not work.
Thanks to this site and a profile of Professor Snowball in the WSJ, I also purchased RPHYX this week with part of my cash position. It looks to be a good option for an intermediate cash position.
Ted's post also highlights a brand new ETF ,available just this past week.http://globalxfunds.com/Investment_Case/PERM_Investment_Case.pdf will try to replicate PRPFX in
profile and performance.It is not a no commission ETF @Fidelity.
Keep us posted as you proceed!
The only exception among Fidelity funds are the the Fidelity Spartand/Enhanced Index funds that require a minimum of $10K. So, he will not be able to setup a diversified portfolio of index funds if he insists on index funds. However, I've pointed that he can instead use the NTF ETFs available at Fidelity if he is into indexing.
http://personal.fidelity.com/products/trading/What_You_Can_Trade/WYCT_ETFs_Category.shtml
So, he can diversify but it is not going to happen while using Fidelity Index funds. That is a choice he has to make.
I kind of like professor Snowball's suggestion of looking into something boring.
At least until I put in the time and learn the basic, make good decisions and minimize mistakes.
DPN
I plan to convert my 2012 IRA also but I'm wondering what advice you might give for investing strategy. Should I dollar cost into a few funds that I like or just go all in now. I guess i feel like the market my go down a little over the next few months so that would be a vote for making monthly investments I suppose but eventually it will all be invested so the question is when.
Don
From your original post........"I can not contribute directly to a Roth"
Apparently I have missed something here. You noted that you have contributed the maximum to a traditional IRA and then converted to a Roth.
Why are you not able to contribute to a Roth directly?
Regards,
Catch
In addition to the funds I posted earlier ,here is another with a $1,000.00 minimum @ Fidelity , SSSFX and another with a $500.00 minimum, TSELX, as seen here in Mr Snowball's recent WSJ interview.
http://si.wsj.net/public/resources/images/IF-AA712_SNOWin_G_20120203113006.jpg
In the end, it's your money and your decision. Good Luck
Accipiter noted about checking with Fidelity about investment options. You may have an investment center near you to speak directly with Fido. Although a phone call may answer many questions.
You also noted that you already have two funds in place. Knowing those would provide a basis of whether it may be best to stay with them for now; or whether to add another. This also applies as to whether or not you have access to and/or are investing in any other retirement plans (401k, etc.).
As you also noted, there can be a starting place that is a matter of wait time until one accumulates enough monies in a money market fund or related; and then move the money into an investment fund. While there is little growth taking place, many of us were in the same boat at one time. You may also find a small fee placed against your monies until hitting a total dollar value for monies with Fidelity. This is not uncommon, to the best of my knowledge.
Above all, you have a plan and that is the key. Fidelity is a decent vendor with whom to have your monies. We have no complaints over a more than 30 year period.
Take care,
Catch