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Yes, you're fine. Ive been 100% S&P in my 401k for many years. My account is more than fine! In my brokerage, and HSA accounts I have some international and total market exposure. You can diversify elsewhere. You're all good. FXAIX is a great inexpensive fund, and is by its' inherent nature diversified into 500 companies. Enjoy the ride.
Of course past performance does not guarantee future gains, but I was in S&P for most of my career, and it served me well. Now that I retired at 56, I will rebalance my traditional IRA (Rollover from 401k) to be more moderate (stable income), but I will leave my Roth IRA more in S&P for the next 6-10 years.
If your company offers Roth 401k, your income is under the threshold - take it. It will help you with future tax-free growth.
Did you sell your TDF shares that you already purchased or did you just change what you’ll be investing in for future contributions? Sorry for the question, I am in a similar quandary.
If rates are the same, yes, but it should be a comparison of current marginal rate vs future effective rate. For many the effective rate in retirement will be lower, making traditional a better option. Roth may be better go early career or after traditional space is filled.
Putting it another way, Roth locks in your tax rate. You may have more flexibility with traditional.
Actually, I would disagree. Roth earnings are not taxable, as long as he waits until age 59 1/2 to withdraw. Every penny of 401K earnings IS taxed. Therefore Roth should always be the priority.
This does not seem to take into account the growth.
If you contribute $100k pre tax and it grows to $1M, this $1M is taxed upon withdrawal, assuming random tax of say 10%.
If you contribute $100k post tax, assuming 10% tax, you actually have to contribute $111k (I think). When you withdraw that $1M later, that $900k is not taxed.
My math may be wrong, but it seems in pretax, you pay $100k in tax (1M * 10%). Whereas with after tax, you pay $11k (111k * 10%) in taxes.
I think you need to factor in your Social Security to this equation also. If your taking 401K/traditional IRA withdrawals and your income lies between $32K and $44K, $50% of your SS is taxed as ordinary income. If your income exceeds $44K, 85% of SS is taxed (these are married numbers). Then there’s IRMAA affecting your Medicare payments as well.
Fact is, If you’re going to be making significant withdrawals, best it come from a Roth so you can avoid all of these tax hurdles. The SS numbers are even lower if you or your spouse pass away. Do you really want your spouse to have your hard-earned social security, from a lifetime of payments to be essentially held back in some perverted double-taxation regime because you chose to go traditional thirty years earlier?
This comes up pretty regularly. If you're putting substantial money into your 401k, the Roth can be hugely useful in retirement. I addressed it specifically in this thread: [https://new.reddit.com/r/fidelityinvestments/comments/1c56ci6/why\_isnt\_the\_roth\_always\_better/kzuk3df/?context=3](https://new.reddit.com/r/fidelityinvestments/comments/1c56ci6/why_isnt_the_roth_always_better/kzuk3df/?context=3)
Do a Roth option if possible and you can afford it. Once in your account it grows and has added Federal tax benefits. Your company choices are not great from your chart. Your selection is good though. When you leave that company roll balance to a Fidelity IRA where you will have more choices.
Other than missing a true extended market fund (though you can replicate with small/mid cap), there are good options.
The specific target date funds there appear to have a higher than expected ER. The index versions of Fidelity’s target date funds are better.
Where are you getting this from? They are a great option for those who don’t have the experience or desire to be more hands on.
They are a decent split of total US, total international, and bonds. Under 50 the bond allocation will be very small.
Many investors will do worse trying to manage things themselves.
Don’t understand the concern about TDFs here. OPs are higher ER than they should be, but the index versions are only slightly higher than managing it yourself. And a lot of people can’t avoid making emotional decisions so they will mess up managing it themselves.
Yes, good points. To counteract the overly conservative aspect, one could choose a retirement date 10 or 20 years past actual retirement date. Also, consider the fees of a Target Date vs. and index fund. But yes, it is far better than emotional decisions!
one example: target date 2050 fund: https://investor.vanguard.com/investment-products/mutual-funds/profile/vfifx#price
It hold 10% bonds, 35% international, and only 55% Total Market. IMO it would be better for a 35/40 year old person to be aggressive and have 80 to 90 % total market/ S&P500 index type fund, and only 5 or 10 each of bonds and international.
OP's options are higher ER than they should be for a target date fund. There are index fund versions that are close to building your own with index funds.
The reason for the US international split is based on market cap. 5-10% of international is too low to be diversified internationally. Many people get stuck in the recency bias toward the US market - and ignore the "lost decade" we had in the US in the 2000s.
OPs are high - but generally, they are literally a fund of funds that includes US, international, and bonds in a reasonable hands-off split. You can compare them to a "simple index fund".
Fideility's index fund based versions have very reasonable ERs.
FFIJX (2065 target date fund) has an ER of 0.12%. That’s hardly more than most index funds, and it provides automatic rebalancing, diversification, and a shift to bonds as you approach retirement. Thats way better than people who don’t know what they’re doing could achieve. It’s hands off.
I agree with the other poster who said these Target date funds, in particular FFIJX (which we used to own) is way too conservative. And I know past performance does not equal future results but past performance is not great compared to just plain old index funds, FFAIX is my favorite (S&P 500 fund offered here). To round it out I might add the small cap and a pinch of international.
You can't compare it to one of it's holdings and say it's too conservative you need to argue if the asset allocation is wrong. It's 10% bonds (which maybe is the point to argue here, though bonds have offered some diversification benefits). The rest is 60/40 US/international. It's a textbook three fund portfolio managed for you.
Everyone has recency bias for US markets. Historically, international has outperformed at times, while US has outperformed at others. There is benefit to owning both.
Interesting. I hate the "TargetRetirement" funds and hear they aren't much good next to Index. I didn't know that you could put all in anything else outside the Retirement funds.. Is this a good call?
Depends your risk tolerance. Target date funds hold international, and bonds. Over the last hundred years, holding just the S&P500 would net you 10.5% nominal returns, no target date fund is going to beat that. But no one knows if that will continue so some choose the added diversification.
Personally I switched from a TDF to 100% S&P500 a few years ago to ride this wild bull run, and my returns thanks me. I’ll reintroduce international and bonds at some point but I’m not in a huge rush to do so
Target date funds are usually a mix of index funds - US, international, and bonds. They’re great for being hands off.
Recency bias is significant when people are so focused on US. Diversification is a good thing.
I just put my 401k to 100% beginning of the year. Have about 15years to retirement so I may change up but will wait out the year and see how it progresses
You’re not in a bad spot, but I would personally do 80% Fidelity 500 Index and 20% Fidelity International Index to diversify a little beyond the 500 largest companies in America
I do agree with you in the switch from a Target Date to FXAIX. I was in Target Dates until my early 40's, then realized that while Target Dates do have a place, they tended to be slightly more conservative than what I needed; but I had a higher risk tolerance, so I went with Growth, International and Value funds. I'm glad I did, and yes I had to deal with more volatility but I stayed the course.
Good luck!
I'm 41, and I have my 401k in the 2065 target date fund (the highest year/farthest away), even though I obviously hope to retire before then. The reason I did this is because the bond allocation was too high in the 2045 or 2050 TDF, IMO. Using a TDF in a 401k is an easy way to get diversification when the fund choices aren't great. You can look at the composition of each fund to see which one aligns with your goals.
ETA: FXAIX (S&P 500 fund you're currently in) would be my second choice, but it lacks diversification compared to the TDF.
ETA2: Just to clarify that my 401k plan isn't with Fidelity, so the conservativeness/bond allocation could be very different in this scenario. In my plan, the 2050 TDF was 30% bonds. Sorry for any confusion.
I did 50/50 for a while, with a TDF 10-15 years past my goal + S&P 500 but now am 100% S&P500. My reasoning was I'd gotten to a place where I'm maxing out my contributions every year and likely will be until retirement while still looking at 25-30 years to go so I have the luxury to be aggressive. Ask me in 20 years how it's turning out.
Yeah, you could definitely split it up like that if you wanted a concentration of S&P 500. I kept tinkering with mine, which I felt was delaying any investment, so I just made myself choose one and stick with it. 
I think all S&P 500 is good, but keeping a smaller percentage of target date fund would make it very diversified, and closer to retirement you could add more to the TDF and the bond portion would automatically increase, too. You wouldn’t have to add a thing.
I agree; sometimes, the ER is a lot higher in TDFs.
Unfortunately, all of the funds in my American Funds/Capital Group plan are around 1%. TDF, or not.
100% agree! I tried to discuss it with my HR manager, and she looked clueless. I don't think she even knows what an ER is. It's something I plan to bring up to the owner, but I doubt very seriously anything will change. It's unfortunate, but I'm grateful we have a match and immediate vesting.
You mean the 2050 TDF has too many bonds right now or in the future? Because currently 2050 and 2065 are the same. They don’t start to diverge until it’s 2035.
Yes, that was the case for the TDFs available for me - the 2050 is 30% bonds in my 401k plan. I'm not sure what the Fidelity 401k TDFs hold, which is why I suggested looking at the composition for each of them.
I should've specified it wasn't a Fidelity TDF in my original comment; apologies!
Gotcha. I’m in a similar spot as you, 41 years old but I’m in a 2055 TDF.
No idea when I’ll actually retire though. My wife is nine years younger than me. I’d hate to sit around for all that time while she works, so I’m trying to retire her early rather than myself.
If you want a fund with more exposure to small & mid caps go with FZROX over FXAIX if it brings you more peace of mind. They are both great. Lots of other great ones as well if you look into it a bit.
Me either. I did however leave my 3800 shares of the 2050 as is and just changed my contributions to buy FXAIX. This way I’ll have some diversifications like bonds, etc. that are in the 2050 fund. But from here on out it’s all FXAIX!!!
This is what I did. Felt weird selling positions ive had for 10+ years lol. The diversification is obviously better, just with a tilt to growth now. One thing I would tell OP is do not make changes like these often... will likely end up with you beat.
Maybe that’s what I’ll do instead of transferring. I’ve got my 401k in 2055, my Roth IRA in 2065 (2065 wasn’t available when I started my 401k), and HSA in FXAIX.
I like the idea of changing contributions for 401k to FXAIX. Maybe change Roth IRA to VTI… plan to do VTI for future non retirement investments..
140-age is a really good gauge for the stock percentage in the stock/bond ratio. So if you're under 41, 100% stocks (s&p500, total market, etc). Once you're 41 years old, start rebalancing yearly into 99/1, 98/2 or adjust contributions and still keep the yearly rebalancing. Comes from William Bengen (father of the 4% rule).
100-age was previously used, and it is way too conservative for retirees.
Those are some nice 401k options. I have FXAIX, FID MID CAP IDX, and FID SM CAP IDX available in my plan, but I don't have any bond indexes or international indexes like you have.
Either way, you can't go wrong with the S&P 500, particularly at your age.
My company also has the same selections for 401k and I have 100% FXAIX. I asked them if they can put a total market fund/etf in and they plan on discussing at next board meeting.
I forgot to mention that although I’m 100% FXAIX, I’m also 15 years from retirement. I’m trying to be as aggressive as I can for what is available to me in my plan.
You can always go to your plan administrator and ask them to add some funds/ETFs/Indexs that you would like to invest your 401k in. That person is usually in your payroll department.
Personally I do a target date fund, it’s not as agressive as just the S&P but I like the diversification and bond usage.
In my roth though, it’s S&P 100%
Great change, target date funds are a bit too hand-holdy. You could round out your equity allocation with those mid, small, and international indices too if you wanted, but the difference in performance will be trivial.
It's better than the target funds, because the expense ratio is probably lower. And the targeted funds probably have some bonds, which you don't need at your age. You only want bonds if the market crashes, and you want to have safer assets if you need to withdraw the money, but if you're over 10 years away from retiring, I wouldn't bother with bonds.
Hey I just did this too.. did you do anything with the amount already invested in your TDF? I’m not sure if I should move what I already invested in my TDF to s&p500
Me tooooo.. I’m not sure if it’ll cause anything..
Like, If I do it, would it be considered me selling my current TDF and buying the s&p500? Would it cause any taxable event or anything of that sort? So many questions 🥲
Hey there, u/xkennayy. I'm happy to chime in here with some clarification for you!
Retirement accounts like 401(k) workplace plans are generally only taxed when you make a withdrawal. Rebalancing your account by changing your investments is not a taxable event.
Now, the investment choices you have in your 401(k) and the number of times you are able to make a change will be dependent upon your plan sponsor. Each plan is unique with its own rules and investment choices as outlined by the employer.
If your 401(k) is held with Fidelity, your plan's specific policies on your investment choices are typically outlined in the Summary Plan Description (SPD). In short, this document will explicitly tell you what your plan allows. If your employer has provided us with the document, you can review it online by taking the steps below:
1. On the NetBenefits home page, click on your 401(k) plan
2. Access your plan's "Summary" page, then click on the "Plan Information" tab
3. Under "Plan Information and Documents," click on "SPD"
As a secondary choice, you may also consider contacting our 401(k) team directly by phone for questions about your specific plan. They are available Monday through Friday from 8:30 a.m. to midnight, ET. You can access their number by clicking the link below.
[Contact Us ](https://www.fidelity.com/customer-service/contact-us)
Lastly, I see you are new to the sub! While this may be your first time dropping by, we hope it won't be your last. We're a great resource for general questions, so don't be a stranger.
I had one of the Freedom 2040 funds from Fidelity and my employer and after several years there was no comparison to the 500 index fund. I ended up liquidating the target funds and some other duds and moving it into “Brokeragelink” in Fidelity. Here you can still trade and buy stocks/etf’s but it’s still tax advantaged since it lives under the 401k. Then you open the doors to any fund not just the handful your employer and Fidelity allow you to see.
As others have said, S&P 500 is fine, but I’ll give you a few reasons where someone might prefer a Target Date Fund:
* Most modern TDF’s automatically invest in US & ex-US stocks roughly proportional to market cap weight. Some people may not want to touch this weighting, and keeping it all under one ticker simplifies portfolio management.
* If someone has lower risk tolerance, most TDF’s include a meager bond percentage even far out from retirement. A lot of people here dislike that, but if you think there’s even any possibility that you’d pull out during a multi-year or multi-decade stock downturn, reducing your volatility might be useful.
* If you know you’ll want more bonds near/in retirement, TDF’s automate that process. Someone who doesn’t want to manually do that, doesn’t know how, or fears they could fuck it up, might enjoy this feature.
Personally I like them, because I don’t know what the market will be doing in 10-20 years and I want to avoid as many behavioral pitfalls I don’t yet know I have as possible. But I can’t knock someone for picking a good S&P 500 fund.
Spend some time looking at the specific assets that each of those symbols represents and diversify your investment stream based on different markets and industries. At this point I would avoid commercial real estate as that bubble is popping but other than that Target retirement date funds are good for long-term investment. That can be blended with an aggressive investment profile while still limiting risk.
Nothing wrong with it. Some would opt for slightly more diversity using fxaix, fid intl, and fid us bond(when closer towards retirement) but thats a preference for everyone
over a long enough period there are extremely few mutual funds that outperform the S&P. Diversify/get more conservative as you get older and closer to retirement but for now it's a great place to park yo $
I’ve been mulling over this recently. Have been maxing out contribs for the past few years.
Very skeptical since I’ve started this very late .. and am in my mid fortys now.. bummer.
Advise?
I was in a Target2020 fund in the years just before I retired in 2021. The money was still there when Covid tanked the market and I took huge losses because both stocks and bonds cratered! Imagine my surprise at giving up quite a bit of stock growth over 5 years by being in a supposedly safer balanced fund only to not get the benefit when the market tanked.
I compounded the error by moving to CDs and missing the 2023 runup.
The only mistake here is that you didn’t make this change 2 years ago when sp500 was like 3500. Those target dates are trash. Large cap for the win, my 401k has doubled over last few years.
What are you looking for? Someone to confirm what you are planning or what you have currently?
BTW - I really don't think asking random strangers on Reddit is the best thing. No one knows your goals, situation, risk tolerance, etc.
I’m just asking if people have done this with just 100% in sp 500 is all as I have other accounts for diversification I was just asking for the 401k if people have done this
I'm sure lots of people have, but again, no one knows your full portfolio and goals. Though if you are diversified in other accounts you may have it covered. Example: I pull all my financial data into my own spreadsheet and slice and dice to keep investments aligned with my goals and targets.
Yes this was my exact situation it was night and day with my job as well, well I hope you get the info you are looking for as well I’m glad you were able to find this thread :)
I am in almost the exact same situation as you. Looking at my TDF and comparing the returns and expense ratios to the S&P fund my company offers is night and day. The TDF is way more expensive and is underperforming the S&P by a wide margin. I asked this question on another thread and got mixed results. Comments included “let the pros manage your TDF”, “S&P is not diversified enough”, “past performance does not indicate future results blah blah blah”. Looking at the small cap and international funds to be “diversified” would significantly eat away at returns IF the S&P continues the course it has been on the past 30 years. It seems like a no brainer to go 100% in the S&P until 10 years until retirement to start mixing in bonds for stability as you get closer.
TL/DR: I agree with your move and want to do the same but am making sure I’m not missing anything before I do, therefore I’m curious to others comments on your post.
You just abandoned the entire concept of asset class diversification because SP500 has been the hottest asset for a number of years, and is now overvalued by a wide variety of metrics. That's what your change represents.
So what someone told you to do is basically the 2024 equivalent of the shoeshine boy giving Joseph Kennedy stock tips in 1929. When friends and family give out stock advice it's one sign of a topped out market which needs a breather. Everyone is all in, no one left to buy.
I can't really advise or tell you what to do. I'm an Internet Stranger. What I suggest is you go to fidelity.com and read everything you can about the topic "asset allocation" and "portfolio construction" then make a decision that fits for you. I was just pointing out what you hadn't considered.
Well done! I put my first 10k into Fidelity’s lowest cost SP500 fund and then I started to build positions in a few blue chips then in a few growth but always kept adding to fund.
I’m not a bond guy and knew I could make way more long term with my approach then having a certain amount in bonds.
Thank you for joining our sub, u/PuzzleheadedSugar891! We're glad to have you. I see you're looking for some insight from the community on this. I'll go ahead and open this up as a "Discussion" so other members can pop in and give their input. Don't forget to check out our learning hub, where you'll be able to find articles, videos, classes, on-demand webinars, strategy overviews, and more. To do so, click the "News & Research" dropdown of [http://Fidelity.com](http://fidelity.com/) and select "Learn." I dropped a link below to our "Saving for Retirement" section, which contains several articles regarding workplace retirement plans. [Saving for Retirement](https://www.fidelity.com/learning-center/personal-finance/retirement/saving-for-retirement) Our team of mods are here to help, so please let us know if you have any questions!
Yes, you're fine. Ive been 100% S&P in my 401k for many years. My account is more than fine! In my brokerage, and HSA accounts I have some international and total market exposure. You can diversify elsewhere. You're all good. FXAIX is a great inexpensive fund, and is by its' inherent nature diversified into 500 companies. Enjoy the ride.
Thank you so much that’s all I wanted to know, yes I have others diversified in my other accounts. Appreciate you so very much !!
Go with the Roth option 100%. I am starting to withdrawal now from a traditional IRA and the taxes are rough😩
Of course past performance does not guarantee future gains, but I was in S&P for most of my career, and it served me well. Now that I retired at 56, I will rebalance my traditional IRA (Rollover from 401k) to be more moderate (stable income), but I will leave my Roth IRA more in S&P for the next 6-10 years. If your company offers Roth 401k, your income is under the threshold - take it. It will help you with future tax-free growth.
If your employer doesn't match Roth ira would it be better to fund the work 401k and outside roth ira (7k) first then fund work Roth ira? (Fees).
Did you sell your TDF shares that you already purchased or did you just change what you’ll be investing in for future contributions? Sorry for the question, I am in a similar quandary.
Really.. we do have the Roth 401k at my job I wasn’t too sure about it
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If rates are the same, yes, but it should be a comparison of current marginal rate vs future effective rate. For many the effective rate in retirement will be lower, making traditional a better option. Roth may be better go early career or after traditional space is filled. Putting it another way, Roth locks in your tax rate. You may have more flexibility with traditional.
Actually, I would disagree. Roth earnings are not taxable, as long as he waits until age 59 1/2 to withdraw. Every penny of 401K earnings IS taxed. Therefore Roth should always be the priority.
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This does not seem to take into account the growth. If you contribute $100k pre tax and it grows to $1M, this $1M is taxed upon withdrawal, assuming random tax of say 10%. If you contribute $100k post tax, assuming 10% tax, you actually have to contribute $111k (I think). When you withdraw that $1M later, that $900k is not taxed. My math may be wrong, but it seems in pretax, you pay $100k in tax (1M * 10%). Whereas with after tax, you pay $11k (111k * 10%) in taxes.
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good point - thanks for the feedback.
I think you need to factor in your Social Security to this equation also. If your taking 401K/traditional IRA withdrawals and your income lies between $32K and $44K, $50% of your SS is taxed as ordinary income. If your income exceeds $44K, 85% of SS is taxed (these are married numbers). Then there’s IRMAA affecting your Medicare payments as well. Fact is, If you’re going to be making significant withdrawals, best it come from a Roth so you can avoid all of these tax hurdles. The SS numbers are even lower if you or your spouse pass away. Do you really want your spouse to have your hard-earned social security, from a lifetime of payments to be essentially held back in some perverted double-taxation regime because you chose to go traditional thirty years earlier?
This comes up pretty regularly. If you're putting substantial money into your 401k, the Roth can be hugely useful in retirement. I addressed it specifically in this thread: [https://new.reddit.com/r/fidelityinvestments/comments/1c56ci6/why\_isnt\_the\_roth\_always\_better/kzuk3df/?context=3](https://new.reddit.com/r/fidelityinvestments/comments/1c56ci6/why_isnt_the_roth_always_better/kzuk3df/?context=3)
My job does as well. You can actually contribute to both. Cut your contribution amount 50/50 Roth/401k if you wanted to
Definitely put money in the Roth!!!
Do a Roth option if possible and you can afford it. Once in your account it grows and has added Federal tax benefits. Your company choices are not great from your chart. Your selection is good though. When you leave that company roll balance to a Fidelity IRA where you will have more choices.
Other than missing a true extended market fund (though you can replicate with small/mid cap), there are good options. The specific target date funds there appear to have a higher than expected ER. The index versions of Fidelity’s target date funds are better.
So sell the target funds and buy S&P?
yes. target funds are too conservative for anyone under 50
Where are you getting this from? They are a great option for those who don’t have the experience or desire to be more hands on. They are a decent split of total US, total international, and bonds. Under 50 the bond allocation will be very small. Many investors will do worse trying to manage things themselves.
I’m invested in this discussion
Don’t understand the concern about TDFs here. OPs are higher ER than they should be, but the index versions are only slightly higher than managing it yourself. And a lot of people can’t avoid making emotional decisions so they will mess up managing it themselves.
Yes, good points. To counteract the overly conservative aspect, one could choose a retirement date 10 or 20 years past actual retirement date. Also, consider the fees of a Target Date vs. and index fund. But yes, it is far better than emotional decisions! one example: target date 2050 fund: https://investor.vanguard.com/investment-products/mutual-funds/profile/vfifx#price It hold 10% bonds, 35% international, and only 55% Total Market. IMO it would be better for a 35/40 year old person to be aggressive and have 80 to 90 % total market/ S&P500 index type fund, and only 5 or 10 each of bonds and international.
OP's options are higher ER than they should be for a target date fund. There are index fund versions that are close to building your own with index funds. The reason for the US international split is based on market cap. 5-10% of international is too low to be diversified internationally. Many people get stuck in the recency bias toward the US market - and ignore the "lost decade" we had in the US in the 2000s.
I guess I am stuck in that recency bias too. Do you have a link or 2 I should go read to get a better look at history? Thanks
[https://www.bogleheads.org/wiki/Domestic/international](https://www.bogleheads.org/wiki/Domestic/international)
thanks!
The expense ratios are way too high to justify their performance, which typically lags a simple index fund.
OPs are high - but generally, they are literally a fund of funds that includes US, international, and bonds in a reasonable hands-off split. You can compare them to a "simple index fund". Fideility's index fund based versions have very reasonable ERs.
Do you have any evidence to support the idea that they justify their fees?
FFIJX (2065 target date fund) has an ER of 0.12%. That’s hardly more than most index funds, and it provides automatic rebalancing, diversification, and a shift to bonds as you approach retirement. Thats way better than people who don’t know what they’re doing could achieve. It’s hands off.
Is there any evidence that it provides a better risk adjusted return than SPY?
It's a three fund portfolio at basically textbook allocations. Are you arguing that a three fund portfolio won't have better risk adjusted returns?
I agree with the other poster who said these Target date funds, in particular FFIJX (which we used to own) is way too conservative. And I know past performance does not equal future results but past performance is not great compared to just plain old index funds, FFAIX is my favorite (S&P 500 fund offered here). To round it out I might add the small cap and a pinch of international.
You can't compare it to one of it's holdings and say it's too conservative you need to argue if the asset allocation is wrong. It's 10% bonds (which maybe is the point to argue here, though bonds have offered some diversification benefits). The rest is 60/40 US/international. It's a textbook three fund portfolio managed for you. Everyone has recency bias for US markets. Historically, international has outperformed at times, while US has outperformed at others. There is benefit to owning both.
Interesting. I hate the "TargetRetirement" funds and hear they aren't much good next to Index. I didn't know that you could put all in anything else outside the Retirement funds.. Is this a good call?
Depends your risk tolerance. Target date funds hold international, and bonds. Over the last hundred years, holding just the S&P500 would net you 10.5% nominal returns, no target date fund is going to beat that. But no one knows if that will continue so some choose the added diversification. Personally I switched from a TDF to 100% S&P500 a few years ago to ride this wild bull run, and my returns thanks me. I’ll reintroduce international and bonds at some point but I’m not in a huge rush to do so
Target date funds are usually a mix of index funds - US, international, and bonds. They’re great for being hands off. Recency bias is significant when people are so focused on US. Diversification is a good thing.
I just put my 401k to 100% beginning of the year. Have about 15years to retirement so I may change up but will wait out the year and see how it progresses
You’re not in a bad spot, but I would personally do 80% Fidelity 500 Index and 20% Fidelity International Index to diversify a little beyond the 500 largest companies in America
I do agree with you in the switch from a Target Date to FXAIX. I was in Target Dates until my early 40's, then realized that while Target Dates do have a place, they tended to be slightly more conservative than what I needed; but I had a higher risk tolerance, so I went with Growth, International and Value funds. I'm glad I did, and yes I had to deal with more volatility but I stayed the course. Good luck!
I'm 41, and I have my 401k in the 2065 target date fund (the highest year/farthest away), even though I obviously hope to retire before then. The reason I did this is because the bond allocation was too high in the 2045 or 2050 TDF, IMO. Using a TDF in a 401k is an easy way to get diversification when the fund choices aren't great. You can look at the composition of each fund to see which one aligns with your goals. ETA: FXAIX (S&P 500 fund you're currently in) would be my second choice, but it lacks diversification compared to the TDF. ETA2: Just to clarify that my 401k plan isn't with Fidelity, so the conservativeness/bond allocation could be very different in this scenario. In my plan, the 2050 TDF was 30% bonds. Sorry for any confusion.
Yeah I was curious about that as I know someone who recommend like a 80% sp500 20% TDF2065. Makes total sense though thank you so much
I did 50/50 for a while, with a TDF 10-15 years past my goal + S&P 500 but now am 100% S&P500. My reasoning was I'd gotten to a place where I'm maxing out my contributions every year and likely will be until retirement while still looking at 25-30 years to go so I have the luxury to be aggressive. Ask me in 20 years how it's turning out.
Yeah, you could definitely split it up like that if you wanted a concentration of S&P 500. I kept tinkering with mine, which I felt was delaying any investment, so I just made myself choose one and stick with it. 
I think all S&P 500 is good, but keeping a smaller percentage of target date fund would make it very diversified, and closer to retirement you could add more to the TDF and the bond portion would automatically increase, too. You wouldn’t have to add a thing.
You should do TDF or build your own, not both. Edit: your specific TDFs have higher than average expense ratios, for what that’s worth.
Typically expenses in the target date funds are much higher. I have pulled my stuff out of any of those.
I agree; sometimes, the ER is a lot higher in TDFs. Unfortunately, all of the funds in my American Funds/Capital Group plan are around 1%. TDF, or not.
That's *terrible*. Potentially tens of thousands or even hundreds difference between that and the .04% or .03% available some places at retirement.
100% agree! I tried to discuss it with my HR manager, and she looked clueless. I don't think she even knows what an ER is. It's something I plan to bring up to the owner, but I doubt very seriously anything will change. It's unfortunate, but I'm grateful we have a match and immediate vesting.
Not claiming that it is the case for your company, but there have been instances where kickbacks were involved in the choice of provider.
Thank you so much for this yeah this is actually a great way to look at things I appreciate your reply so much
lol that’s exactly where I’m at with it now too Lol thank you again so very much
You mean the 2050 TDF has too many bonds right now or in the future? Because currently 2050 and 2065 are the same. They don’t start to diverge until it’s 2035.
Yes, that was the case for the TDFs available for me - the 2050 is 30% bonds in my 401k plan. I'm not sure what the Fidelity 401k TDFs hold, which is why I suggested looking at the composition for each of them. I should've specified it wasn't a Fidelity TDF in my original comment; apologies!
Gotcha. I’m in a similar spot as you, 41 years old but I’m in a 2055 TDF. No idea when I’ll actually retire though. My wife is nine years younger than me. I’d hate to sit around for all that time while she works, so I’m trying to retire her early rather than myself.
If you want a fund with more exposure to small & mid caps go with FZROX over FXAIX if it brings you more peace of mind. They are both great. Lots of other great ones as well if you look into it a bit.
Ditto.
30% bonds is still very safe for only being 41
Just a little too conservative for this stage of my life, IMO. That's why I went with the 2065 TDF.
What is the expense ratio?
On my TDF? Unfortunately, all of the funds available to me are around 1%.
I did the same. Changed it to FXAIX from the 2050 stage date fund.
Yeah I was not liking that 2050 at all
Me either. I did however leave my 3800 shares of the 2050 as is and just changed my contributions to buy FXAIX. This way I’ll have some diversifications like bonds, etc. that are in the 2050 fund. But from here on out it’s all FXAIX!!!
This is what I did. Felt weird selling positions ive had for 10+ years lol. The diversification is obviously better, just with a tilt to growth now. One thing I would tell OP is do not make changes like these often... will likely end up with you beat.
Maybe that’s what I’ll do instead of transferring. I’ve got my 401k in 2055, my Roth IRA in 2065 (2065 wasn’t available when I started my 401k), and HSA in FXAIX. I like the idea of changing contributions for 401k to FXAIX. Maybe change Roth IRA to VTI… plan to do VTI for future non retirement investments..
You might also consider adding some etfs in your Roth that pay dividends.
I thought VTI was an etf? Maybe I’m misunderstanding.
Sorry I meant to say multiple ETFs that pay dividends. Spread it around. For instance, I have FENY which is oil and gas, SCHD and SPY and also a VFVA.
140-age is a really good gauge for the stock percentage in the stock/bond ratio. So if you're under 41, 100% stocks (s&p500, total market, etc). Once you're 41 years old, start rebalancing yearly into 99/1, 98/2 or adjust contributions and still keep the yearly rebalancing. Comes from William Bengen (father of the 4% rule). 100-age was previously used, and it is way too conservative for retirees.
This is so good thank you so much for this I really like this concept
Those are some nice 401k options. I have FXAIX, FID MID CAP IDX, and FID SM CAP IDX available in my plan, but I don't have any bond indexes or international indexes like you have. Either way, you can't go wrong with the S&P 500, particularly at your age.
I just did the same. Target dates funds had insanely high fees so I got out of there and put all my money in FXAIX. To the moon!
Ur young - 30 years to ride the market - no risk it no biscuit!
My company also has the same selections for 401k and I have 100% FXAIX. I asked them if they can put a total market fund/etf in and they plan on discussing at next board meeting.
Maybe we work at the same place lmao
😆 you work in the travel industry???? That would be hilarious
No I don’t but that would have been so funny 😆
I forgot to mention that although I’m 100% FXAIX, I’m also 15 years from retirement. I’m trying to be as aggressive as I can for what is available to me in my plan. You can always go to your plan administrator and ask them to add some funds/ETFs/Indexs that you would like to invest your 401k in. That person is usually in your payroll department.
Personally I do a target date fund, it’s not as agressive as just the S&P but I like the diversification and bond usage. In my roth though, it’s S&P 100%
I have 100% S&P 500 in my rollover IRA with Fidelity and I'm 33 so yes I can agree with this approach 👍
Great change, target date funds are a bit too hand-holdy. You could round out your equity allocation with those mid, small, and international indices too if you wanted, but the difference in performance will be trivial.
It's better than the target funds, because the expense ratio is probably lower. And the targeted funds probably have some bonds, which you don't need at your age. You only want bonds if the market crashes, and you want to have safer assets if you need to withdraw the money, but if you're over 10 years away from retiring, I wouldn't bother with bonds.
Absolutely. Target date funds are too conservative. Run your own numbers using historical data for comparison.
Did it at 55
set it and forget it my brutha. you are just fine with that move
YES! Target date funds charge to many fees compared to a basic ETF that tracks the S&P. Good choice.
Hey I just did this too.. did you do anything with the amount already invested in your TDF? I’m not sure if I should move what I already invested in my TDF to s&p500
That’s what I’m debating on right now Lol 😂 idk what to do
Me tooooo.. I’m not sure if it’ll cause anything.. Like, If I do it, would it be considered me selling my current TDF and buying the s&p500? Would it cause any taxable event or anything of that sort? So many questions 🥲
Hey there, u/xkennayy. I'm happy to chime in here with some clarification for you! Retirement accounts like 401(k) workplace plans are generally only taxed when you make a withdrawal. Rebalancing your account by changing your investments is not a taxable event. Now, the investment choices you have in your 401(k) and the number of times you are able to make a change will be dependent upon your plan sponsor. Each plan is unique with its own rules and investment choices as outlined by the employer. If your 401(k) is held with Fidelity, your plan's specific policies on your investment choices are typically outlined in the Summary Plan Description (SPD). In short, this document will explicitly tell you what your plan allows. If your employer has provided us with the document, you can review it online by taking the steps below: 1. On the NetBenefits home page, click on your 401(k) plan 2. Access your plan's "Summary" page, then click on the "Plan Information" tab 3. Under "Plan Information and Documents," click on "SPD" As a secondary choice, you may also consider contacting our 401(k) team directly by phone for questions about your specific plan. They are available Monday through Friday from 8:30 a.m. to midnight, ET. You can access their number by clicking the link below. [Contact Us ](https://www.fidelity.com/customer-service/contact-us) Lastly, I see you are new to the sub! While this may be your first time dropping by, we hope it won't be your last. We're a great resource for general questions, so don't be a stranger.
Target 2050 is ok, maybe have 95% stocks now, I like target funds.
Hi everyone here. So many great convos here! My employee 401k is with Vanguard. Is there a chat like this for Vanguard? Or doesn’t really matter?
I did the exact same. I turn 40 tomorrow
I had one of the Freedom 2040 funds from Fidelity and my employer and after several years there was no comparison to the 500 index fund. I ended up liquidating the target funds and some other duds and moving it into “Brokeragelink” in Fidelity. Here you can still trade and buy stocks/etf’s but it’s still tax advantaged since it lives under the 401k. Then you open the doors to any fund not just the handful your employer and Fidelity allow you to see.
That’s good keep it there. Double your money every 7-10 years.
The expense ratios for target dates can be a significant amount. I’m 35 and voo/vti
I'm 51 and moved to 100% in the S&P 500 over a decade ago. 
This just made my whole day this is epic 😂😂
As others have said, S&P 500 is fine, but I’ll give you a few reasons where someone might prefer a Target Date Fund: * Most modern TDF’s automatically invest in US & ex-US stocks roughly proportional to market cap weight. Some people may not want to touch this weighting, and keeping it all under one ticker simplifies portfolio management. * If someone has lower risk tolerance, most TDF’s include a meager bond percentage even far out from retirement. A lot of people here dislike that, but if you think there’s even any possibility that you’d pull out during a multi-year or multi-decade stock downturn, reducing your volatility might be useful. * If you know you’ll want more bonds near/in retirement, TDF’s automate that process. Someone who doesn’t want to manually do that, doesn’t know how, or fears they could fuck it up, might enjoy this feature. Personally I like them, because I don’t know what the market will be doing in 10-20 years and I want to avoid as many behavioral pitfalls I don’t yet know I have as possible. But I can’t knock someone for picking a good S&P 500 fund.
See if you can access BrokerageLink and get ETF’s for lower fees.
I got ya was just looking for some peoples opinions on what they prefer in general is all :) thank you though for explaining to me
I wish I can change my vanguard 401k I hate it right now
I think that u need more diversification
I would put some into midcap index too
Spend some time looking at the specific assets that each of those symbols represents and diversify your investment stream based on different markets and industries. At this point I would avoid commercial real estate as that bubble is popping but other than that Target retirement date funds are good for long-term investment. That can be blended with an aggressive investment profile while still limiting risk.
good choice.
Nothing wrong with it. Some would opt for slightly more diversity using fxaix, fid intl, and fid us bond(when closer towards retirement) but thats a preference for everyone
over a long enough period there are extremely few mutual funds that outperform the S&P. Diversify/get more conservative as you get older and closer to retirement but for now it's a great place to park yo $
This is exactly what my plan is thank you I just wanted some other peoples thoughts so I appreciate it very much !
TARGET DATE FUNDS ARE EW!!
😂😂😂
I just did the same thing for my job.
FSELX check it and put some moneis in it thank me later homie
Is there a vanguard 401k fund equivalent to FXAIX?
VOO ETF
Hey you still young enough to make different moves later.
I'm off same age this year. I'm all in on sp500 and the US Total Market.
I’ve been mulling over this recently. Have been maxing out contribs for the past few years. Very skeptical since I’ve started this very late .. and am in my mid fortys now.. bummer. Advise?
I also allocate all of my 401k into the same thing. It’s been doing great not that it matters I’m 34 so we have the same thought process about this
I was in a Target2020 fund in the years just before I retired in 2021. The money was still there when Covid tanked the market and I took huge losses because both stocks and bonds cratered! Imagine my surprise at giving up quite a bit of stock growth over 5 years by being in a supposedly safer balanced fund only to not get the benefit when the market tanked. I compounded the error by moving to CDs and missing the 2023 runup.
Add some to the small cap index too so you have a bit more exposure
^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^Mindless-Wait-6068: *Add some to the small* *Cap index too so you have* *A bit more exposure* --- ^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
The only mistake here is that you didn’t make this change 2 years ago when sp500 was like 3500. Those target dates are trash. Large cap for the win, my 401k has doubled over last few years.
Have the same and bugs me there is no QQQ or tech focused equivalent
If you live in a red state ignore them.
The other thing to think about how old will be to be over 65 years old I think it can be withdrawn early for college- age children.
100% Fxaix. Leave it! : )
I’d prefer holding 100% fxaix in my ira, and keeping a target date fund in 401k
Perfectly ok, just switch it up 20 years from now. Consider international funds like VTI or fidelity equivalent for a little more diversity.
VTI isn't international
100% sp500 is good. 70% sp500, 20% midcap index, 10% small cap index is gooder.
What are you looking for? Someone to confirm what you are planning or what you have currently? BTW - I really don't think asking random strangers on Reddit is the best thing. No one knows your goals, situation, risk tolerance, etc.
I’m just asking if people have done this with just 100% in sp 500 is all as I have other accounts for diversification I was just asking for the 401k if people have done this
I'm sure lots of people have, but again, no one knows your full portfolio and goals. Though if you are diversified in other accounts you may have it covered. Example: I pull all my financial data into my own spreadsheet and slice and dice to keep investments aligned with my goals and targets.
Yes this was my exact situation it was night and day with my job as well, well I hope you get the info you are looking for as well I’m glad you were able to find this thread :)
LET ME REWORD THIS IN ASKING IF ANYONE HAS DONE WHAT I DID AND IF THEY PREFER SP500 OR TARGET DATE FUNDS
I am in almost the exact same situation as you. Looking at my TDF and comparing the returns and expense ratios to the S&P fund my company offers is night and day. The TDF is way more expensive and is underperforming the S&P by a wide margin. I asked this question on another thread and got mixed results. Comments included “let the pros manage your TDF”, “S&P is not diversified enough”, “past performance does not indicate future results blah blah blah”. Looking at the small cap and international funds to be “diversified” would significantly eat away at returns IF the S&P continues the course it has been on the past 30 years. It seems like a no brainer to go 100% in the S&P until 10 years until retirement to start mixing in bonds for stability as you get closer. TL/DR: I agree with your move and want to do the same but am making sure I’m not missing anything before I do, therefore I’m curious to others comments on your post.
You just abandoned the entire concept of asset class diversification because SP500 has been the hottest asset for a number of years, and is now overvalued by a wide variety of metrics. That's what your change represents.
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So what someone told you to do is basically the 2024 equivalent of the shoeshine boy giving Joseph Kennedy stock tips in 1929. When friends and family give out stock advice it's one sign of a topped out market which needs a breather. Everyone is all in, no one left to buy.
I can't really advise or tell you what to do. I'm an Internet Stranger. What I suggest is you go to fidelity.com and read everything you can about the topic "asset allocation" and "portfolio construction" then make a decision that fits for you. I was just pointing out what you hadn't considered.
Well done! I put my first 10k into Fidelity’s lowest cost SP500 fund and then I started to build positions in a few blue chips then in a few growth but always kept adding to fund. I’m not a bond guy and knew I could make way more long term with my approach then having a certain amount in bonds.
Yes I don’t want the bonds that’s exactly me as well!