Roth funds for 59 yr old (bond, 401k, Fidelity, investments)

[mathjak107]

Originally Posted by rose3408

LongArm: Percentages indicated below.

Present 401k
24.31% - PIMPCO Total Return - exp ratio 0.71%
25.01% - Fideltiy Spartan 500 Index - exp ratio 0.10%
16.44% - Mainstay Large Cap Growth - exp ratio 0.89%
7.97% - JP Morgan Mid Cap Value - ex ratio 1.14% - net exp ratio 1.00%
8.30% - MSIF Mid Cap Growth - exp ratio 0.71%
10.02% - Prudential Jenn Small Co - exp ratio 1.15%
7.95% - Target Small Cap Value - exp ratio 0.68%

Other available funds within 401k
BMO Stable Principal - exp ratio 0.59% - net 0.57%
MFS Value - exp ratio 0.96%
American Fundamental Inv - exp ratio 0.36%
American Euro Pacific -exp ratio 0.55%
Thornburg Internl Value - exp ratio 1.06% next 0.99%
Prudential Jenn Health Sciences exp ratio 1.23%
Fidelity Freedom Income - exp ratio 0.51%
Fideltiy 2000, 2005, 2010,2015, 2020, 2025, etc. 0.51%

rose you got a hodge podge of stuff with no direction ,overlap and conflict.


make sure you don't own a target fund . you should not own other investments if you do . you are un-doing the very nature of what the target fund is trying to do.

it is trying to adjust equities while all your other stuff un-does it.

as far as what you should do? no one can really say. without knowing your entire financial situation there is no way to do this right.

why? ideally you only want income generating stuff in your 401k and ira and equities outside of it.

you do not want to pay regular tax rates on your deferred retirement money on equities when you take it out . you can pay half those tax rates outside the iras and 401k . you have to pay regular tax rates on income stuff so that should really be what goes in your deferred plans.

how you structure will depend on how much you have outside the deferred money to work with.

it will depend on your risk level as well.

it isn't just a simple case of buy this fund in your ira or that fund. a comprehensive plan takes in a whole lot more including tax ramifications and works as one cohesive package.

[rose3408]

Per my notes, since I have an IRA in Fidelity I will be opening the Roth w/them. Is there a similar account to Wellesley w/Fidelity or can this be purhased w/Fidelity?

[mathjak107]

fidelity balanced is close..

my personal opinion is before you create more hodge podge you need to somehow get a plan in place that is cohesive. perhaps a newsletter to tell you what to buy would help.

it isn't about having all these funds that makes your portfolio work. it is the interaction and cohesiveness of the total portfolio.

when a portfolio plays nice the sum of its parts should be better than any one piece alone.

[rose3408]

You are spot on! That was my thoughts exactly in that it is a hodge-podge of funds with no reasoning or direction what-so-ever; hence my decision to post on this forum. Problem is, I don't know where to begin to fix it?

To answer your question regarding my financial status/picture, it's pretty much as you see in my post. I'm 59, lost many years of saving due to divorce and job loss so I'm working very hard in making up for lost time. A few years ago during the financial crisis it was a financial adviser that told me to rollover my IRA from a previous job in the annuity. It had $20k in the fund. Not knowing anything about such issues I trusted him, so I have the annuity. In 2023 when I turned 67 it will have around $30 and at that time I can choose to annuitize, lump sum, payments for life, payments for a set amount of time. . . you know the drill.

Other retirement funds. I presently have a small IRA ($5,100) rolled over from an old 401k that is with Fidelity in a target fund. And then I have the 401k at work and all those funds are listed what I am enrolled in. How did I choose? Not knowing anything and picked. Sounds terrible I know, but as indicated, I'm not knowledgeable about such things which is quite obvious. My only other retirement funds are a savings account of which I built to an 8-mo. emergency. And I now want to open the Roth.

So what are my next steps? I know now you need to properly build the retirement portfolio, consider tax implications, etc. But I'm so confused and I now I need to clean up the hodge-podge of my 401k, but I don't know where to begin. I'm loosing so much sleep over this and want to get things right and learn. I have so many books sitting here on my desk, couch, bed that I have read, but I need a little guidance.

[mathjak107]

i see you are almost 100% equities , is that the route you want to go? are you comfortable with that?

[mathjak107]

when were you thinking of retiring ? were you planning on staying at that allocation for retirement?

if not when were you going to phase over to your retirement model? you really want to do that years before. we did it 7 years prior.

[rose3408]

Hello Mathjak: First and foremost, thank you for helping me, I appreciate so much. You an PM as well if you feel more comfortable.

In the many books I have read it was mentioned "not" to put all your eggs in one basket and to to have a well balanced/diversified portfolio which is everything you mentioned and are 100% correct. To answer your question, NO, I do not want to have everything in Equities. When I looked at my present and all available funds I want to make the correct and appropriate allocations but needed direction.

Step 1. - Begin with the 401k and change my hodge-podge mix around for an appropriate portfolio taking into consideration the IRA target fund in Fidelity I presently have.

step 2. - Slapping myself for the flexible annuity with Modern Woodmen. I learned from this mistake and wish I knew about this forum for advice before rolling over IRA into annuity. At least as far as annuities go, it's a safe and good one, fixed at 3% or better, no withdrawl fees, etc. I've had it for 5 yrs. Penalities/charges drop down to 5% next year if I withdraw it and 3% in 2015 and 1% in 2016. At that time I would like to put $$$ elsewhere and could use your advice on that and where to invest.

Step 3. - Refer to comment above about target fund in Fidelity. Am I correct in keeping this fund or make a change to other fund(s) given the changes to be made to 401k

Step 4. - Refer to above comment on annunity. I am making right choice to keep until 2016 to avoid withdrawal charges or invest elsewhere. confirm w/Mathjak.

Step 5. - Open Roth w/Fidelity since I already have an account. Make decisions on fund(s)

Step 6. - Continue to build up liquid assets. Presently at $21k

Step 7. Send Mathjak BIG {{{Hugs}}}} Your help is priceless and will NEVER be forgotten, thank you!

Kindest regards,

[rose3408]

Hello Mathjak: My retirement goal is 2023 and I plan to retire here, or if relocating in an area where COL is the same. As you can see I have a lot of catching up to do in retirement which is why I am taking this seriously and need to SAVE, SAVE, SAVE and make sure my portfolio is correct. No sense in whining about divorce or job loss, many go thru worse and I'm working hard in making up for los time and willing to learn how to create a much better portfolio. You are so very helpful and I'm so grateful!

As indicated earlier, you can also send me PM. Thanks!

[mathjak107]

i can only tell you what we did , i am 61 and about 7 years ago we went from our growth mode to a mode we felt we wanted to be in so we could retire at anytime.

i used the fidelity insight growth model up to that point and had great gains .

we sold off the growth model and i went 2/3 income and preservation model ,it is about 30% equities.

the other 1/3 is in the 60/40 growth and income model.

including cash and other investments not counting investment property we are about 35% equities over all.

once we enter retirement in a year or so we will INCREASE equities by 1% a year . yep increasing.

the low level of equities going in prevents you from being harmed if the first 5 years suck. you can destroy an entire retirement budget if the first 5 years go badly.

the increase of 1% a year helps build protection against inflation . the rising equity position builds a larger cushion so when the down years come later on you can fall quite a bit and still be way ahead where you would be if you used no or little equities.

[rose3408]

Hello Mathjak: Looks like I know the direction to take with the Fidelity accounts, thanks. What is your "suggestion" and I realize it's just that, for my hodge-podge and mix of funds in present 401k at work? I need to reallocate those.