Fidelity Freedom Index Fund series hold 40% of their stock allocation in international equities. To me, that is an unacceptably high percentage, I would want no more than 20%.
If I were you, I would use the State Street 500 Index Fund for its 0.02% expense ratio almost exclusively, OR split my contribution half each into the S&P 500 Index fund and the Fidelity Freedom Index fund. With the latter approach, you will get 20% of stock allocation equities as international equities, and also 5% as bonds. A three fund portfolio with just two funds.
This isn’t a purist’s 3 fund portfolio but will get you exactly where a 3 fund portfolio will lead you.
A purist’s 3 fund portfolio isn’t going to get you any more financial advantage, the I-shares MSCI EAFE Index fund has an ER of 0.05% which isn’t much better than 0.06% for the Freedom Index Fund’s ER of 0.06%. And the best pure bond fund, the Vanguard Intermediate Term Bond Fund has a HIGHER expense ratio of 0.07%. So, even if you were to construct a purist’s 3-fund portfolio you are likely looking at weighted average expense ratio exactly the same as my proposed three-fund-portfolio-in-two-funds approach.
Regarding Roth IRA, why in the world you want to limit the tax free growth, by having low growth assets like bonds in there? One cardinal rule: Roth == zero bonds!!
If I were you, I would use the State Street 500 Index Fund for its 0.02% expense ratio almost exclusively, OR split my contribution half each into the S&P 500 Index fund and the Fidelity Freedom Index fund. With the latter approach, you will get 20% of stock allocation equities as international equities, and also 5% as bonds. A three fund portfolio with just two funds.
This isn’t a purist’s 3 fund portfolio but will get you exactly where a 3 fund portfolio will lead you.
A purist’s 3 fund portfolio isn’t going to get you any more financial advantage, the I-shares MSCI EAFE Index fund has an ER of 0.05% which isn’t much better than 0.06% for the Freedom Index Fund’s ER of 0.06%. And the best pure bond fund, the Vanguard Intermediate Term Bond Fund has a HIGHER expense ratio of 0.07%. So, even if you were to construct a purist’s 3-fund portfolio you are likely looking at weighted average expense ratio exactly the same as my proposed three-fund-portfolio-in-two-funds approach.
Regarding Roth IRA, why in the world you want to limit the tax free growth, by having low growth assets like bonds in there? One cardinal rule: Roth == zero bonds!!
Statistics: Posted by lakpr — Tue Nov 05, 2024 1:50 am