Investment Choices…
Posted by texasmoose on May 19, 2007
So, what to do with my money? Here’s the breakdown for my 401(k): 35% international, 35% small-cap, 15% mid-cap, 15% large-cap. Like I said before, I have 30+ years until retirement, so I can afford a little risk right now, which is why I’m overweighted in international and small-cap. However, I’m limited to the options in the plan.
My IRA and Roth accounts at Fidelity are heavily weighted towards large-cap (~70%), with the rest in international. About 40% of this is in Fidelity’s US Equity Index, a nice S&P 500 index. But the rest…
I’m a fan of index funds, although I have only a small portion of my total investments in them (it’s not my fault my 401(k) doesn’t offer them). Warren Buffet is a fan of index funds. Free Money Finance is all over index funds. What’s so great about index funds? Two thing: 1) low costs, and 2) more importantly, most actively managed funds do worse compared to their index benchmarks. And they offer instant, broad diversification (as long as the underlying index is broad and diversified). Ok, so that’s three good things.
The problem I have is that the index fund choice is limited at Fidelity, where I currently have my money. Although the choices are pretty good, the minimum investment amount for most of the index funds is $10,000, which I do not have yet. So, either I wait and build up my balances, taking advantage of actively managed funds, or go to Vanguard, where the minimum balance amounts are much lower ($3000), although this would mean having different accounts in different financial institutions. Since my actively managed, large-cap fund is doing pretty well, I think I’ll stick with that, although I will still research to keep my options open.
