3 ms·

Sooo... if it's possible (I have a Fidelity 401k), is it a good or terrible idea to put a small % of my 401k into this?

by tibbon 8y ago

theandrewbailey 8y ago
There would be that nasty early withdraw penalty on that (probably). Not sure if it would be worth it in the long run. (IANA investor)
- astura 8y ago
  What‽‽‽‽ Changing your fund allocations within your 401(k), in general, doesn't trigger any penalties and is not a withdraw.
  - theandrewbailey 8y ago
    I was under the impression that it was about taking funds out of the 401k entirely (because the article doesn't mention 401k anywhere), not about changing the fund allocations within the 401k.
    - froindt 8y ago
      Whether the funds would be removed wasn't explicitly clear, but in a roundabout way, you brought up a good point. 401k's typically have a select 20-40 funds you can choose from, and this won't necessarily be available to GP. That being said, I haven't had a 401k with Fidelity in 3 years and don't recall if I had access to "everything" or if the fund choices are limited.
      - WorldMaker 8y ago
        I know Fidelity has limited Vanguard options in the past in its 401k and IRA funds options, presumably for control/competition reasons. I'm definitely curious how well Fidelity will promote its own index funds over actively managed ones, given they are still competing on active fees versus passive, but now just with themselves. I am planning to take a look at my own Fidelity accounts this weekend and see if they've surfaced these index funds well. It seemed encouraging from the email this morning.
smileysteve 8y ago
The lowest fee broad index fund has always been the ideal investment for your long term savings. A Random Walk Down Wall Street was published in 1973 and studied decades of data and funds. Jack Bogle started Vanguard in 1974. And 8 years ago, most every newspaper published a cycle of how the S&P 500 almost always beats active investing, especially after fees. So, a small%, only if you like paying active funds money to not make you money. tldr; Unless you're retiring in the next 10 years; the lowest fee broad index is your best investment with something resembling "diversity" and risk resembling slight "diversity"
astura 8y ago
401(k)s usually have limited investment options, you'll have to check if these funds will be available under your company's plan. To answer your question, why on Earth would it be a terrible idea? They are two index funds - total market index and international index. Investing in low cost index funds is generally considered the best way to invest for the average person. Furthermore, with 401(k)s you can freely trade without having to worry about triggering capital gains taxes, so there's no reason not to move the entirety of your investments in these asset classes fully over to the new funds in a 401(k).

Sooo... if it's possible (I have a Fidelity 401k), is it a good or terrible idea to put a small % of my 401k into this?

by tibbon 8y ago

Sooo... if it's possible (I have a Fidelity 401k), is it a good or terrible idea to put a small % of my 401k into this?

There would be that nasty early withdraw penalty on that (probably). Not sure if it would be worth it in the long run. (IANA investor)

astura 8y ago
What‽‽‽‽ Changing your fund allocations within your 401(k), in general, doesn't trigger any penalties and is not a withdraw.
- theandrewbailey 8y ago
  I was under the impression that it was about taking funds out of the 401k entirely (because the article doesn't mention 401k anywhere), not about changing the fund allocations within the 401k.
  - froindt 8y ago
    Whether the funds would be removed wasn't explicitly clear, but in a roundabout way, you brought up a good point. 401k's typically have a select 20-40 funds you can choose from, and this won't necessarily be available to GP. That being said, I haven't had a 401k with Fidelity in 3 years and don't recall if I had access to "everything" or if the fund choices are limited.
    - WorldMaker 8y ago
      I know Fidelity has limited Vanguard options in the past in its 401k and IRA funds options, presumably for control/competition reasons. I'm definitely curious how well Fidelity will promote its own index funds over actively managed ones, given they are still competing on active fees versus passive, but now just with themselves. I am planning to take a look at my own Fidelity accounts this weekend and see if they've surfaced these index funds well. It seemed encouraging from the email this morning.

smileysteve 8y ago

The lowest fee broad index fund has always been the ideal investment for your long term savings. A Random Walk Down Wall Street was published in 1973 and studied decades of data and funds. Jack Bogle started Vanguard in 1974. And 8 years ago, most every newspaper published a cycle of how the S&P 500 almost always beats active investing, especially after fees. So, a small%, only if you like paying active funds money to not make you money. tldr; Unless you're retiring in the next 10 years; the lowest fee broad index is your best investment with something resembling "diversity" and risk resembling slight "diversity"

astura 8y ago

401(k)s usually have limited investment options, you'll have to check if these funds will be available under your company's plan. To answer your question, why on Earth would it be a terrible idea? They are two index funds - total market index and international index. Investing in low cost index funds is generally considered the best way to invest for the average person. Furthermore, with 401(k)s you can freely trade without having to worry about triggering capital gains taxes, so there's no reason not to move the entirety of your investments in these asset classes fully over to the new funds in a 401(k).