My employer recently switched to Fidelity and for now I’ve chosen the LIFEPATH IDX 2050 A option. It looks like this one provides quarterly dividends, but the yield is 0.0%(?)

I’m looking for some fairly risk adverse options or blends that provide dividends that will be reinvested. Anyone have any recommendations?

  • root@lemmy.worldOPEnglish
    1·
    3 months ago

    Thanks for the reply!

    • Here is what I seem to have access to (the Vanguard funds are catching my attention).
    • I just mean that I’d prefer something not too risky, like putting all your money into a single stock or industry. I’d like some diversity
    • Good point, I was just told that dividends set to re-invest are a good way to compound
    • I was hoping in the next 25-30 years
    • rIRA that I max each year (it’s only a couple years old), HSA and 529
    • sugar_in_your_tea@sh.itjust.worksEnglish
      2·
      3 months ago

      If you want to be lazy, the Lifepath Index Funds are completely fine and well-diversified. They’ll have a good mix of US, international, and bonds, and it’ll become more conservative over time (i.e. more bonds). Pick a number that’s close to your retirement date, and you should be set.

      That said, I like to be in control, especially since I have other accounts, so I’d go with the Vanguard Institutional 500 Index, which is a super cheap S&P 500 fund, and the Vanguard International Stock Index, which is a pretty cheap total international (not US) index fund. That’s about as diversified as you can get, though it does miss US small caps (can add the Vanguard Extended Market Index if you want, but it won’t likely impact returns much).

      As for ratios, I’d go with:

      • 60-70% S&P
      • 30-40% International Index

      Or you can ignore international stocks and just do the S&P 500, that’s also fine. If you really want those US small caps, add in like 5-10% of that fund and take from the S&P 500 fund (so they’ll end up at something like 85/15 split between those two funds).

      So it’s up to you. The Lifepath funds (basically a target date retirement fund) is run by Blackrock, and they’re usually a fantastic fund manager with low costs. The Vanguard funds are also great and you’d probably get a little lower fees by DIY, but not enough to really matter. So if you’re on the fence, go with the Lifepath fund. But if you want to control where your asset allocation is (i.e. if you plan to have an IRA and taxable brokerage at some point), go with custom funds.

      • root@lemmy.worldOPEnglish
        1·
        3 months ago

        Wow, great advice! Thanks so much. My rIRA is through Vanguard, and I do want a brokerage account at some point in the future for mid/long term savings.

        I’ll likely go with a blend of the Vanguard options, but just so I know, why might it be better to do so if I have an IRA and plan to have a brokerage in the future? Just so I have more “dials to turn” to match my tolerances?

        • sugar_in_your_tea@sh.itjust.worksEnglish
          1·
          3 months ago

          It’s more about tax efficiency. if you open an IRA, you’re likely going to be contributing on a Roth basis, meaning that you’ll never pay taxes on the growth, whereas in a 401k, you’re likely contributing on a pre-tax basis, meaning you will pay taxes on that money. With a taxable brokerage account, you’ll be paying taxes on every disbursement, meaning anytime you sell or receive a dividend.

          So, generally speaking, you’ll want:

          • Roth accounts (Roth IRA, Roth 401k, etc) - highest expected growth
          • pre-tax accounts (IRA, 401k) - lowest expected growth
          • taxable brokerage - lowest capital gains (so low dividends)

          In practice, that usually means:

          • highest growth - growth stocks
          • lowest growth - bonds
          • lowest capital gains - value stocks

          This can be as complicated or as simple as you’d like. For me personally, I have:

          • Roth - US stocks - i think these will continue to outperform longer term
          • pre-tax (401k and HSA) - other stocks & bonds - this is where I rebalance
          • taxable brokerage - international stocks (for the foreign tax credit)

          My overall portfolio composition is the same, I just shift around where I keep each asset class based on tax efficiency.

          • root@lemmy.worldOPEnglish
            2·
            3 months ago

            Ah that makes sense, thank you. For now I’m doing backdoor Roth IRA contributions as I can’t do direct contributions. Eventually I hope to be able to also use the mega backdoor after I fill up the pre-tax federal contribution limits for 401k. That will be “after-tax” that is converted to Roth.