I'm mid-40s with a relatively novice level of investment knowledge and recently rolled over a 401k to a Fidelity IRA account and now trying to figure out how to allocate the funds. This account represents 17 years of 401k contributions so I'd like to get the allocations right. Would prefer not to have to make adjustments more than once or twice a year (see novice comment above). Plan is to keep this as a purely pre-tax account and not co-mingle pre and post-tax contributions.
Fidelity of course was chomping at the bit to make it a managed account but I have some smaller managed accounts with other firms where I haven't been pleased with the performance when compared to the market, so I'm trying to DIY this one.

Below are the options I see at the moment:
Easy button = 2045 target date fund
Next easiest would be an 80/20 split between VOO and VTI respectively, or something similar
Slightly more sophisticated would be a mix of ETFs to cover the below:

• Large Cap
• Mid Cap
• Small Cap
• International

Do I need to diversify more than this? Put a token % into bonds? Something else entirely?

Appreciate any suggestions and yes I did create a new account for this post for the sake of anonymity.

I dont do target funds, but that is me. I have my rollover account 80% VTI and 20% SCHG. Roth and brokerage are much different allocations. Curious what the experts on this forum provide though, might make some moves myself.

100% VOO until you are 10-15 years away from retirement then start to slowly DCA into more bonds/fixed income

previously posted:

target date funds are trash, wayy too heavy in bonds and international for anyone that's trying to build real wealth over time, most just default into it not knowing any better thinking it's the best standard or they can't mentally stomach short term volatility and rob themselves of returns over time

target date funds are like the Dave Ramsey of investments, helping the poor stay slightly less poor

beating the market is not easy, beating target date funds absolutely is

My entire working life I had nothing but stocks in my 401-K, no bonds, no target date funds. I retired in 2018 and a year later had to begin RMD's. I remained 100% equity and even with hefty RMD's my IRA's have doubled in 6 years. I manage half and gave half to an FA for a fee, but I told him what to do with it, broadly. My portion is a lot of VOO & VGT and maybe 8 long term stock holds (my Apple basis is about $8). I'm 78 next month and have zero inclination to buy anything on the bond side. And FWIW my FA has done a great job of keeping up with my portion and will keep my kids from spending it all a week after I'm gone. Succession is the main reason I have an FA.

permabull said:

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100% VOO until you are 10-15 years away from retirement then start to slowly DCA into more bonds/fixed income

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I've never resonated with the idea of pulling out of the equity markets, even a little bit, with that much time left on the clock.

Anytime a defense goes into "prevent" mode they usually end up losing.

In my investing lifetime I have seen 10 year dips where you are even money. At the end of the day it really depends on your withdrawal rate, if you are only withdrawaling 3% or less then sure go 100% stocks but if you need to pull 5-6% annually in retirement you probably want 30-40% fixed income and bonds to smooth out the swings the markets might give you

I have long suspected this but haven't really had any idea on what to do about it. Slowly educating myself so this is good information to have. Also mid 40s. Great thread OP.

Diversity means more than equities

3 fund portfolio with whatever risk you are willing to take. Below are vanguard funds but fidelity should have similar funds. The rationale behind the 3 fund portfolio.
- us bonds (BND)
- total us stock (VTI)
-international (VUXS)

If I were starting out this is what I would do

All ETFs
International 5%
Small Cap 10 %
Mid Cap 20 %
Large Cap 65%, spread among at least 4 sectors, Technology, Financial, Industrials, Healthcare

This IRA is 100% pre-tax funds rolled over from a 401k.
Not planning to deposit or withdraw any funds until I'm 60 (I assume this is the smart thing to do by not comingling pre and post-tax dollars.)
Any thoughts on FXAIX vs VOO in my situation? Expense ratio is low on both but FXAIX has the advantage.

TuckerO said:

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This IRA is 100% pre-tax funds rolled over from a 401k.
Not planning to deposit or withdraw any funds until I'm 60 (I assume this is the smart thing to do by not comingling pre and post-tax dollars.)
Any thoughts on FXAIX vs VOO in my situation? Expense ratio is low on both but FXAIX has the advantage.

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It's just me but I'd put the entire thing in either one of those and sleep just fine at night. I don't know why you wouldn't want to deposit more later on, that shouldn't change a thing.

TuckerO said:

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This IRA is 100% pre-tax funds rolled over from a 401k.
Not planning to deposit or withdraw any funds until I'm 60 (I assume this is the smart thing to do by not comingling pre and post-tax dollars.)
Any thoughts on FXAIX vs VOO in my situation? Expense ratio is low on both but FXAIX has the advantage.

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I have a lot in FXAIX. Everyone on here always recommends Vanguard which is just fine but the equivalent Fidelity funds perform the same and usually have better expense ratios.

YouBet said:

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TuckerO said:

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This IRA is 100% pre-tax funds rolled over from a 401k.
Not planning to deposit or withdraw any funds until I'm 60 (I assume this is the smart thing to do by not comingling pre and post-tax dollars.)
Any thoughts on FXAIX vs VOO in my situation? Expense ratio is low on both but FXAIX has the advantage.

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I have a lot in FXAIX. Everyone on here always recommends Vanguard which is just fine but the equivalent Fidelity funds perform the same and usually have better expense ratios.

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Not to mention Fidelity's apps and website, are from 2024.
Unlike Vanguard's antiquated interface.

Petrino1 said:

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VTI and VOO are practically the same, I would just choose one and ride it. I prefer VTI because it has exposure to small cap and mid cap stocks.

Since you are decades away from retirement, I personally dont feel like you need to add bonds right now. But if you just feel the need to, then maybe add something like 10% bonds and 90% VTI.

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i can't stand the thought that BND returns like 1.3% over TEN YEARS.

it's basically keeping your money in a cash account to be in bond funds the last two years.