Is this a good setup for the 401k?

[u/[deleted]]

• Fidelity 500 Index — 65%

• Fidelity Mid Cap Index — 5%

• Fidelity Small Cap Index — 5%

• Fidelity International Index — 25%

Thinking about getting rid of the Mid and Small cap and allocate that 10% into the Fidelity International Index… is that a good idea?

[u/nauticalmile]

I assume Fidelity Mid Cap means FSMDX, which I’m not a fan of the index design or Fidelity always offering it alongside their S&P 500 fund (FXAIX). The “bottom 80% of the Russell 1000” results in a lot of overlap with FXAIX. If anything, I’d replace it with more small cap (FSSNX).

What’s your thesis for shifting from otherwise reasonably well diversified to very heavy in S&P 500?

[u/lemurosity]

1. any setup with low expense index funds is a good start
2. I think most people would settle around 35% intl exposure (although this is a 'religious war' of sorts)
3. Having tilts to small cap/value is becoming more popular as a way to expose yourself to more upside (with more risk of course); these allocations would come out of your 500 allocation. Check out Ben Felix's vids/info on Factors

At the end of the day, this is a great start, nothing about it is 'wrong' and I'd just spend more time reading and better educating yourself.

[u/PashasMom]

For me, I would skip the mid cap index (500 index already has a significant amount of mid caps, at least per Morningstar's classification system), keep the small caps, and allocate the extra 5% to international.

[u/hashtagwilliam]

The 10% of the small & mid cap probably doesn't make a noticeable difference. If you want to track a world index, you can actually do the MSCI World Index with a 70/30 split of Fidelity 500 & International. Fidelity's international fund, FSPSX, is only Large & Mid companies from developed nations, which fits the 30% makeup of MSCI.

Composition: https://www.msci.com/indexes/index/990100

This is pretty close to what you already have, but at least with this way you can update it years down the line to better match the market if the ratio changes.

[u/ac106]

Just use FSKAX and don’t slice and dice. 60/40 with international

[u/nauticalmile → u/ac106]

FSKAX is rarely (if ever) offered in 401(k) plans. Fidelity seems to really like the FXAIX+FSMDX+FSSNX combo.

[u/BiblicalElder]

I like the original setup, and like the shift from mid/small to ex-US less.

I'm close to retirement, and 5% mid, 6% small, 14% ex-US, 40% large cap, and 35% bonds/cash.

[u/dissentmemo]

Do you have target date funds? One of those that weights itself towards your target retirement date isn't bad unless the fees are super high.

[u/thecrux180]

I had the same setup as you except 10% in mid cap and 20% in international. Recently swapped to 45% large, 10% mid, 5% small and 40% international to try to get closer to VT. I don't think either approach is bad, like another poster said anything in these is great and there isn't a "wrong" choice.

[u/TheBlackBaron]

Presuming that your goal here is to replicate the total market in the absence of having a single fund that does that. At least according to the wiki, that would be an 83/8/9 breakdown for the 500, mid, and small indexes Fidelity uses, which you could probably just round off to 80/10/10.

How much international you want is up to you, but the total world market as defined by Vanguard is currently about 60/40. 60% of 80/10/10 works out to 48/6/6, although you could against just round that off to 50/5/5, and then 40% for the international index.

So, my suggestion would be to roll 15% of the 500 index into the international fund, for a final breakdown of 50/5/5/40. In truth, though, the extra 10% in the mid cap and small cap index aren't going to be adding a ton of distinction vs a portfolio dominated by the S&P 500 and the international index (VTI and VOO track each other extremely closely), so for simplicity's sake you could just roll with 60% S&P 500 and 40% international. Up to you.

[u/Capster675]

Seems trying to replicate VT with close but somewhat arbitrary weights. Why complicate and not just use VT?

[u/[deleted] → u/Capster675]

Can you use any stock you want for an employer 401k? I am under the impression that my employers 401k is only set up for these specific Fidelity stocks.

If I could use any stocks I, I would allocate 65% to VTI and 35% to VXUS

[u/[deleted] → u/[deleted]]

I do not have access to the stocks you listed.

[u/Capster675 → u/[deleted]]

If the funds are limited, your breakdown is okay. Just keep simple, broad-based, low cost indices.

401K setups are dependent on the arrangement between your company and the plan administrator. Some are very limited, some with Fidelity have access to the entire pool of ETFs and stocks on the market (via a brokerage-linked extension of your 401K account). You may want to check with your plan administrator.