Fidelity Funds

[newdoc1]

Hi All,

New to the forum and excited to join the community. I am in my last year of residency and starting to max out my roth iras. I have been mainly investing in the S&P 500 index fund and have done pretty well over the last year or two. However, I think that we are probably heading towards a bear market so want to transition my remaining cash into safe bond funds for now. Any advice on a safer mutual fund (I guess bond fund?) with fidelity? Or should I just continue putting money into the index fund (FUSEX). ? I have around 50k saved during residency and would like to allocate it wisely. I was thinking of paying off some of my loans, but thinking that first I want to allocate enough into investments and then maybe start paying off my loans. I still have one year left of fellowship.

[G]

newdoc1 wrote:

continue putting money into the index fund (FUSEX)

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[Peds]

hi, welcome.

first off, why s&p and not a total market fund?

second, total bond is fine. ftbfx

third, you should write down a plan. this willy nilly add and subtract wont work long term.

[newdoc1]

Thanks peds. I agree with you..i gotta make a plan. I think sp500 and total market funds would give you very similar returns...no specific reason that I chose sp500. I feel like I don't have that many investment options so it's easy to either put money in bond or stock index funds.

Do y'all recommend investing in bond funds in this market climate?

[sthealth_wealth]

Expected people to jump and say stop timing the market, then I realized this isn't the bogelheads forum.

[Zaphod]

Returns are definitely very similar. You're still in res/fellowship, aka, you have your whole career ahead of you. You dont need bonds any time soon, and you also have hardly any money at risk in the market to worry about anyway (dont feel bad, me neither). If the market tanks 50% youre out what, half a yearly contribution? It doesnt matter in the grand scheme of things. Keep plugging away at equities until you figure out an asset allocation you're comfortable with.

Do not take your investment money from what I hope are tax deferred accounts and put it into loans. Even if taxable, probably not wise. No reason you cant simply put incoming cash flow towards them, in 5 years you'll kick yourself for worrying about them and making any kind of movements, especially if they incur taxes and penalties.

[CordMcNally]

Write down an investment plan with an asset allocation that you feel comfortable with and then just add your contributions to try to match that. If your contributions aren't able to keep your allocation within a reasonable degree, re-balance once a year or so.

[Gas_Doc]

newdoc1 wrote:

Do y’all recommend investing in bond funds in this market climate?

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The "market climate" should not dictate how much of your portfolio you allocate to bonds. As many have said, make an Investing Policy Statement and stick to it. Your stock to bond ratio should be a reflection of your risk tolerance and how far you are from retirement. Without knowing anything about your risk tolerance, I tend to agree with @Zaphoid in that you likely don't need much bond exposure because you are so far from retirement. That being said though, you've likely never experienced a bear market, so who knows how you'll react to losing 30-50% of your portfolio. If you think you will panic and sell on the way down, maybe some percentage of bonds would be advantageous.

[newdoc1]

I see. I think I'll just invest most of the money into a stock market index fund (S&P 500). When i was in college I invested a couple thousand in 2008, and took my money out at the way bottom. Will never make that mistake again. If anything I'll have around 10% in a bond index fund invested at any given time, which is better than having cash just sit around.

[jz]

Do y’all recommend investing in bond funds in this market climate?

You can not predict the market moves short term.  If you need to use the money within 3-5 years, put it into bonds. If you need the money after that, put it into the stock market.

[Dreamgiver]

Is the 50k you have saved an emergency fund? Do you need it to be that big? Why is that not invested?

[newdoc1]

yes, the 50k is sorta an emergency fund. Yes, that's why I want to invest it.

[The White Coat Investor]

Not much left to say here. I cannot emphasize enough the quality of the advice you've been given. You need a plan. You're shooting from the hip here. If you don't know enough to write your own financial plan, consider hiring a financial planner or taking my online course designed to help you get a written financial plan.

As a general rule, emergency funds shouldn't be "invested". If you feel a need to invest your emergency fund, it's probably too big.

[newdoc1]

Thank you for the responses. I do understand the importance of a financial plan, but I do think that investing roth ira money in an index fund doesn't require a lot of thinking at this point in time. I will create a plan for the long term though.

[Donnie]

newdoc1 wrote:

Thank you for the responses. I do understand the importance of a financial plan, but I do think that investing roth ira money in an index fund doesn’t require a lot of thinking at this point in time. I will create a plan for the long term though.

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I agree that you don’t need to do a lot of thinking at this point in time.  The problem is you are doing too much.  100% S&P 500 will do just fine.  Jumping into bonds at random times based on your feelings will not.