Just wanted to check what options you take in oracle 401k fidelity portfolio . I have vanguard (years ) fidelity contra pool and dodge .. YTD gains are not that great
- Microsoft realguruOracle .. not sure they still pay salary .. who uses those arcade technologies.. guess Vietnam and China does .. Larry missed the whole cloud boat
- I choose fidelity and just looked at previous years returns and choose the best.
- But seriously I hope you’re not choosing an active mutual fund with that logic.
“To date, an overwhelming body of academic research has demonstrated that past performance not only fails to guarantee future performance (as the required SEC disclaimer states), but has almost no value whatsoever as a predictor—with the exception that poor performance combined with high expenses predicts future poor performance.”
http://thebamalliance.com/blog/the-peril-of-chasing-active-mutual-fund-performance-ratings/Aug 26, 2018 0
- The traditional guidance seems to be to choose low cost index funds to create a portfolio. The portfolio should match an asset allocation that represents your goals for risk and diversification.
So a good place to start would be to look at fees associated with the funds. And if you don’t have a target asset allocation across all your accounts, that should be done as well.
- Thanks for sharing. I hope it continues to work out for you! (No sarcasm.)
I used to have a lot of those same funds.
FWIW, you may want to check these against their correlated index funds too. For example, there’s a Vanguard Russell 1000 growth trust that would compare with the first two contra pools. It has a slightly higher one year return (22.83% vs 22.75% as of 7/31) and has 0.02% expenses instead of 0.35%. Same for Vanguard Russell 2000 growth trust for small cap vs dfa sm/med cap value. It’s value vs growth so of course it’s not perfectly aligned but if you just care about small cap exposure then the vanguard index fund has 0.03% expenses and returned 23.09% in one year vs the dfa fund with 0.25% expenses and returned 15.42%.
It ultimately comes down to whether you think paying someone more money to actively manage your money (instead of passively manage to an index) will result in higher returns. I used to think the answer was yes. But the more I read, time and again studies have shown otherwise.
I can’t say much about total return or intl or mid cap because MSFT 401k doesn’t have lower cost options there. If you must invest in those assets in the 401k, you don’t have a better option. If you have investable assets in other accounts (IRA, other 401k) you may consider choosing low cost options in those accounts instead and only choosing assets in your 401k which have low cost options. Or you can just stay invested in the options you have and pay the extra fees.
Of course you are only talking about 0.25%-0.50% per year. It could be worse. But it does add up. Compound fees eat away at your compound interest.
No one knows the future. You could end up laughing at us all for choosing the low cost options while you stick with your existing portfolio. But by your logic, if you chose the funds with the highest returns today, you’d actually choose a lot of the low cost index funds that I would recommend.
Good luck out there and happy investing!
- BTW the reference MSFT 401k portfolio I was looking at to check out the MSFT options is 43% S & P 500 index trust, 31% Russell 2000 growth trust, and 26% Russell 1000 growth trust. It is 14% YTD using all low cost index fund equivalent. Obviously international exposure and bond exposure are missing from this allocation, and so those would need to be added in a separate account that has low cost options (or keep the 401k options with the fees.) depending on your asset allocation, I’m just saying you could get similar performance with lower fees.
This portfolio also assumes there is more large cap exposure outside the 401k, since some people may consider 30% Russell 2000 an excessive small cap tilt on its own.
- I'm 95% Vanguard Target Date 2045 and 5% Brokerage Link. The target date fund return has been a bit underwhelming, but it's diversified. My Brokerage Link was a small holding of MSFT, AMD, AAPL, and some others. Not diversified, but one hell of a year.
- It's a Fidelity feature enabled for our plan. You need to request access or click something to opt into it. It then works as a nearly full-featured brokerage account. You can buy stocks, bonds, ETFs, etc. You need to pay whatever commission. But you get a way to really manage and customize your retirement account.Aug 25, 2018 1
- Oracle / IT pFiR53I left mine at default and the ytd has been better than any or my past 401ks
- I've got about 40% in Fidelity Gr co Pool CL 3, 20% in Fidelity LPS pool class 2 10% in vanguard 500 index fund and then a smattering of other stock and Bond funds.
My allocation is about 90% stock since I'm fairly young, so I can stand to be more aggressive.
I've got a 9.5% return YTD, But that's been fluctuating due to market instability down to about 7% at times. Last year I was at 22% return, which was phenomenal.
If you believe the market forecast that the stock market is due for another correction, this isn't a great time to switch up investments. Wait until after the correction.
- I have other investments outside, so I chose the most aggressive target date fund I could.