r/investing
if i want to go 100% s&p 500, through fidelity... is fxaix (for roth) and voo (for brokerage) the recommended setup?
User seeks advice on optimal S&P 500 allocation between FXAIX for Roth IRA and VOO for taxable brokerage at Fidelity.
my understanding is fxaix is best for roth because it's a tax advantaged account, and the expense ratio (0.015%) is lower than voo (0.03%)... and voo is best for a taxable brokerage because it's transferrable, should i ever wish to move away from fidelity.
is this accurate?
or should i go with the same thing for both, whether that's fxaix or voo?
(roth ira is at $25k and brokerage will be starting with $400k, if this is relevant. employer 401k is mmwvt, $420k, through merrill lynch.)
I wouldn’t be concerned about such a small difference expense ratio, the holdings aren’t 100% identical so VOO could easily accidentally outperform FXAIX by 0.015%. The bigger difference is that FXAIX is a mutual fund and VOO is an etf, if that matters to you choose whichever you prefer, if it doesn’t, I wouldn’t be concerned about which one you choose.
Fwiw I prefer etfs because like you mention they’re easier to transfer, I don’t own mutual funds so I don’t know about this but I have heard about mutual funds having taxable capital gains distributions, and an etf lets you monitor the price intraday rather than needing to wait until market closes to reprice.
Why pay any expense ratio at all? Fidelity has several funds with literally zero expense ratio, including an S&P500 fund.
https://www.fidelity.com/mutual-funds/investing-ideas/index-funds?imm_pid=57138822883&immid=100726_SEA&imm_eid=ep302442874453&utm_source=GOOGLE&utm_medium=paid_search&utm_account_id=4288888904&utm_campaign=MUT&utm_content=57138822883&utm_term=fidelity+index+mutual+fund&utm_campaign_id=100726&utm_id=1490091060&gclsrc=aw.ds&gad_source=1&gad_campaignid=1490091060&gbraid=0AAAAAD7OUhIdDW8A0hajrK-ypdIB_bHUY&gclid=Cj0KCQjwrZTRBhDSARIsAHidYfe3CBC-vvow8jVhB4hauKZEoUUmYqhJkA-MytZ1VvEa5xTfiM9_gQwaAk8nEALw_wcB
FNILX isn't an SPX fund and FZROX isn't a total market fund but they perform basically the same.
Close enough to be essentially the same thing.
You recommend no-fee over a tiny-fee fund. Then you disregard the small difference in returns.
Can you be consistent?
If the no-fee fund gives higher return than the tiny-fee after accounting for the fee, that's the best choice.
But I am not sure and you are not saying that...
These are designed to entrench you at fidelity. If you ever want to transfer out, it triggers a sell and taxable event. Not saying it's good or bad but just be aware
Not in my Roths they don't.
You can sell/buy all you want without triggering taxable event inside a Roth IRA. So the day they want to transfer out just sell everything, transfer cash, buy whatever equivalent at new brokerage.
If you’re willing to lock into a mutual fund for tax-advantaged, go for fidelity’s zero cost funds. FZROX, FZILX etc
It was one of the first and has the most volume so it's the gold standard. There are a ton of similar funds now and all have various pros and cons but most are functionally identical.
Pick which works best for you in your circumstance.
SPYM and VOO are pretty much identical we except for the expense. I prefer SPYM.
If you are starting now - instead of VOO you could use SPYM - same holdings but SPYM expense ratio is lower (0.02 vs 0.03)
Exactly! SPYM is super underrated. VOO hype is a bit annoying.
Fxaix is portable also
FXAIX to save on expense ratio and to reduce panic selling temptation in a Roth IRA. Because ETF are too easy to sell, people tend to panic sell more than index mutual funds. Treat index mutual funds like a marriage in an IRA.