Hi Jeremy! First before my question I just want to say that I love your IG and have been getting all my friends and family to follow you. You’re changing so many people’s lives! Second, I’m wondering if you might be willing to share your thoughts on whether this seems on the right track: I’m 35, I’d like to retire between 45-50 (HCOL city, currently no debt except a mortgage, $300k NW, I max out my BD Roth and Solo401k, I’ll prob still work part-time and make $30k/year after I fire.) I’m thinking about investing $1.5k a month in VTSAX and $1.5k a month in FIPFX, does that seem off-track? Would you do something different if you had $3k a month to invest and wanted to fire in 10-15 years? Thanks so much!
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Welcome @RibeyeRosie!
Thank you for the kind words!
It sounds like you’re on a great track. And VTSAX and FIPFX are both excellent choices, BUT a couple of issues:
- VTSAX is a total US stock market index fund. And FIPFX is a target date fund, which is a “fund of funds”. Inside of FIPFX IS a total stock market index fund. So it’s kind of like buying neapolitan ice cream and chocolate ice cream. You’re just doubling up on chocolate. It’s not bad, but it’s adding complexity for no reason (unless you have made a decision to “overweight” US stocks). Target date index funds are designed to be an “all in one” fund so you don’t have to buy anything else. Again, not bad necessarily (some people buy ONLY VTSAX) but it’s good to understand why you’re choosing those.
- VTSAX is offered by Vanguard, and FIPFX is offered by Fidelity. Brokerages generally charge high fees if you buy their competitors fund from their website. So you usually want to match the funds to the brokerage where you have the account. i.e. if you have a Vanguard account you could do VTSAX and VFIFX (Vanguard’s equivalent 2050 fund). If you have a Fidelity account you could do FZROX (Fidelity’s equivalent total market fund) and FIPFX. Or of course, you could simplify and just by the target date funds. These days, I never pay any sort of transactional fees to buy or trade index funds or ETFs. There are just so many free options.
With what brokerage do you have your Roth IRA and Solo 401K?
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Thanks Jeremy! This is helpful. I have accounts with Fidelity and Vanguard, my Solo 401k is with Vanguard. I was leaning towards doubling up on chocolate (VTSAX) even though it’s already in FIPFX because: I’m hoping to FIRE in 10ish years and have built up my 401k but only have $40k in my brokerage acct, the past 10 year rate of return has been higher on VTSAX (but I suppose that would be chasing past returns), and expense ratio is slightly lower on VTSAX. Still a little torn. Thanks so much for your wisdom!
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Sweet! Yeah, I appreciate that you’re cognisant of chasing past performance… I’d hate for 10 years from now to have the target date outperform (because US had slower growth, or emerging markets started going gangbusters or who knows) then you have to decide of you switch again.
That said, there are some very wise people (e.g. Jack Bogle, Warren Buffett) who think all in on the US economy is the best strategy. So I don’t think you’re being reckless by doubling up on the chocolate. Who wants strawberry anyway???
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