04-19-2011, 07:19 PM
My two cents on the matter.
I would not pay them if I were you because the fees will eat into your gains and depending on how conservative the investment portfolio, you may be back to 0.8%. They will also be investing in their own offerings, so they will essentially be double-dipping and offering little to no management value. If you do go this direction, ask them to break out compensation by their fees for management and also the expense ratios of the mutual funds invested in. This will give you an idea of how much of your portfolio goes to Fidelity on a yearly basis.
The good news is you are still working and can take on a little more risk by allocating 60% of your portfolio into stocks. You will need the larger gains to combat long-term inflation. Fidelity is likely to have what is called an "Index Fund" in their offering. An index fund simply buys an equal allocation of every stock on an exchange (i.e. S&P 500). When the exchange goes up, you gain accordingly and the same if it goes down. Instead of trying to bet on one stock or a specific mutual fund, you are investing in the general market. It takes the guessing out of the equation.
The other 40% should go into a bond fund or funds. There are low risk options where your principle (original investment) is likely to be safe. You could look at funds that focus on tax-free municipals or highly rated corporate bonds. I would be happy to give you a few Fidelity choices to look at but do a reality check to make sure they are available for your IRA.
A little long, but those are my thoughts.
I would not pay them if I were you because the fees will eat into your gains and depending on how conservative the investment portfolio, you may be back to 0.8%. They will also be investing in their own offerings, so they will essentially be double-dipping and offering little to no management value. If you do go this direction, ask them to break out compensation by their fees for management and also the expense ratios of the mutual funds invested in. This will give you an idea of how much of your portfolio goes to Fidelity on a yearly basis.
The good news is you are still working and can take on a little more risk by allocating 60% of your portfolio into stocks. You will need the larger gains to combat long-term inflation. Fidelity is likely to have what is called an "Index Fund" in their offering. An index fund simply buys an equal allocation of every stock on an exchange (i.e. S&P 500). When the exchange goes up, you gain accordingly and the same if it goes down. Instead of trying to bet on one stock or a specific mutual fund, you are investing in the general market. It takes the guessing out of the equation.
The other 40% should go into a bond fund or funds. There are low risk options where your principle (original investment) is likely to be safe. You could look at funds that focus on tax-free municipals or highly rated corporate bonds. I would be happy to give you a few Fidelity choices to look at but do a reality check to make sure they are available for your IRA.
A little long, but those are my thoughts.