My employer recently switched to Fidelity and for now I’ve chosen the LIFEPATH IDX 2050 A option. It looks like this one provides quarterly dividends, but the yield is 0.0%(?)
I’m looking for some fairly risk adverse options or blends that provide dividends that will be reinvested. Anyone have any recommendations?
If you want to be lazy, the Lifepath Index Funds are completely fine and well-diversified. They’ll have a good mix of US, international, and bonds, and it’ll become more conservative over time (i.e. more bonds). Pick a number that’s close to your retirement date, and you should be set.
That said, I like to be in control, especially since I have other accounts, so I’d go with the Vanguard Institutional 500 Index, which is a super cheap S&P 500 fund, and the Vanguard International Stock Index, which is a pretty cheap total international (not US) index fund. That’s about as diversified as you can get, though it does miss US small caps (can add the Vanguard Extended Market Index if you want, but it won’t likely impact returns much).
As for ratios, I’d go with:
Or you can ignore international stocks and just do the S&P 500, that’s also fine. If you really want those US small caps, add in like 5-10% of that fund and take from the S&P 500 fund (so they’ll end up at something like 85/15 split between those two funds).
So it’s up to you. The Lifepath funds (basically a target date retirement fund) is run by Blackrock, and they’re usually a fantastic fund manager with low costs. The Vanguard funds are also great and you’d probably get a little lower fees by DIY, but not enough to really matter. So if you’re on the fence, go with the Lifepath fund. But if you want to control where your asset allocation is (i.e. if you plan to have an IRA and taxable brokerage at some point), go with custom funds.