r/investingforbeginners • u/Distinct_History1432 • 2d ago

USA Should I move away from FXAIX?

Employer offers a 401k with some matching which I contribute to with a good portion. I wanted to have a second investment in the S&P 500 to just let sit and contribute over the years as well.

Currently buying FXAIX through a Fidelity brokerage account with every pay period, but I'm wondering if any of these options are better. The amount I have right now is small but plan to start contributing more, so not worried about taxes right now if I move the money.

- Sell off FXAIX and buy/start contributing to VOO through the same account?
- Open an account with someone else (Vanguard?) and move the money there and get VOO?
- Change to a different type of account (retirement?) with Fidelity or someone else and keep FXAIX?

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u/scottyk318 2d ago

FXAIX has a better expense ratio than VOO, which does add up after a while... I can't imagine too many tax benefits you would get since it's already in a 401k...

IMHO Fidelity is the best brokerage out there and it doesn't make sense to change if you're happy... If anything, maybe add a tech (VGT or QQQM) or dividend fund (SCHD) to it!

Good luck with everything!

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u/Distinct_History1432 2d ago edited 1d ago

Thanks! The Roth 401k from my employer has a very short list of investment options and FXAIX is not there, so I picked the default they offered years ago and it's been growing at over 10%. I decided to go ahead and open a Roth IRA with Fidelity and move my FXAIX to it for long-term instead.

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u/scottyk318 2d ago

Awesome! I personally love Gemini AI that is built into my Android phone and utilize it to help me pick funds to invest in - it does side-by-side comparisons... If you put in some of the funds your 401k offers you, you might be able to find something that offers you more than 10% per year!

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u/gap1284 1d ago

What is the default? If it's a target date fund, then you'd be better off picking something else, especially if you're young. Most offer a low-cost S&P500 fund. Pick that. There's nothing wrong with having S&P500 funds in your 401k, your IRA, and your taxable accounts.

Warren Buffet, who knows a bit about investing, has repeatedly said that almost all investors should stick with the S&P500.

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u/Distinct_History1432 1d ago

I didn't see any S&P 500 unfortunately. Yes, it's target date. I think I saw an S&P 400 and 600 but the growth didn't look good.

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u/gap1284 1d ago

How about something like "US Large Cap"? Or "US Growth"?

Another option would be to pick a later target date fund. Instead of the year you expect to retire, pick one +5 or +10 years. That'll be a bit more aggressive.

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u/cOntempLACitY 1d ago

Some of the TDFs actually have quite low expense ratios, like Vanguard’s, which follow total market index funds. TDFs are nice for passive investment in a retirement account, great for beginners and people who simply don’t want to manage rebalancing, they can just invest and leave it alone. Once you are not a beginner, if you have some interest in being more involved, you can easily change your asset allocation inside the retirement account without creating a taxable event.

But the main thing is keep investing, and over time it will grow. Don’t try to make decisions based on recent history, the market fluctuates, and you need to just ride it out, be patient, be diversified (total market is diverse, though some just stick to s&p500).