Monday, September 3, 2007

Lowest Cost IRA Rollover– EFT’s are Perfect

When I changed jobs recently, I moved my 401k money to a rollover IRA at Fidelity. While my new employer offers some 4 and 5 star funds in our 401k, there is only one Index fund available and it has a high expense ration. Bottom line, all 401k money will be in actively managed mutual funds for the foreseeable future.

Since I cannot add any tax deductible money to my IRA, it is the perfect vehicle for a buy/hold strategy using index funds. Since Fidelity offered me “free trades for a year,” it was the perfect time to get into EFT’s. Unfortunately, I couldn’t find an international EFT I liked. The weighted average expense ration of the portfolio is well below 20 basis points.

New Retirement Asset Allocation:
Vanguard Total Stock Market ETF – 0.07 Expense Ratio
Fidelity Spartan International Fund – 0.10 Expense Ratio
Vanguard Energy ETF - 0.25 Expense Ratio