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Computerized Investing > July 15, 2017

Selecting Asset Classes for Retirement Investments

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by John Zhong

AAII

The founder of MyPlanIQ.com shows how to use his online portfolio management platform to build a well-rounded retirement portfolio.

When it comes to retirement investments, it’s paramount to construct a portfolio that can deliver a reasonable return with acceptable risk. This is where asset allocation comes into play. One should carefully choose funds that represent specific asset classes being targeted within a portfolio. Furthermore, one can reduce risk by carefully weighting allocations to each asset class and choosing asset classes that have a low correlation (meaning they haven’t historically moved in the same direction).

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Discussion

H Mercer from TX posted 4 months ago:

Unusual that REIT's are mentioned but health care, biotech, and pharmaceuticals are not. Just how have they done as a group over the past 1,3,5,10, 20yrs? I have a good bit of these in my portfolio.


John Zhong@MyPlanIQ from CA posted 3 months ago:

Even though REITs are sometimes classified as a sector, like health care, technology, etc., they have some distinct features that make them more suitable as a major asset class. We will have a future newsletter to discuss this issue in more details. In the meantime, you can find more info on REIT.com.


John Zhong@MyPlanIQ from CA posted 3 months ago:

A user recently told us that the statement “Fidelity offers half-baked commission-free ETF trades that are only buy commission-free, but not sell commission-free.” in the article is misleading. He believes that Fidelity offers ETFs that are commission free in both purchase and sell trades.

Here is our answer:

We have monitored Fidelity commission free ETFs since the days they were introduced. Fidelity went through commission free (both purchase and sell) and then commission free purchase but sell with a commission till last year sometime. Apparently, recently, they changed the policy to

commission free purchase and sell with some activity fees (0.01 - 0.03 per $1000, so $100,000 would be charged $1-$3).

This is true even after you have held shares for more than 30 days. So it's still not entirely commission free but now it's close.

See foot print on page https://www.fidelity.com/etfs/overview :

Free commission offer applies to online purchases of Fidelity ETFs and select iShares ETFs in a Fidelity brokerage account. Fidelity accounts may require minimum balances. The sale of ETFs is subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal). iShares ETFs and Fidelity ETFs are subject to a short-term trading fee by Fidelity if held less than 30 days.

We wrote the piece late last year and the information was correct at that time.


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