3 Best Fidelity Funds for Conservative Retirees

Fidelity's combination of low cost and high quality make its funds a perfect fit for retirement-focused investors

Retirees and other investors looking for stability, growth, income or some combination of those investment qualities, will find outstanding choices with Fidelity funds.

3 Best Fidelity Funds for Conservative Retirees
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Fidelity funds have a broad selection of high-quality, low-cost funds that can help squeeze out every ounce of return, get every possible boost in yield or build a retirement portfolio to suit an investor’s specific needs.

More specifically, it is important that retired investors maintain a moderate-to-conservative investment style. But they also need to minimize all possible costs and find the best funds that can combine to create the ideal balance of growth and income to make the nest egg last throughout retirement.

So with that backdrop, I give you the three best Fidelity funds to buy for a conservative portfolio in retirement.

Best Fidelity Funds for Conservative Retirees: Fidelity Freedom Income Fund (FFFAX)

Fidelity Freedom Income Fund (FFFAX)Expenses: 0.49%, or $49 for every $10,000 invested
Minimum Initial Investment: $2,500

Investors looking for a solid balanced fund that is truly conservative will like what they find in Fidelity Freedom Income Fund (FFFAX).

Although you won’t often find FFFAX among the top-performing conservative allocation funds, and it doesn’t kick off big yields, you can rest easily at night knowing that you’ll get a low-risk mutual fund that will produce long-term returns that can keep up with inflation while keeping volatility to a minimum.

The strategy of FFFAX is to maintain a stable allocation and the underlying holdings are other Fidelity funds. The allocation target is roughly 17% domestic equity funds, 7% international funds, 46% bond funds and 30% in short-term funds, such as money market funds.

Therefore, FFFAX can make a good core holding to lay the foundation of a smart retirement portfolio.

Best Fidelity Funds for Conservative Retirees: Fidelity Strategic Dividend & Income Fund (FSDIX)

Fidelity Strategic Dividend & Income Fund (FSDIX)Expenses: 0.78%
Minimum Initial Investment: $2,500

The highly rated Fidelity Strategic Dividend & Income Fund (FSDIX) is one of the best funds to combine growth and income.

FSDIX is a 5-star fund that will normally hold about 80% growth and income stocks, such as Johnson & Johnson (JNJ), Chevron Corporation (CVX), and Microsoft Corporation (MSFT), with the balance of the portfolio consisting mostly of bonds and cash. With this much allocated to stocks, keep in mind that FSDIX is not suitable for a standalone investment for a conservative investor.

However, a big challenge for retirees is to stay ahead of inflation while simultaneously keeping risk to a minimum. A smart way to achieve this balance of return and risk is to build the retirement portfolio around a balanced fund that consists mostly of dividend stocks. FSDIX fits this purpose perfectly. To build on this core, the retiree can then add more conservative, low-risk holdings, such as a solid bond fund.

The yield on FSDIX is 3.1% and long-term returns have historically averaged comfortably ahead of inflation.

Best Fidelity Funds for Conservative Retirees: Fidelity Spartan U.S. Bond Index Fund (FBIDX)

Fidelity Spartan U.S. Bond Index Fund (FBIDX)Expenses: 0.2%
Minimum Initial Investment: $2,500

The best funds for retirement will include a low-cost, passively-managed bond fund like Fidelity Spartan U.S. Bond Index Fund (FBIDX).

When constructing a retirement portfolio of mutual funds, an integral piece of the foundation can be a core bond holding that captures the entire bond market by tracking the Barclays Aggregate Bond Index. And this is one of the reasons FBIDX is also featured in our gallery of 10 best funds for your 401(k).

FBIDX offers a diversified mix of U.S. Treasury bonds, corporate bonds, Mortgage-Backed Securities pass-through and other debt, all at one of the industry’s lowest expense ratios for a bond fund.

With FBIDX and the other featured Fidelity funds in this article, you’ll be well on your way to building an outstanding retirement portfolio.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities, although he holds FBIDX in some client accounts. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.


Article printed from InvestorPlace Media, https://investorplace.com/2016/03/best-fidelity-funds-for-conservative-retirees-fffax-fsdix-fbidx/.

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