I have a SEP IRA since I am self employed and so I am able to put quite a bit of money into retirement each year. I started this just last year with a fidelity account. Today I was looking through their available funds and tried to pick a few to invest in. I quickly realized that I was just picking names out of hat. I don't really have a good idea about what I am doing.

I'm young so I was looking mostly for more aggressive funds, but I'm going to be investing thousands at once here so I don't really want to put money into a fund just to watch it lose a bunch of money right away (the fund I picked last year lost $500). My best guess when picking funds is just to look at their morningstar ratings and their past performance, but I still feel a bit clueless. Given the current economic status, does anyone have any suggestions about what to do? or perhaps some ideas or links to different sites that help people out? I know I could call fidelity but I never feel like I can trust sales reps.

I originally picked this kind of a portfolio:
50% domestic index funds
25% international growth funds
25% international bond funds

But honestly, I don't really know *why* I picked that or why I picked the specific funds I did. Like I said, in the end I just feel like I'm pulling names from a hat.

that's pretty much how it is - picking from a hat...but you can at least choose the hat you're picking from. there's nothing wrong with picking indexes for the long term given the expenses are low. otherwise, go create a hat of names that have shown good performance over the long term and pick from that.

You need to tell us more about your situation. How many years are you away from retiring? Do you ever expect to need this money before retirement (as in a down payment on a house). Do you have any other investments or retirement accounts? How about any savings?

Simpliest 4 funds ever for great allocation:

10% REIT
40% Domestic Index like SP500
30% International Index
20% Treasury Bonds

You're in luck. Fidelity will give you a personalized asset allocation strategy and even recommend risk-minimizing funds for free. You can either take or leave their advice, but it's free, so you might as well do it.

And no, they don't just steer you toward fidelity funds. You'll most likely get a mix of no-load no-transaction fee founds.

you should check diehards.org

xerty said:Fidelity's Spartan class of funds are quite good as index funds go, and much cheaper on the expenses than many of Fidelity's actively managed funds. They have "Investor" class shares which are quite cheap (min $10K), and "Advantage" class shares which are even cheaper (min $100K). If you want suggestions for the areas you already hold, you might consider these:

Spartan 500 Index Fund - Investor Class (FSMKX) - 0.10% expense ratio
Spartan International Index Fund - Investor Class - (FSIIX) - 0.10% expense ratio

Honestly though you probably won't go too far wrong picking from any of Fidelity's Spartan funds. This is not to say Fidelity's are always the best (Vanguard's are often a little cheaper), but these are decent choices.

You can also invest in their Four-In-One Index Fund (FFNOX). Expense ratio is 0.23% (higher than individual Spartans), but you can start investing $2500 if you're in an IRA (as opposed to $10k for the Spartans).

It has the following allocation:
Spartan 500 Index Fund - 54.82%
Spartan Extended Market Fund - 15.30%
Spartan International Index Fund - 14.90%
Fidelity US Bond Index Fund - 14.90%
Other - 0.08%