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jebjebitz

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Everything posted by jebjebitz

  1. jebjebitz

    Early retirement considerations

    Maybe this is a stupid question. I’m wondering how they plan for major home renovations and just random unexpected crap. I just had to replace a roof. And life happened a couple of times in addition to this; water heater went, dryer went, washer went, baby short circuited our cars computer by loading the CD player with quarters, etc. it all happened at once. Is this included in their yearly budget?
  2. jebjebitz

    Help deciphering fees

    So, there’s a rep (Forster’s Financial) in my district who has been pretty successful at scooping up teachers looking to leave AXA. To find out more about what he’s selling, I pretended to be a teacher looking to transfer from AXA to Foresters. I just need help using the numbers to point out that this plan is also bad. Here’s what I learned: His pitch started out by pointing out that AXA sells annuities and Foresters uses mutual funds. They charge a 5.75% finance charge to funds being transferred in. There is a 5.75% charge on all contributions. He claims this is great compared to the 1-2% AXA is charging on total funds. The 5.75% gets lowered as your total funds increase. For example, the charge goes to 4.75% one you get to 100,000, down to 0 when/if you get to 1,000,000. I’ve seen Foresters fund options on 403b compare. The expense ratios are up around 1%, some are north of 1%. When I asked him about expense ratios his response was along these lines, “Expense ratios just give you an idea of how much it costs to run a fund. I assure you, you won’t see this in your return.” Anyone able to show how these fees would effect an investment over time? Or, does anyone have a link to a calculator? Thank you.
  3. jebjebitz

    Help deciphering fees

    Awesome! Thank you! Could you break down how you got to the $70,925? I’m awful at math. This was more familiar to me. When the rep says, “you won’t see this this in your return,” he’s being purposefully misleading and deceptive. He’s right, I probably won’t see the effects of a 1% expense ratio on a statement from his company but, as you’ve pointed out here, the expense ratios could cost a Teacher over $100,000. It’s no surprise to contributors on this forum that the salesman would twist the facts in this way but, when I explained this to a teacher who asked me my opinion, she was surprised to learn that the expense ratios would effect her return so dramatically. Unfortunately, she had recently signed a contract with this guy. She had no idea about the 5.75% finance charge on the transfer or the 5.75% on each contribution. She was only made aware of the fact that it’s mutual funds vs. annuities and that she’d be saving money by switching from AXA. She also has to pay a surrender fee to AXA. It makes me really upset to see decent people placed in these situations where they’re not fully aware of the real cost of these investments.
  4. Great article thank you. Also, I thought you were Tony Isola.
  5. jebjebitz

    457 question

    I recently asked the business administrator at my district about who our 457 provider was. She said that any vendor plan could be used as a 457 plan we just needed to let them know we wanted to invest in a 457 instead of a 403b. Does anyone know if Security Benefit DirectInvest can be used as a 457?
  6. jebjebitz

    457 question

    Great information thank you Krow.
  7. jebjebitz

    457 question

    Thanks Krow. Is the main benefit/difference between 457 and 403 that you have better access to your money in the 457? I know for some, 457 options offer better investment options but, in this case I’d have access to the same funds.
  8. I have a hard time telling people this. I feel like most teachers think that these guys will help them somehow if there’s a market crash? Or, maybe they believe these guys are carefully watching their investments and they’ll swoop in and help them change their investments so they’ll avoid a loss. Like you said, after signing up you never see these guys again. In my case, when I finally had questions about my AXA account it was a different guy then the one who set up my account. My friend has an account with Valic and there have been five different “advisors” since he first opened his account.
  9. The salesmen I’ve talked to recently often say the self direct plans are great but then add,”...if you want to do it all by yourself.” My question is, after the salesmen sign teachers up for these plans, what else do they do for the teacher?
  10. Just wanted to get some thoughts on this. My district has at least two vendors that have sales reps that are related to teachers in our district. I know this because they referenced these relations in their sales pitch to me. In both cases, the reps are married to a teacher in our district and, in both cases, the reps use this information when talking about why teachers should transfer assets/invest with their company. Example: “Look, I want to help teachers, my wife is a teacher here in town, my kids went to these schools.” In at least one of these conversations, the rep followed this with a pitch on an annuity that returns 8% and has fees as low as 1.5%!! And, he added, if you have assets above 100,000, expenses could go even lower, .90%!! Just wanted to hear your thoughts on this. Do you think on some level these guys think they are doing right by teachers in the district? Also, does anyone know if there are laws against this?
  11. jebjebitz

    Advisors related to district employees

    Thanks Ed. There was a point where I felt bad for possibly getting in the way of this guys business. However, I kept reminding myself that he is in the business of getting teachers into an annuity, so he can realize the highest commission, whether teachers need an annuity or not. I appreciate the responses on here that helped confirm this.
  12. jebjebitz

    Advisors related to district employees

    Hi Krow. Yes you are right. They are considering an alternative along the lines you described, not an annuity. Good to hear you have seen it as a positive thing in your state.(WA) NJ and I think Kentucky are at the bottom when it comes to unfunded pension liabilities.
  13. jebjebitz

    Advisors related to district employees

    Is the annuity always bad? Is there any circumstance where the teacher is better off putting their money in an annuity and guaranteeing some form of income for life. In NJ, pensions are underfunded. There’s talk of moving new hires, and even teachers with five years or less into something other than a traditional pension plan. Would these teachers benefit from a plan like this?
  14. jebjebitz

    Advisors related to district employees

    I started this thread because of an interaction I had with a salesman and my thought process followed a similar pattern as your quote above. i sent an email blast to the teachers in our building as a heads up about this vendor. Basically, the email mentioned that there was one good product ( a self-directed plan) and the other products were confusing, costly and to be avoided at all costs. Well the salesman got word of it and asked me why I had sent it. He was upset because as he put it, “these people know me and my wife. I can save them a lot of money. No one has come to see me.” on one hand, I believe to some degree, this guy genuinely feels he will help teachers invest toward a retirement goal. And, for some people, they may not invest in anything without being put in contact through the networks this guy has in place due to his wife and her friends. He seems like a genuine person and, I’m sure there are teachers who would benefit from the peace of mind they would feel investing with someone they”know and trust”. Finally, like you said, everyone has a right to make a living, who am I to get in the way of it. on the other hand, I recognize his first move is to steer teachers toward the expensive annuity when I know for a fact his company offers better, cheaper products. I would rather not see fellow employees blindly sign off on this product because this guys wife is a teacher in the district. I’m torn on the whole thing but my gut tells me teachers should at least know what they’re signing up for.
  15. So the rebalance process is their way of buying stocks at a lower price? So, in a scenario like the 2008 crash, would investors consistently rebalance every day the market goes down? Or do they wait a few days and try to rebalance when they think it’s at its lowest? I know this is describing market timing to a certain degree but, I honestly don’t know how people react in these situations.
  16. Ok. But if the FIRE people follow the age formula,(assume it’s a 30 year old allocated at 70 stock 30 bond) and the market crashes, they could lose a substantial chunk of money. They don’t have an income to put towards purchasing more stocks at bargain prices. So what do they do?
  17. Thank you Moe, this answers my question. Seems like these folks have thought of everything. Very impressive.
  18. Along with the added benefit of a pension I would also include job security. When you read through some of these profiles, a lot of these workers stressed over being fired or replaced. Once tenured, teachers have a great chance of staying in one place for as long as it takes to reach their goals. Not sure I agree with this. If these people are living off investments, what happens when the market takes a hit? When they retire at 40 and start living off their investments, are they still growth oriented or, have they become more conservative the way a 60 - 65 year old would be? If they’re supporting their lifestyle and, in some cases their family, with what they’ve stashed away in investments, psychologically they’d be anything but stress free in the event of an economic downturn. The article makes mention of the good fortune this group of young investors have experienced in this past decade. Does the FIRE community discuss strategies for surviving a recession after retiring early?
  19. Ha, this is so true. I learned about Lincoln Investments Participant Directed Platform From Bogleheads.
  20. jebjebitz

    403b Vendor Options

    After reading Ed’s response I should probably admit that I have not researched the other plans either. My statement is pretty absolute without knowledge of the other plans. i would rephrase this and say, I know that DirectInvest is a good plan. It is the one I use. i would look at the other plans closely and be skeptical of anyone of these plans that required you to talk to an advisor.
  21. jebjebitz

    403b Vendor Options

    DirectInvest is the only good option
  22. jebjebitz

    Switching vendors; need help!

    That is cool! Looks like Maryland has a state tax break. This link shows you a comparison of expense ratios and provides a calculator if you want to see what you’d save with the tax break
  23. jebjebitz

    Switching vendors; need help!

    Hi Soph, I used AXA for 403b, 529 and life insurance. I got out of the 403b and the 529 but I still have the life insurance. When they set up my 529 for me they just enrolled me in the plan my state offers (NJ). Not sure what kind of commission the rep received or what additional fees I was paying them but, this is something I could have just done on my own. I don’t know about Maryland but NJ does not offer any state tax benefits for contributions to a 529. I opened a new 529 using the Nevada plan which gave me access to Vanguard. I did this directly through the Vanguard website. They offer different investment options tailored to your child’s age and whether you prefer a conservative, moderate or aggressive investment strategy. My children are still only 2 and 4 so I am in an aggressive age based option. You can read more about Vanguards 529 age based options here: https://investor.vanguard.com/529-plan/age-based-options I’m satisfied with the life insurance the AXA rep helped my wife and I sign up for so , for now I’m keeping that the way it is. As for the 403b my story is similar to everyone here. You’re in good hands with the folks on this board. They’ll certainly steer you in the right direction. Best of luck.
  24. I looked into this but am still not 100% certain how it works. I'll describe what it looks like when I rebalance and receive the message to "auto-rebalance" in my DirectInvest account: I choose "Change Investments" From there it asks if I want to use Morningstar recommendations or choose my own investments. I select "Choose my own investments" Next it asks if I want to "Exchange", "Rebalance" or make changes to "Future Investment Elections". I select "Rebalancing" I then perform the rebalance by typing in the percentage of allocation for each investment. At the bottom of this page, before I can continue, it asks: "Would you like these changes to also affect how your future contributions are invested?" I choose yes. Finally, I'm taken to a page that asks: "Would you like to set up automatic rebalancing for your new portfolio?" Off to the side on this page there is an Icon that says: "What is Automatic Future Elections?" followed by a short description that reads, "Automatic future elections enable you to specify the frequency at which to rebalance your asset allocations" It's a little confusing to me because "Automatic Future Elections" sounds a lot like the "Future Investment Elections" option from the earlier menu. I did not click yes to auto rebalance because I'm reluctant to sign up for something that I might not be able to get out of easily. Not sure if this explanation was helpful/necessary but maybe there are members on here that can tell if this is actually an auto rebalance option or something entirely different.
  25. My 403b is with Security Benefit DirectInvest. I use the 3 fund strategy and I do my own rebalancing. However, they do offer an automatic rebalancing option. I personally like to control when I rebalance but, would this be an appropriate option for someone who can’t be bothered with rebalancing but still wants to save money on the added expense of a Target/Life Strategy Fund? Or am I missing something? Is there a difference when setting up your own auto rebalance?
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