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About EdLaFave

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    Orlando, Fl

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  1. I rarely make definitive statements, but I’ll double down on that sentiment and say there is exactly no doubt.
  2. Need help choosing 403b Vendor

    allegory, you're welcome. I hope you have success. My entire K-12 education was in Broward County (Hunt Elementary, Forest Glen Middle, and Coral Springs High) so I'd really like to see those teachers get better options. Let me know if I can help. tony, thanks!
  3. Need help choosing 403b Vendor

    Sorry for the really long reply. I didn't have time to make it concise, so you're getting my strėam of conscience. FRS Pension I didn't have time to look this stuff up and my memory is a bit foggy so I may make an error, but the general idea will at least be correct. You have to contribute 3% of your paycheck to the pension. The pension is calculated using a fairly simple formula...your average salary over your highest paid fiscal years * years of creditable service * percentage value. If you enrolled in FRS before July of 2011 then the number of years salary you have to average is 5 years, otherwise it is 8 years. If you're a "special" kind of employee then your percentage value will be higher but "regular" people have a 1.6% percentage value. So if you were hired in 2008, worked 40 years, and your 5 highest fiscal years salaries averaged to exactly $100,000 then $100,000 * 40 * 0.016 means you'd get a $64,000 payout from the pension. I believe the portion of your pension attributable to time served before July of 2011 will receive a cost of living adjustment each year, I think it is 3%. The other portion of the pension will remain constant...so it will be worth less and less each year. If you began before July of 2011 then the pension vests after 6 years of service, otherwise it takes 8 years. I think "regular" employees who began before July of 2011 have to wait until 62 to receive the full benefit, otherwise you have to wait until 65. If you don't wait that long the benefit will be decreased by 5% for each year you came up short. FRS Investment Option Earlier I had the notion that you could contribute to the investment option in a way that is similar to a 403b, but I now think I was wrong. I think the contributions are fixed; you contribute 3% of your salary and the employer adds 3.3% of your salary on top of that. Your contributions are always vested from day 1, but it takes a year for the 3.3% employer contribution to vest...I think. You pick the investments, they're awesome! Beyond that, I think it is pretty straight forward. Pension vs Investment Option I actually can't remember why my wife thought the pension was a better deal for older people than younger people (July of 2011). After thinking about it for a few minutes, I could only come up with the different vesting schedules and the number of years of salary you have to average. I no longer think younger people have a lower "percentage value", which is what I thought at one point (double check me). The big risk with the pension seems to be that the legislature can change things at anytime. For example, I think they have the power to wake up one morning and cut the "percentage value" in half which would cut your pension in half. If you don't expect to be an FRS-eligible employee for very long then a pension really isn't the best thing for you. It takes years to vest and I think even if you transfer it to the investment option, that portion is still held to the longer vesting schedule of the pension. Again, fact check me on this. Here is a link that compares the pension vs the investment option. Roth vs Traditional I really don't think this is a big deal and you'll find opposing arguments, but for most people I argue that a traditional is your best choice. When you earn 5.5k you pay tax based on your highest marginal bracket before it goes into a Roth. However, for a Traditional you don't pay tax up front. Instead when you pull it out you pay tax on it as if it were regular income, which means you get to fill up the lower tax brackets first. So if you imagine a contrived example where your real (inflation adjusted) income remains constant throughout your working years and retirement...then putting money into a Roth would be a mistake because your "effective" tax would be exactly equal to your highest tax bracket, but with a Traditional your "effective" tax would be lower because you got to fill up the lower brackets before you hit the higher bracket. Pushing for Reform I am not an expert, but this is what I've learned (we can always chat more if you go down this road) in my experience... Spend the time to fully understand your district's plans. That's what I did here. Spend the time to fully understand some of the best plans in the state. That's what I did here. Spend the time to clearly layout what improvements you'd like to see and what constitutes a win for you. That's what I did here. In my view, there is nothing more ineffective than a lobbyist/activist who simply complains about the problem and has no solution. Here at OCPS we have a "Retirement Services" department, whatever the equivalent of that is for your district, reach out to them. Get an in person meeting if possible and explain why the current plans are so bad and explain why other plans are great. Tell them about the nearby districts that are using those plans. Offer to connect them to people at those companies to get things setup. It is highly likely that these people don't understand investing, so teach it to them in the nicest, non-condescending way possible. It is also highly likely that these people don't want to do work, so do everything you can to shoulder the load yourself. Go to your school board members and make the same arguments. I've got a blog where I've documented some of the speeches I've given at our school board meetings. Reach out to the union and try to convince them to lobby with you or let you reach out to their membership in one way or another. Lots of unions are corrupt, operating with conflicts of interest. Lots of unions have huge turnover so they're fairly ineffective. Our union has a seat at the table in selecting the vendors so if you can get them to do their job, it is powerful. Reach out to media outlets to see if anybody will do a story on how badly teachers are being hurt. Your district has 100% of the decision making power. However, it is likely that your district simply does whatever their Third Party Administrator (TPA) tells them to do. It is a weird relationship where technically the TPA has none of the power, but the district is incompetent/afraid (which the TPA leverages), so the district relies on them to make decisions. The TPA is almost certainly operating with egregious conflicts of interests...they're generally not your friend. Organize all of the teachers in your school and schools throughout your districts to do the same thing you're doing. If you guys overload Retirement Services with phone calls and the school board meetings and do it respectfully, they'll want to cave just so they can go back to peace and quite.
  4. FTJ FundChoice - Self Directed, or Advisor

    I understand. I ultimately agree with your decision to go with the lower expenses. I also agree with Krow’s suggestion to lobby for a better vendor.
  5. FTJ FundChoice - Self Directed, or Advisor

    I’m thoroughly confused by what you’re saying your two options are. It sounded like you could choose a self-directed account with access to vanguard’s admiral shares or you could pay some adviser 1% to manage your account. If that’s correct then you’d obviously go with the self-directed account. So I think I’m misunderstanding something here.
  6. Need help choosing 403b Vendor

    Again, I haven’t had time to dive into any details, but a taxable account should absolutely be considered. However, that’s a relatively complex calculation with several unknowable variables. My gut tells me the tax advantaged account is, more likely than not, still the best option (but I’m far from certain). I vaguely recall a person from bogleheads (user name starts with a g) who supposedly did the math to see if an expensive 401k was worth it...same basic premise here. allegory, are you participating in the pension? I believe the alternative to the pension is something called FRS Investment Option (google it), which is effectively just like a 403b or 457b and has amazing investments at rock bottom costs. You’re a few years younger than my wife and I’m told she was right at the cut off where they made the pension far less attractive. It may be in your best interest to use the FRS Investment Option in favor of the pension. Determining if this is true depends on how long you plan to remain an employee of the state, what your career path will look like (i.e. how much money you’ll earn), and so on. If this is something you’ll consider then I can help you try to figure this out, my wife and I made a spreadsheet to help her figure it out a few years ago. Also, since you said you weren’t a financial expert, you may find the Investing 101 page I wrote for teachers to be helpful.
  7. Need help choosing 403b Vendor

    ...I forgot to mention that you can always push the district to add quality vendors. I’m in the middle of doing this in Orange County Public Schools and I’d be happy to share information and help if you wanted to go down the same road.
  8. Need help choosing 403b Vendor

    I documented Florida’s best plans, but Broward doesn’t use any of them. You’re in the position of having to pick the least bad option. I don’t currently have the time to look closely enough at the data to provide my opinion. With these options, I’d first make sure I was maxing out my IRA (where you’ll have access to the best investments at the lowest costs). Another consideration, if you have a spouse, is to maybe max out their retirement account (assuming it is a better option)...but of course that hits on personal marital/trust issues. If you think you’ll be moving to another school district or retiring relatively soon then investing in a “bad” plan is more manageable because when you leave you can roll it over into a “great” IRA.
  9. I never tried to email Security Benefit. I used DocuSign to open the account, OCPS (FL) did whatever they did to begin funding the DirectInvest account, and I used securityretirement.com to manage the account (forgot how I got the login credentials). My obstacle was OCPS, not Security Benefit. OCPS insisted that DirectInvest wasn’t an option. I documented our struggle, in all of its detail, here.
  10. When dealing with the reps at Security Benefit you should expect a mixture of incompetence, ignorance, and malevolence. They couldn’t/wouldn’t even confirm that the DirectInvest program exists! I suggest everybody figure out, on their own, the exact steps to accomplish what they want and execute those steps. Do not rely on them if you can help it. I documented the exact steps you have to go through to open a DirectInvest account here in OCPS (FL). If I ever walk somebody through a transfer then I’ll document those steps too.
  11. What are the mutual fund symbols that have outperformed the market and over what time period have they outperformed? A great way to pick a loser is to buy the fund that performed the best the previous year. I suggest buying funds that you agree with philosophically...diversification is critical, minimizing costs keeps money in your pocket, and nobody can predict the market and if they could why would they use that knowledge to help you?
  12. In John Bogle's book Common Sense on Mutual Funds. Bogle compared mutual fund returns to the overall market beginning in 1970 and ending in 2005. At the beginning there were 355 funds. 223 funds, 62.8%, were closed before 2005 rolled around. 60 funds, 16.9%, lagged the market by 1% or more. 48 funds, 13.5%, were within + or - 1% of the market (slightly more on the losing side of that coin). 15 funds, 4.2%, beat the market by 1%. 9 funds, 2.5%, beat the market by 2% or more. A fun fact about the 9 big winners, the majority have lagged the market significantly in the past 15+ years and attribute their performance to a period of early dominance (perhaps lucky dominance).
  13. Hey Jrhorns, I may not clearly understand what you've said, but the first red flag is that you're talking to a rep. As a general rule you should never trust a rep. I assume the rep you're talking to is from Security Benefit, in my experience their reps have an awful mixture of ignorance and exploìtative tendencies. Security Benefit's NEA DirectInvest does not require a rep. I have a page that describes how we enrolled in Direct Invest, some of it is specific to OCPS (FL), but you'll probably find it useful. The fees for Direct Invest are a $35/year fee (waived when you hit 50k balance) and the rock bottom expense ratios of the funds (which I believe include a 0.01% 12b-1 fee). Under no circumstances should you ever pay a sales charge (aka, a load) and paying more than roughly 0.16% via an expense ratio is also unnecessary. In my view, paying 0.35% for the pleasure of having an account is absurd because (assuming 6% returns and 3% inflation) it consumes 11.67% of real profits after 1 year and 14.96% of real profits after 30 years. In my view, advisors wouldn't be worth it if they were free and they're very far from free and you're right, Direct Invest is the way to go. I’ll leave you with my favorite quote on investing from William Bernstein, “act as if every broker, insurance salesman, mutual fund salesman and financial adviser you encounter is a hardened criminal.”
  14. 403b Contract Exchange

    I've interpreted what you've posted to mean that you previously owned American Funds mutual funds in an AXA 403b and you've essentially transferred those shares to an ASPire 403b. I've never transferred one 403b account to another and I don't know exactly what you mean by "co-mingled". However, it is my expectation that the assets you now hold in the ASPire account will be indistinguishable from the assets you once held in the AXA account. So I would expect them to be "co-mingled". Class A shares imply you paid a sales charge (aka a load) when you purchased them and that there won't be a sales charge to sell them. Based on my understanding of the self-directed ASPire program, you have total control. You can and should sell them and buy low cost, total market, index funds....and Vanguard is a great choice. I'm told ASPire has a web interface that lets you do this all on your own. I'd be extremely wary of being referred to an "expert" because "experts" love to take money out of your pocket. You should be able to do this by yourself.
  15. Aspire?

    You only need one to three funds and there is really no value in buying from multiple fund families. An index fund is a commodity, it doesn’t really matter who you buy it from if the expense ratio is low. Your post didn’t explicitly say what you’d do with all of the options available to you, but using a set of options beyond the minimal subset you need is a great way for investors to sabotage themselves. Simplicity is King. Don’t do something, just stand there!