Jump to content

EdLaFave

Members
  • Content count

    455
  • Joined

  • Last visited

Community Reputation

0 Neutral

Contact Methods

  • Website URL
    https://educatorsfightingforfairness.wordpress.com

Profile Information

  • Gender
    Male
  • Location
    Orlando, Fl

Recent Profile Visitors

437 profile views
  1. EdLaFave

    Switching vendors; need help!

    These are the funds you listed, but none of them have 0% expense ratios: The only funds I'm aware of with 0% expense ratios aren't available in the 403b/457b, at least not yet: Of the funds you listed there is quite a bit of overlap: All 3 of your large cap domestic funds contain quite a bit of Large Blend companies. It seems you want to own the entire domestic market since you're covering large, mid, and small. You don't need 5 funds to do that because Fidelity Total Market Index Fund (FSTVX) has you covered on all fronts with a 0.015% expense ratio...which you'll note is cheaper or equal to every domestic fund you listed! The international index fund you selected doesn't cover emerging markets, which is why, I presume, you've added an emerging markets fund. There is no reason to hassle with two funds when Fidelity Global ex US Index Fund (FSGDX) has both developed and emerging markets for a 0.06% expense ratio. I won't preach too much about the bond funds, but I do like Fidelity U.S. Bond Index Fund (FSITX) better because it is 0.01% cheaper and takes a tiny bit more risk, while still being invested in high quality bonds, which presumably is why it has outperformed. You'll be fine either way. I don't have much to say about the REIT fund you picked except to say, I wonder if the Fidelity Total Market Index Fund (FSTVX) I mentioned also includes real estate. In my view, unless you're wanting to make bets on certain sectors of the economy, you can't do better than this in a Fidelity 403b/457b (which isn't to say you can't do just as well...or if you're lucky, even better...with other options): Fidelity Total Market Index Fund (FSTVX) = 0.015% Fidelity Global ex US Index Fund (FSGDX) = 0.06% Fidelity U.S. Bond Index Fund (FSITX) = 0.025%
  2. EdLaFave

    403-b

    I think this portfolio has excellent diversification, really low expenses, and an appropriate level of risk for your personal taste. If you make changes, make them because your circumstances have changed or your investing philosophy has changed (this probably shouldn’t happen). You’ll maximize your profits by not changing over time. Whatever you do, don’t make changes because of market performance, specifically: 1. Emerging markets begins to do well and you decide you want exposure. 2. Small cap lags and you want to minimize your bet on small. 3. Either stocks or bonds are doing better and you switch more heavily to the other.
  3. EdLaFave

    Switching vendors; need help!

    You won't be choosing stocks; you'll be choosing mutual funds. If you go with Fidelity, I documented the plan and the funds I'd invest with here. I wouldn't say anything above 0 is a bad deal. I'd say anything above the ranges I listed above are a bad deal:
  4. EdLaFave

    Switching vendors; need help!

    There are just a multitude of fees: Assets Under Management fee = every year you pay the vendor a percentage of your account balance just to have the account Expense Ratio = every year you pay the mutual fund a percentage of the amount you have invested in the fund Surrender Fees = you pay the vendor a percentage of your account balance just to leave Sales Loads = Either when you buy or sell a mutual fund you pay a percentage of the sale to the mutual fund company Account Maintenance = every year you pay the vendor a flat fee ...and on and on the list goes, but these are the main fees to be concerned with. I've seen it reported that Fidelity charges $40/year to have an account, but when I called them a week or two ago they said it was reduced to $20. With Fidelity (and everybody else), you also pay the expense ratio on the funds you purchase. TIAA may have misspoken, but I don't know what arrangement they worked out with your district. Here in OCPS (FL) they charge a 0.58% Assets Under Management Fee plus whatever the expense ratios are for the funds you invest in. Expense Ratio Ranges Fidelity just released a total international stock fund and a total domestic stock fund that charges 0% for the expense ratio. Beyond this recent development these are reasonable ranges for funds: Total Domestic Stock = 0.015% - 0.04% Total International Stock = 0.06% - 0.11% Total Bond Fund = 0.025% - 0.05% Target Date Fund = 0.13% - 0.15% Fixed Allocation Fund = 0.11% - 0.14% Anything higher than those ranges and you're getting a "bad" deal.
  5. EdLaFave

    403-b

    I hate qualitative statements and I just wanted to quantify "a little more." If you build a 3 fund portfolio with Vanguard it'll cost roughly 0.058% per year. Assuming 6% returns and 3% inflation, over 30 years that fee consumes 2.55% of real returns. If you buy a LifeStrategy fund (which contains the same funds I just mentioned) it costs between 0.11% - 0.14% per year. Making the same assumptions, over 30 years that fee consumes between 4.82% – 6.54% of real returns. It is a personal decision as to whether or not giving up a few percent of real returns is worth the convenience of having Vanguard keep your asset allocation in line for you.
  6. EdLaFave

    403-b

    You may want to layout why you made those selections because it may influence my response, but here goes... Bonds I think you’ll be fine with just the intermediate bond fund. The other fund won’t hurt, but it isn’t really going to help. Some folks prefer the total bond fund (VBTLX), but intermediate is great and has slightly higher returns/risk. You could consider adding an international bond fund, but again I believe this is unnecessary. Domestic Stock I see what you’re doing in selecting a large, mid, and small cap fund. It is smart and makes total sense. However, if you buy the total market fund (VTSAX), it has small mid and large for you. So going that route is less complex! Some folks like to hold the three funds you picked (and others) because they want to invest disproportionately in one in the hopes it’ll outperform. International Stock That is a great fund; I actually own it. However, it doesn’t invest in emerging markets. If you want that exposure then the total international fund (VTIAX) is the way to go. All In One Just wanted to reiterate that a target date or LifeStrategy (fixed allocation) fund may be ideal too. It just costs a little more. I wouldn't pick it for me but it is best for many/most.
  7. EdLaFave

    Retirement's Sometimes Dismal Reality

    Something I've always wondered about: how much poverty and income inequality can you inflict on a nation before they refuse to accept it? If I answered this question in a vacuum I certainly would have underestimated the answer. I don't think we're necessarily there yet. I think a diverse nation who has woven personal and institutional bigotry into their DNA is more likely to accept awful conditions (relative to a more homogeneous nation). So I think we're more willing to accept this, but it is starting to feel like the limit may be within sight. Wow. However, it does seem odd that we're comparing February 2013 - November 2016 to 1991. Anytime I see something like this (especially with respect to money), I wonder if the data is being cherry picked.
  8. EdLaFave

    403-b

    If you rollover a traditional 403b to a traditional ira then you will not pay taxes as a result. If you withdraw money from the traditional 403b or the traditional ira then you will pay taxes as if you earned the income through labor. If you rollover a traditional 403b to a roth ira then you will absolutely pay taxes.
  9. EdLaFave

    403-b

    SJP-3, I know you listed all of the funds, but if you can list their fund symbols then I can speak definitively about them. For example, the symbol for American Funds Europacific Growth R5 is RERFX. ...that fund in particular has a 0.53% expense ratio, which is 100% unacceptable. You've solve the case! I wasn't into investing when TIAA had a good reputation. Literally every single thing I've ever heard about TIAA has been negative. Every story involves them charging too much and pushing investors into things that benefit TIAA rather than the investor. TIAA is not on your side, remember that folks. Sometimes it makes sense to invest through a financial predator (I do so at Security Benefit), but you need to understand the relationship you're in...it is absolutely adversarial.
  10. EdLaFave

    Switching vendors; need help!

    I just want to second that piece of advice...but sometimes even the word Index isn't proof it is a good fund. To illustrate the problem in its totality. Target Date Fund Fidelity Freedom 2060 Fund (FDKVX) has an expense ratio of 0.75% Fidelity Freedom Index 2060 Fund (FDKLX) has an expense ratio of 0.14% International Stock Fund Fidelity International Enhanced Index Fund (FIENX) has an expense ratio of 0.59% Fidelity Global ex-US Index Fund (FSGDX) has an expense ratio of 0.06% Domestic Stock Fund Fidelity Large Cap Stock Fund (FLCSX) has an expense ratio of 0.67% Fidelity Total Market Index Fund (FSTVX) has an expense ratio of 0.015% Bond Fund Fidelity Total Bond Fund (FTBFX) has an expense ratio of 0.45% Fidelity US Bond Index Fund (FSITX) has an expense ratio of 0.025% ...so be careful. Posting the mutual fund symbols you plan to purchase here is a good opportunity for a sanity check before you pull the trigger.
  11. EdLaFave

    403-b

    I couldn't agree more. I wrote my second blog post on this very topic about a year and half ago when I first got into this 403b/457b mess.
  12. EdLaFave

    Switching vendors; need help!

    You may want to read my Investing 101 page here. With respect to your options... I documented the AXA plan here. I documented the Fidelity plan here. I documented the Security Benefit's NEA DirectInvest plan here. ...that should give you an understanding of why AXA is inferior to those two choices. You want a fully diversified portfolio with fees as close to zero as possible; Fidelity hits both of those marks. I'm not a 529 expert (so fact check me) but this is basically why I'm not a fan... When it comes to federal taxation, contributing to a 529 doesn't reduce your tax liability. Had you contributed to a traditional IRA, 403b, 457b, HSA, etc then you would have saved money on taxes, but not so with a 529. When it comes to state taxation (something we don't even have here in Florida) each state gets to decide whether or not 529 contributions will reduce your tax liability and to what extent. So your mileage may vary with this perk. I don't understand the exact circumstances, but in a subset of circumstances if the 529 account balance exceeds qualified education expenses then I think you're hit with fees! I'm sure careful planning and luck can mitigate this risk, but you should really know this stuff in and out before engaging in it. So the main benefit for a good chunk of folks is that the money in the 529 can grow tax free and you don't pay taxes on that growth as long as you spend it on education expense (under specific circumstances). I'm aware of some alternatives where you can get tax free growth and under certain conditions withdraw without penalty (for example a Roth IRA)...so I would certainly fully explore those options (which are probably less restrictive) before jumping into a 529. Perhaps my biggest problem with 529 is that most folks aren't well positioned to support themselves in retirement! I know parents want to do everything for their kids, but I think it is reasonable that they save themselves first...which is why I cringe when 529 accounts are used before regular tax advantaged accounts (403b, 457b, IRA, HSA, etc) are being maxed. I favor tuition/fee free higher education, but if a bill must be paid by the attendee then it is reasonable to me that the student (who will benefit financially from the degree) take care of that bill especially because they may have access to scholarships and interest free loans. If you're a super wealthy person who is already going to send their kids to private school and then to college and you're not only maxing out tax advantaged accounts but you're investing heavily in a taxable account then a 529 is a great way to shield your assets from taxation. This part of the tax code (as most others) was never written for regular folks...it targets spending that rich folks already engage heavily in and gives them tax breaks for it. When things like this are created, regular folks may be able to benefit but typically if you're a regular person who is just trying to get by and take care of your kids then a 529 will be far less useful and possibly inappropriate. This is half opinion and half supported by fact. You can read all about 529 plans here.
  13. EdLaFave

    Switching vendors; need help!

    I’ll give a more detailed reply later, but you’re going to want to switch your 403b and 457b to Fidelity. There are almost certainly better options for the 529. I personally and perhaps philosophically don’t like 529 plans, but I really don’t like them if you’re not maxing our all of your tax advantaged space in your IRA, 403b, and 457b. This opinion will probably be rejected by some, but I can explain more if you’d like. Again, it may be controversial but I don’t like life insurance as a good use of money. Reasonable people will disagree, but I suspect most will find that AXA’s offering isn’t good (just a hunch).
  14. EdLaFave

    403-b

    Let me give you some good news... All of these funds are in a tax advantaged account. That means you can sell all of them and invest in whatever funds you want (whether you stay with the TIAA account or move elsewhere). If this were a taxable account you’d likely have to pay capital gains tax to do this and that cost may be prohibitive. So you have total freedom and total control! Take your time and ask questions. Although you will ultimately want to make changes, there is no rush. This is a really slow moving “problem.”
  15. EdLaFave

    403-b

    I believe strongly in the information we provide and I follow it myself. Still, I recommend everybody prove it to themselves first because trust is what got folks into sub-optimal positions in the first place...and they have no way of knowing how well intentioned, qualified, or informed we are until they've proven it to themselves.
×