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whyme

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  1. Q1 YTD Return

    I'm not sure that we're offering a healthy model for newcomers by focusing on short-term changes, but I'll play. (However, I think readers should consider John Bogle's advice, "don't peek.") My portfolio performance is minus 0.3% YTD.
  2. A financial milestone to celebrate!

    Nice milestone, Steve. Kudos. You've done it right, you're a fine role model and inspiration for all who want to build a prosperous retirement on a modest (teacher's) income.
  3. Indeed, the 85% support level is far better than nothing! Very glad to hear that you've been rescued by supplemental savings.
  4. Conclusion after a year of 403b/457b reform.

    I'm no fan of Rubio, but extending access to the TSP strikes me as a good idea, wherever it comes from (I believe there are some liberal-identified organizations or politicians who have also supported this, though I don't have the names off the top of my head). I'm not sure whether Rubio's proposal extended to 403b accounts--it was mostly aimed at workers who had no access to a 401k or 403b--but I'd support a universal, transportable (across employers) TSP account with the same contribution limits as the 401k. This could effectively eliminate the 403b (except, perhaps, as site for additional savings for those who have maxed the TSP), and with it, all the inherited connections to annuity sales fees, exaggerated fund fees, third party wrap fees, awful fund choices, etc. The industry that thrives on those fees would fight it to the death, but should the country arrive at a moment friendly to worker-focused retirement reform, I think this idea could gain wide support.
  5. Conclusion after a year of 403b/457b reform.

    You're preaching to the choir, Tony!
  6. Conclusion after a year of 403b/457b reform.

    Sadly, I think defined benefit pensions tend to lull teachers into complacency—they know there is something that they are contributing toward, and that they have little-to-no influence over the nature of that plan. Any savings beyond that is a "bonus," if they are persuaded to save or invest at all (I am amazed how many of my colleagues don't seem to be contributing any significant amount to a 403b). For those who manage very long careers within the pension system—35 years or more—they may be able to replace enough of their salary for a comfortable retirement with pension alone (at least that's true in California), but everybody else is going to come up way short if they don't find a cost-efficient investment plan. I think hopes for a collective solution may have to depend, alas, on government-based reform. Ed, your Florida senator Rubio (among others) had a fine idea years ago: make the federal Thrift Savings Plan available to all workers. If teachers could be funnelled into that, the cost and inappropriate product issues would be solved (for everyone!) and advocacy would just be an issue of getting them to contribute more.
  7. Thank you for the reply. Yes, I think the Calstrs formula compared to some scenarios about the value of the invested money over time will get me into the ballpark. As you say, there are unknowables, including lifespan and market conditions. I have yet to learn exactly how much this will cost, but it looks as though at my (over 60) age 1 year credit = 30% of my current annual salary. If that's right, I'd probably do better by the numbers to keep the money invested, but I may go for the extra buy anyway if the value gap isn't egregious , as I'd like to up the percentage of my retirement income that is predictable and the absolute amount I'd be consigning to this is fairly small. (I'll probably retire with a pension replacing about 35-40% of my income, the rest will have to come from investments, plus a tiny soc sec payment.) RE: COLA, Calstrs has a really strange agreement. One gets a fixed COLA of 2% annually, but it is forever based on your initial pension amount. In other words, if the pension is $1000 per month, you get a COLA of $20/month, which remains a COLA of $240/year forever, whether in year two or year thirty-two of the pension. So the purchasing power of the pension is virtually guaranteed to erode over time. But they have a provision to issue a supplementary payment (based on a formula I don't know) that supposedly guarantees that the pension will retain at least 85% of the purchasing power of the original pension amount. Sheesh. My mother has received a Calstrs pension for more than 30 years, and that quarterly supplement has become a substantial fraction of her total pension (at least a third). But the resulting pension would make for a meager living... in her case, fortunately, she also has Soc Sec (secured before the "windfall elimination provision") and some dividend income, so she's in better shape than most retirees.
  8. Turns out that I am "qualified" to purchase about a third of a year of additional service credit (the number of working years calculated for my eventual pension) at CALSTRS. The money can be paid with pre-tax dollars (from my 403b or 457 account). Does anyone know of a calculator online where I might plug in variables to see whether the expected value of the additional pension is greater or less than the expected value of simply holding the pre-tax funds in a 403b or IRA account?
  9. Potential crash?

    Ed, I will echo Tony's sentiment: your future looks bright. I'm not going to presume to come up with a dollar amount for you--there are too many moving parts to sort through in this forum, not to mention the limits of my own competence in these matters. But if I've got this right, you already have something approaching a million dollars in investments, you plan to make substantial contributions for another couple of years, then you expect to be able to keep that money invested for two or three decades before you take income from it (wow), and when you do so you'll just want to withdraw the equivalent of about 25k/year in current dollars. (Maybe less than that, if you've got social security benefits.) If that's the case, it seems to me that you are on course to "oversave." Short of some Alex Jones-style survivalist apocalypse, you'll likely have resources beyond your needs, even with a protracted period of stingy markets or a large weighting in low-risk fixed-rate investments. I suppose you should (if you haven't already) explore the arithmetic for worst-case scenarios that undermine your plan--unexpected health crises, your wife's job ends prematurely, family members who will need your support, etc--and verify that you've built in a margin that will allow you to roll with such punches should they occur. But saving big at a young age, limiting expenses and planning--that's a great formula, one that very few of us manage to pull off as well as you seem to be doing.
  10. Potential crash?

    RE: Dollar cost averaging: I meant it in the latter sense... regular (biweekly, monthly, whatever) contributions to savings. I invoked it only in the hope of avoiding any suggestion that "an opportunity to accumulate" meant market timing. RE: retirement dates. This is obviously a personal choice, but if I were you, I'd err on the side of accumulating more while you can, assuming that current conditions (work environment, health issues) don't argue for retirement to start right away. The financial podcaster Paul Merriman advocates what he calls "oversaving"; I think he advises people aim for TWICE the nestegg amount that seems to meet needs before retiring, though that would be quite a reach for most of us. But the advantages of such a scenario are obvious.
  11. Potential crash?

    Ed, you certainly know this, but I feel compelled to remind you (and other readers) in hopes of calming any fear that the sky will fall this week: 10 - 20% market declines are normal features of investing that occur more-or-less annually. The rarity of such pullbacks in the last few years is an anomaly. For a young investor such as yourself, "corrections," bear markets and even the occasional crash provide opportunities to accumulate (through dollar-cost-averaging) at lower prices. I concur that "emotions have zero predictive power" and that "it is important you don't pull your money out." Still, I think this moment of volatility is a good occasion for everyone to reassess their long-term asset allocation: If you worry or lose sleep due to market gyrations, recall the famous advice of JP Morgan, "sell down to the sleeping point."
  12. 2017 Return, costs and asset allocation

    I'm no expert, but my conclusion is that "ethical" funds don't make much sense. Better to invest in widely diversified low-cost funds and use some of your income to directly support causes of your choice. Not only are the socially screened funds more expensive and less diversified than whole-market index funds, there's little agreement about what investment categories to avoid -- tobacco? oil? mining? ? abortion services? pharmaceuticals? subpar working conditions? etc, etc, etc...
  13. 403b Annuity Salesman Perspective

    I came into this thread late. I'm willing to take the 403bannuitysalesman at his word--as somebody who works in that field and is struggling with the ethics of his job. Unfortunately, much of the financial services industry as it stands has conflict of interest built in, and I'm sure many (most?) folks go into it with good intentions, only to find that they have to engage in tortured rationales to justify "helping" people by selling products that are not in their clients best interest. If that's true, it seems like the question is: why not use this experience to move toward another, more ethical career path? For example, could you make a living as a fee-only fiduciary financial advisor who specializes in teachers and school employees? I think some of the most successful client-focused investment or financial planning people have backgrounds in "traditional" financial services--Rick Ferri began as a high-fee stock broker, if I remember correctly.
  14. Frequent trading policies; Best Fund Family?

    Frequent trading is widely understood to be a poor long-term investment strategy, so Tony (and pretty much everyone here) will advise you to steer away from it. That said, if you must frequently trade funds, ETFs (Exchange Traded Funds) make it easy: they trade just like stocks and depending on where you hold your account, you can trade one or more families of funds with no transaction fee. This is, by the way, the reason John Bogle dislikes ETFs--they make it too easy to trade. If you are wondering about the evidence in favor of passive, buy-and-hold investing, look for articles or interviews by Bogle, Burton Malkiel or Charles Ellis (for example: I could list many more names, but those guys will get you off to a good start).
  15. 2017 Return, costs and asset allocation

    I'm not up to typing in as detailed an account of my investments as Steve did, but my (roughly) 70/30 equity/fixed portfolio (to which I am still contributing) appreciated by 15% in 2017. My investments are index funds, tilted toward small and value, with above-market weightings of REITs (which did relatively poorly this year) and Emerging Markets (which did very well). I still have one individual stock holding--Berkshire Hathaway--which is about 8% of the portfolio; that did well, a bit better than the S&P 500. As retirement approaches for me (still 3 - 5 years away, most likely), I've begun to add to fixed investments (mostly, for now, a stable value fund)—last year, the allocation was closer to 75/25. PS: Steve suggests we include costs: I'm not sure of the overall total, but my Vanguard account (roughly 3/4 of the total portfolio) averages .10% ER, according to Vanguard. The Berkshire stock has a zero ER, the stable value has unknown costs baked in (+ a .25% admin fee).
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