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whyme

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About whyme

  1. 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).
  2. I have used all three (Fidelity, Vanguard and Pension2) for 403b accounts. I recommend Fidelity, so long as you only buy their low-cost index funds (Fidelity also offers many actively managed funds which could easily eat up your cost savings). The desirable Fidelity funds have the designation "PR," for "Premium Class." (Weird name, as these are straight cap-weighted index funds with no premium attached; they used to call these "Spartan" funds.) Fidelity's customer service, to the limited extent I've dealt with it, is excellent. Vanguard, sadly, seems to have become an inferior choice for 403b accounts. (Though they are still great for most other types of account.) Calstrs Pension 2, run by Voya, has one feature that you can't get at Fidelity which may be attractive: a stable value fund. Currently, that pays 3% annually, minus the .25% admin fee. I hold part of my 403b there. I can say more about that on request, but most likely Fidelity alone will be the simplest and best choice. ADDED COMMENT: I just noticed above where you say you are in your mid-30s. I'd skip the stable value idea, and open a Fidelity account. Unless you can't sleep at night when the account balance goes down, I'd advise a heavy percentage of your contributions (maybe even 100%) go into equity funds (e.g., the total US market and the total global funds). When you get within fifteen years of retirement, start to shift toward (less volatile) bond funds. But at your age, market volatility is your friend, so long as you don't sell or stop contributing; when you continue to contribute steadily, recessions or even market crashes become a great opportunity--it's as if you a getting the shares on sale.
  3. Guaranteed Interest account AXA

    There's something to be said for consolidating you accounts, and if you do (at Vanguard?) a short or intermediate term bond fund will probably do fine. On the other hand, the guaranteed interest rate fund is also likely to do just what it says it will do, providing a consistent alternative to bond funds. So neither option is wrong or bad, nor is the choice likely to make much of a difference in your ultimate nest egg. My 2¢: pick one or the other arrangement and leave it alone, there's not much cause to worry over this one.
  4. Guaranteed Interest account AXA

    It's probably a good deal if you have enough in there to make the $30 charge negligible, and if it's true there's no cost to rolling the money out. I don't know about AXA's stability, but this sort of account has a very good track record of holding value: I don't recall hearing of anyone losing money in any of them, even during that 2008 period.
  5. Guaranteed Interest account AXA

    Sounds to me like you need to get clear on the annual administrative charge (is it a flat fee or a percentage of assets?) and the "withdrawal charge" (how much is it and under what circumstances is it imposed)? Only then can you make an informed decision about whether it is worth staying with this fund. Guaranteed 3% sounds good, if those charges aren't poisoning the deal.
  6. Guaranteed Interest account AXA

    I don't know anything about your particular stable value fund, but this might be relevant: While krow36 is correct that the fund expense ratio of the stable value fund is incorporated into the rate of return, it is entirely possible that your 403b provider subtracts an account maintenance fee on all assets in the plan, including the stable value fund. For example, I have a Calstrs Pension2 account, which is held at Voya. The stable value fund is currently paying 3%. But Pension2 charges an annual .25% on everything in the plan, so my effective interest rate is 2.75%.
  7. Believe it or not, the actual list employees see is much longer! I cut out the smaller but still long list of providers whose name begins with ROTH (all of the companies are duplicated on the list above) stuck in the middle of the list. That group adds to the confusion. Also, Voya is on the list twice under two separate code numbers, for some reason. It's an absurd set-up.
  8. Hi, Steve. I'm in a different district from LACC, with a different union. Our union doesn't seem to have 403b issues on their radar at all. Once they invited a speaker from Calstrs who talked about Pension 2, that's the only mention I can remember in the past decade+. While we do have a few good 403b options (Vanguard, after being off the list for years, recently appeared again), there is no guidance to faculty about their choices, except from salesmen and reps from the TPA. Below is the list of "approved" vendors that greets employees at my school. Is this fundamentally different from the k-12 situation? Athene American Fidelity American United Life Americo Ameriprise Annuity Investors AXA CalSTRS Pension2 Commonwealth Fidelity Foresters Financial Services Franklin Templeton FTJ FundChoice GALIC Great American Advisors Great Southern Life GWN Hartford Horace Mann Industrial-Alliance Pacific Legend Group Lincoln Investment Lincoln Nat'l Life MassMutual MetLife Travelers Metropolitan Life Midland National Modern Woodmen National Health National Life Group New York Life North American Oppenheimer Pacific Life PFS Plan Member Putnam RSG Securities SchoolsFirst RBP Security Benefit Thrivent Financial Thrivent Investment Transamerica USAA Investment USAA Life VALIC Vanguard Veritrust Voya Waddel & Reed Western National Life
  9. Hi Tony, In California, the UC system has it's own pension and supplemental retirement plans which are better than the offerings K-14 deal with. I believe their 403b's pretty much all go through Fidelity, and the plan includes some very low-cost target date options (lower cost than the retail products). The Cal State University system is yet another different layer of the state educational system--I'm not certain what their 403b options are. "Higher education in general," yes, I think most colleges and universities are not stuck in the annuity salesperson mode.
  10. Bravo, Steve! One question: is there some reason that you identify the beleaguered group as K-12, rather than K-14? I'm at a California community college, and it seems like a very similar state of affairs: Calstrs pension plan, a long list of 403b options, mostly insurance companies peddling annuities. (I don't hear about salespeople walking into classrooms, but they have been known to come on campus and some outside agents send misleading emails to the faculty and staff, trying to pull us in for an "Annual retirement planning" appointment, or some such. These emails are framed in such a way that they can easily be mistaken for something coming from Calstrs or from the college benefits office.) In short, I think the cc's could use the exact same reforms. Keep up the good work, and please keep us posted here if the Commissioner's office responds.
  11. Ed, you might want to look at the approach of the financial advisor/educator Paul Merriman. I'm not 100% on board with him, but I consider his a reasonable voice worth considering. He suggests that the ideal way to retire is to substantially "oversave," by working longer and investing more (and some amount of frugality). Once you've figured out what amount you'll need in your portfolio to get by in retirement, aim to substantially exceed that amount before retiring--Merriman suggests you amass TWICE the "needed" amount. If you manage this, you can easily afford to adopt a "flexible" withdrawal scheme, where you take out a set percentage--maybe 5%--each year, allowing the amount to vary in response to the changing value of your portfolio. This only works if you've saved more than you need, so that when you experience a significant down year, you can comfortably accept the reduced income (because your basic needs will still be easily met). Such a plan promises peace of mind (virtually no chance of running out of money) and more spendable income in retirement. PS: here's a link to some of Merriman's charts about how this would have worked historically with various asset allocations: http://paulmerriman.com/distribution-tables-2017/
  12. I understand why the forum admin might want to stop the discussions from devolving into political arguments. But in this case--where congress is discussing changes in the law that will directly and powerfully effect 403b contributions--I think banishing political arguments would be tantamount to abandoning the topic that this board exists to discuss.
  13. Hi, Ed. Well, I don't think we really have a difference here. I totally agree about keeping a vigilant eye on the pols, including those who seem congenial, and on registering one's concerns with them via writing or calling their offices. I certainly didn't mean to imply that California is some sort of socialist utopia guided by impeccable politicians. (We've had some awful ones, including some who portray themselves as progressive tribunes of the people while stealing their communities blind.) My point was narrow: my federal reps are publicly committed to vote against the currently promoted Republican tax modification plans, they get political currency out of their public stands against Trump, and it appears to me that if this tax plan passes it will depend overwhelmingly, perhaps entirely, on the votes of Republicans. There could come a situation where the Dems compromise on some revised version and if it looks like that compromise is wrongheaded, I'll be sure to make my concerns known. I confess that I'm not terribly well informed about some of the issues you raise; I'm not sure whether single payer is really workable at the state level, and in any case there is much less consensus among the California pols on that issue than on, say, preserving the state tax deduction or funding Medicaid. I do seem to remember Cory Booker voting against something that would make it legal to import ###### ###### from Canada (at lower prices for the identical ######)--I don't know what his rationale was--but I don't recall Democrats obstructing Medicare from negotiating prices, though that is (disgracefully, in my view) plausible, given the monies that come to elected officials (and their opponents) from "big pharma." PS: Good grief, censored by the discussion board. The offending phrase rhymes with "subscription slugs."
  14. Again, I strongly endorse calling or writing representatives about policy issues of importance, and I don't want my digression below to suggest otherwise. For what it's worth, though, some pockets of the country are overwhelmingly "blue" or "red," and with some issues, the allegiance of our representatives is not in doubt. I live in such a pocket. In my congressional district, Trump got about 10% of the vote. Republicans not named Trump rarely do much better than that here; local elections tend to include a dozen or more candidates, virtually all of them competing to be the most progressive--often no Republican candidates appear on the ballot at all. The most conservative or centrist federal representative I've got is Dianne Feinstein. Here's part of her statement after this week's budget vote: “Budget resolutions like the one we voted on today are largely a statement of priorities, and it’s clear that Republicans have only one priority: tax cuts for the rich. And they’re intent on cutting taxes for the rich even if it means gutting the social safety net for the most vulnerable Americans. Their budget would slash $5 trillion from critical programs like Medicare, Medicaid, student aid, transportation infrastructure and law enforcement." My congressperson and other senator issued similar statements (Senator Harris: “Americans deserve a budget that prioritizes the core functions and responsibilities of government: public health, public education, and public safety. This budget does none of those things, hurts the most vulnerable among us, and fails to strengthen the middle class... I simply cannot support a budget that does not reflect the priorities or values of America.”) So that's what I mean about my reps not needing swaying on this issue. But there is something unsettling about the ideological segregation of the country.
  15. Almost everything I've heard about the tax ideas the Republicans are batting around sounds terrible. I'd be surprised if reducing the 401k contribution limit makes it into a bill; wouldn't that alone cause some Republican senators to vote no? I imagine a huge outcry from employed voters and the financial services industry. Such a move seems nearly guaranteed to create more financial problems for the government--less 401k/403b savings likely will lead to more retirees in need of government services and, longer term, lower tax revenues from the required taxable distributions of those accounts. Amen to Ed's suggestion about contacting elected representatives. Especially the Republicans. Alas, I'm in California, virtually all of my representatives are Democrats who don't need swaying and don't matter in this decision. (Another of the tax proposals floating around is to eliminate the deduction for state taxes, which would almost certainly mean significant tax increases for homeowners in states like California, New York, New Jersey and Massachusetts where income taxes and property values are high.)
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