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Everything posted by sschullo

  1. Hi Tony, My suggestion is to write a sentence or two about your opinion of the article you linked. Obviously its important to you. Contrarily, just be looking at the title and without why you posted it, it is not important to me. Even then the participation rate is low, even at Bogleheads its the SAME people posting day after day, year after year while there are 600 700 guest lurkers! People are afraid to post. We know that nobody gives a crap about us personally. People who understand will more likely ask a question and get an answer quickly because we know what we are talking about. Steve
  2. Moe, I am excited! But I agree if you think like you wrote, it is discouraging. If I gave up because it takes 40 years, I would be just another senior regretting that I spent too much and not saved enough too. Millions of older folks have this identical regret. I am excited that I can write books and give them away, to write a blog, share financial information on this forum (and Bogleheads) on my FB and Twitter accounts, take ballroom dancing lessons, have a wonderful 2nd life in a new and wonderful relationship. I also lived a healthy life all those years. I had a wonderful 40-year relationship and I did things that I never planned for, as the FI community will find out too. I was able to do this because I could afford to as I rejected the material things that are short-sighted and deleterious to my personal growth. Steve
  3. I heard Frugalwoods interview on the whimsical Mad Fientist podcast. While I have not read her book, I have read the reviews. I absolutely agree that her writing is just as good as Mr. Money Mustchete and her message, as well as the entire FI community, is the rejection of the consumer lifestyle, live a stress free life where you can do what you want instead of saving like us older people have done little by little over decades. They want to be FI ASAP. Those talented authors do not have to say they are "just regular people" because it will be controversial. And perhaps that is what the book publishing world want is a little controversy, it sells more books so that the publishers make money. Nothing against this, it's just how the book publishing system works. As long as more and more people get the message that just about anybody can save something IF THEY CUT BACK ON SPENDING. Another community dubbed the media literacy community is all for rejecting consumerism too, and be aware when you WANT to purchase something that you will regret later. Of course, it is much more complicated than my one sentence description. There are academic departments around the country devoted to media literacy. Marketing and selling things we do not need is a highly seductive profession and has been around for almost a century. For example, the classic example is buying a new car every 3-5 years. This horrible practice is a 100% negative and complete drain on our ability to attain wealth, especially us lower paid professionals. Moe, I am very excited that I am going to be meet you in a just 3 weeks at the CampFI Southwest in Joshua Tree. My girlfriend and I will probably be the most senior people there, LOLs. Steve
  4. RIGHT! If you cannot kill the beast, we will starve it to death.
  5. To all readers! I urge any employee working at any profession to ask how their 401k, 403b, 457b plans are decided and managed. Sometimes there is an advisory committee. Join it and you will learn all there is about how the game is played. When employees themselves are on the committee, surprise, surprise, the costs get lower, and the investing gets simpler, and annuities begin disappearing. It's funny how it works that way. My free PDF book Fighting Powerful Interests shows how we went from an expensive 403b plan to an Award winning 457b plan in the 2nd largest school district in the country. Besides my story, I have all of my correspondence to school board members, union leaders, the President, ERISA, financial and educational magazines, and Fidelity and Vanguard.
  6. Ed, Funny story about TSA consultants TSA consultants is our TPA for the 403b. Because our advisory committee focuses on the lower cost 457b plan, TSA Consultants sent one of the legal counsel to our committee meeting and began lecturing us about the IRS requires plan sponsors (our district) to bring "meaningful notice" to the 403b plan. Meaning more publicity and attention to the 403b. This guy threated us that if we don't bring meaningful notice, "The IRS could shut down the 403b plan!" We said "That would be GREAT! Shut it down!" We never heard from TSA Consultants legal counsel ever since. These people have scared districts legal counsel for decades with this utter bull. The IRS requires one notice a year for the 403b plan and our district was in complete compliance. But TSA consults thought they could scare us into doing more. Their tactic BACKFIRED! It's a new world, the investment world has changed and the thinking about plans and how they are managed has changed dramatically, and best of all, more and more nonprofessionals are serving on advisory committees. Steve
  7. Hi Ed, When I heard that quote years and years ago about "it's not how much you make its what you do with what you make," I was in my 20s earning a little above minimum wage ($2.00 hour), yet I was able to save some, and I never borrowed from family. I was very proud that I could make it as an adult after my discharge from the service and after living with my sister in Los Angeles for a year. You are a huge proponent of minimalism, so was I (now that I a retired, I can afford to splurge on socially conscious cars, vacations etc). All of my 20s and most of my 30s I drove a VW bug, had roommates to share rent and utilities, do minimalist things such as play handball at the beach, jog, hike and read. NO KIDS! that's huge! Of course, I would have loved to drive a sports car, wear great clothes, live in swanky Marina in Los Angeles, and host lavish parties, but that's not what happened. I carried those early frugal habits throughout my life (never bought a new car until I retired when I could afford it) and started with $200.00 per month in my TSA at the ripe young age of 37 when I started teaching. Again, when I heard that quote, it was encouraging even when I could only save a few dollars here and there. I did not know how I was going to do this but it planted a seed. Saying the I give out "false hope". I HOPE SO! In this pessimistic country we live in now, we need some positive even if its false hope! Did President Lincoln give out false hope? President Lincoln signed a little-known bill during the middle of the Civil War that affected little old me 103 years later! He signed a land grant bill that paved the way for teachers colleges to be built all over the country to train teachers to teach in country schools. I started college at River Falls University Wisconsin in 1966. River Falls was one many of those colleges that Lincoln was thinking. Can you imagine any politician thinking ahead with anything positive and encouraging these days? Look, I feel good and I am just spouting off about something positive. And say that its not how much you make that counts its what you do with what you make that counts just sounds so positive. You are saying that my thinking is out of touch with the real world. Well, I like to think that my thinking has been out of touch with the real world for a long time. But thank you very much! But to say that poor people can NEVER save anything is discouraging! I know because I was poor too, and I never forget where I came from and how lucky I was to meet good people who were a whole lot smarter than me. I learned a lot. I totally agree that many in the FI community are mostly white, privileged and highly talented young people. They still have a great message, however. The only criticism from what I read from book reviewers is that the FI authors often call themselves "regular people." No, they are not. One such author lived in Cambridge with her IT husband before moving to a remote farmhouse in New Hampshire and wrote a book about their experience. Anybody who lives and works in Cambridge MA is NOT regular. However, I absolutely respect their minimalist, anti-consumer message and that they want to live a life of giving back. Have a great weekend, Steve
  8. Fellows, There is nothing wrong with taking 30 or 35 years to save $1,000,000. That's an incredible achievement. If one spends all of that $60,000 year after year, what will you have in 30 to 35 years? We all know that answer, NOTHING. And the same thing will happen with a high-income earner. Spending $60000 or $600,000 ends up with no wealth building either way. If one can save 50% of income and get to FI by 25, 30 or 35 years old that's wonderful too. The point is that people can do without the useless and expensive toys, new cars every 3 years, big houses that are more than they need, and eat at expensive restaurants frequently. The FI community want to enjoy life and have a stress free simple environment that is more meaningful than the high-stress corporate lifestyle with all of its uncertain and disappointing status and prestige. Middle-income people have some natural advantages, their taxes will be lower, and they don't have the money to spend on luxury. The big disadvantage is that they don't THINK that $500 per month saved year after year will add up to much and so they don't try. High-income people have advantages because they can get to their financial goals much faster. But they also have more distractions, they can afford the big homes, fancy cars and luxury with ease. I read or heard that it's not so much how much one makes but what you do with what you make that counts. We have all read stories of the custodian who died at 90 and leaving millions to charity or his or her church.
  9. It just occurred to me as I was making my rounds in the social media 403(b) world that a week ago, on June 28th, marked the 18th anniversary of one of THE BEST 403(b) article ever written, published by my union, the American Federation of Teachers, June 28, 2000. Our fellow advocate Scotty Dauenhauer wrote a piece on his blog on this date two years ago commemorating this great article. Thanks, Scott! http://teachersadvocate.blogspot.com/2016/06/shark-attack.html When Shark Attack came out in 2000, it offered a ton of hope that the 403b world will be reformed. It said EVERYTHING, with 100% accuracy! I could not believe it. Sad to say, not much has changed in the last 18 years. Bits and pieces with some states and some districts, but nothing national (NYC teachers and Wisconsin teachers union appear to have the best plans for their members). The 2006 rule changes that allowed the 457b to be used in K12 offered some additional hope but unless there are teachers on the advisory board, the 457b can be abused by the same professionals who abuse the 403b. Yeah, the 457b may offer mutual funds but they are usually administered by broker-dealer firms with high costs and commissions. BTW I know both, Don Kuehn, author of Shark Attack and I met personally with John Abraham, AFT senior associate. The author has retired but Mr. Abraham never responded to subsequent emails and phone calls. AFT was attacked viciously by the insurance industry after the article was published as you can imagine. To my knowledge, not a single word has been published by AFT regarding the 403b in the last 18 years. Its another one of those mysteries that we ordinary teachers who are out of the power loop will never know.
  10. Even with 20 years to go, you want some allocation in fixed accounts. An 80% equity / 20% fixed is an aggressive allocation for most under 45. As you get closer to retirement, increase your percent of fixed accounts. TIAA Tradition annuity would be a near perfect fixed account. Principal guarantee, paying 3.0% (or more as interest rates are increasing), no fees (except the spread between what TIAA gets on the open market and the rate credited to you). NO Surrender fees except for their option that pays a higher rate of interest. Be careful you understand which one. I would transfer the rest to Vanguard and allocate either 50% or 60% to the domestic and 40% to 50% in international stock markets. There are no perfect portfolios but their are excellant portfolios that do the heavy lifting to get you where you want. Control costs, diversify, stock-bond split, and rebalance when needed. You are in great shape. Keep up the good work. Steve
  11. sschullo

    YTD Return at the half way point

    I was surprised that the number one holding in the Vanguard Extended Market Index is Tesla. I have about $78,000 invested in that index and they report .7% of the assets is Telsa Motors. If my math is correct, and Krow36 will be happy to correct me if I am incorrect, 🙂 I own almost two shares. Calculation: .007 times 78,000 = $546.00. Tesla shares are trading at $308.90 at the close of trading on July 6. I will never purchase individual shares of Tesla Motors because I already invested in Tesla.
  12. My portfolio was flat, made $1184.00 year to date. The total stock market returned +3.18% Small and mid caps returned the highest in my portfolio: +6.14% My bonds took the losses: Total Bond Market index, -1.64% Wellesley slid -2.13% Internationals had the worst loss: -3.62%
  13. sschullo

    YTD Return at the half way point

    More information about my almost all Vanguard and TIAA YTD portfolio report.
  14. There is a huge reason why brokers are leaving the biggest firms on Wall Street--the AUM. Assets Under Management have changed the financial advice landscape. http://www.investmentnews.com/article/20180613/FREE/180619962/advisers-with-billions-in-aum-leaving-wall-street ?utm_source=Morning-20180619&utm_medium=email&utm_campaign=investmentnews&utm_visit=21379&itx=24207cd05800b0429888de1772ed16b47271128299c04beca50eb165790fe0f9%40investmentnews The hourly fee is not enough. The fee-only financial adviser is not just an hourly charge, in recent years it has morphed into Assets Under Management and the dreaded retainer. I checked one fee-only financial adviser who was written up in one of the financial journals who advised the LGBT community. She had all of the credentials for a competent adviser who manages portfolios. I called her to find out what her fees are. She charges a retainer of $5000 per year for a portfolio of $100,000! TERRIBLE! This adviser does not sell commissioned products! WATCH OUT! 1.0% AUM is expensive because the cost of the investments and sometimes the hourly fee have to be added on too. The Answer will always be: learn enough to negotiate a lower AUM or to be a DIYer (do it yourself). A fee of .25% is great! Many of the money talk radio shows and podcasts by the industry discourage people from DIY because they claim you get better results using a financial adviser. This is DEBATABLE, needs to be discussed. Will our educational colleagues do better with an insurance agent who sold them an annuity or hires a fee-only fiduciary charging an AUM, retainer and or hourly fee to manage a portfolio of genuine investments? Of COURSE, genuine investments are always superior to any annuity with compensates the insurance agent in the 403(b) world. But how much AUM and retainer are enough?
  15. Wow! Great job Ed and to your wife. This is where the discussion and the ACTION must go--reform the corrupted 403(b) and offer genuine investments, such as Fidelity and Vanguard. Steve
  16. sschullo

    YTD Return at the half way point

    There will always be uncertainty. Like the old adage: there will always be death and taxes.
  17. jebebitz, You might take a look at a lengthy discussion, and somewhat repetitive and thoroughly uninteresting discussion but SOOO IMPORTANT to know how the person who sits behind the desk thinks about costs and advice. Dave is one of the genuine fiduciary, fee-only, 403b financial advisers who is listed on this website. Fee-only can be misleading as he (and most FAs) defends the AUM and the retainer. I would like to believe that there is room for just a fee-only by the hour for some DIYers.
  18. If you are managing your portfolio as a retired individual like me, then anything less than .10% or ten basis points is low. I pay .07%. If you hire a fiduciary financial fee-only financial adviser, if you can get the adviser to charge .25% AUM, with no hourly fee or retainer, that would be good. But FA would be hard pressed to charge that low when clients don't take any responsibility. If you only pay by the hour $250 would be low. Retainers are complex and can be automatically expensive. If you pay $1000 a year retainer and your portfolio is $100,000, that 1.0%! Yikes, that's way too high. If you work and your employer offers a tax-deferred retirement plan, a low-cost third-party administration at .24% is low. That's what our 457b plan TPA charges. But the mutual funds have to be added to his fee too. Remember on top of all these fees there will be a fee for the indexed and managed funds. It may not be much but add the fees up to get an accurate picture.
  19. sschullo

    Disability Protection

    I fretted about the need for disability insurance during my working years. I was lucky I never got injured but I did come down with cancer at age 53, and was treated successfully, so I was able to go back to work, but I was very very lucky. According to statistics, about 50% of employees work without health, emotional or physical ailments, so they retire as planned. The rest have to retire earlier than planned. I wonder how many of our colleagues who have not saved in a low-cost mutual fund 403(b) or a 457(b) are living sparingly in retirement because they were counting on their pension plan 100%, but they had a health issue which forced them to stop working much earlier than planned. It could be devastating for those people. Pension plans and SS were never created to take the place of one's salary 100%, yet that approach seems to be the assumption that so many of our colleagues are taking.
  20. sschullo

    What could I have done differently

    I second that! But TSA sales folks are very good at reassuring teachers that there are no costs (we know there are), that they will never lose money in a down stock market (what teachers do not know is they will be losing money by not keeping up with inflation and the standard of living), the salespeople offer 10% bonuses, and return guarantees (its hard to reject those types of misleading pitches and that return can be reset every year). NEVER underestimate the power annuity salespeople have over the most vulnerable people, our PreK-12 educators, who end up purchasing those terrible plans.
  21. sschullo

    Fiduciary Rule Is Dead

    Even if it was in effect, the 4 million public school educators and their 403(b) accounts will remain unprotected. Annuities are insurance products which are regulated by each state's insurance commissioner. Still, it is a regretful day for all people who need assistance from a financial pro. For anybody, including educators, you have the right to ask each adviser this question and getting it in writing. Excerpted from the end of the article: Regardless of what happens, consumers may want to heed the words of Phyllis Borzi, an assistant secretary of labor during the Obama administration who helped lead the effort to draft the original fiduciary rule. “When somebody is trying to give you advice, what you do is ask them if they are legally obligated to act in your best interest and as a fiduciary,” Ms. Borzi said. “If they say yes, or any euphemism that can be construed as a yes, then ask them to put it in writing.” IF THEY REFUSE or discourage you IN ANY WAY ("my firm doesn't do that so I cannot sign, sorry about that" and go on assuring you that they will do their best), then get out of that office faster than a scared person running from attacking bees! The advisers on this board will all sign that fiduciary pledge (https://403bwise.com/directory), and then ask them what the assets under management fee or the retainer fee is, depending on the size of your portfolio. Come back here and report to us and we will help you evaluate the adviser). If anybody has used one of the advisers listed on this website, what did they charge (AUM and or retainer) and are you satisfied? It would help others who need assistance with a genuine fiduciary. It's deplorable that we have to locate a fiduciary with no help anywhere in the financial industry or the state or federal governments.
  22. sschullo

    Mortality and Expense Fees

    1. Yes 2. Yes Insurance salespeople are very good at pointing out these concerns about protecting your family. Don't believe them, and don't believe anything you read here either. But you did come here and ask a very important question to a bunch of do it yourselfers who post here because we are concerned about 403(b) options that are loaded with annuity contracts. We advise everybody to stay away from annuities in their 403b plans. Most of us are teachers and we are just offering our experiences as do it yourselfers with managing our money. Many of us got saddled with surrender fees, and the M&E fees. But there is another reason to avoid annuities in the accumulation stage, building your nest egg. This is what I have learned in the last 20 years. I have lots of insurance but none is mixed with my retirement savings. When I was teaching I had a term $100,000 life insurance policy for my spouse, as I am widowed now and retired at 70, I don't need it. OF COURSE, we are all concerned about our loved ones if something happens to us. That's what a separate (from investments) TERM life insurance policy is for. If you determined to get investment and an insurance policy you will pay very high costs (as Ed pointed out very clearly! and M&E cost makes the "investment" just another insurance policy). Not only an M&E fee, but you will never get stock and bond returns that have averaged about 9% for the last 90 years. Those are huge prices. I am risk adverse too, but not that adverse that I want to let an insurance agent manage my long-term retirement money. Get a term life insurance policy and discover that there are approaches to protecting your investments with diversification and thinking long term. Investments are for long-term savings and they go up and down depending on the stock market usually go up over 15-20 years. Depending on the contract, fixed or indexed annuities never lose money and so there is no use for the M&E fee. Think about the 1.25% average fee over a decade, thats a huge premium but you don't see it deducted from your statements, that's why it is so compelling. I hope you stick around here and at Bogleheads, they also have a lot to say about learning about risks in investing, term life insurance vs. regular life insurance and those expensive and useless M&E fees. Good luck, Steve PS None of us here like to lose money either.
  23. One teacher who attended reports this about this training. Our team is going to ask them to repeat the workshop for Los Angeles teachers at our union's headquarters over two weekends in December. If you are thinking about offering a workshop for your colleagues, consider Jump$tart: I just attended the two-day conference at LACOE that Steve shared with us. It was run by Jump$tart, and it was phenomenal. It spends time on more subjects than our investment conference. They go into budgeting, planning, insurance, and other topics of value to money management and teachers. It is an incredible course for beginning teachers. They do cover investments, but I would say that topic is maybe only 1/3rd of the conference. There is some coverage of how to bring it into the classroom, but their theme is a teacher cannot teach this topic appropriately if they do not know how to handle their own finances. Pension II (California's state teachers pension plan's great low-cost 403b option available for all CA teachers) came and presented for one of the six sessions (3 sessions/day). They focused on supplemental savings as an important idea. Naturally, Pension II did come up, but they did not go over their fund particularly. They covered 403bCompare.org, and they went over how to use the site to find out what they may be paying currently. Anyways, I liked the program enough that I want to see about bringing it to UTLA (Our teacher's union in Los Angeles). It is crammed into two full days—so this would have to occur over two weekends I think. But they have their own people. There was only one LACOE person there. So I doubt we would have to staff the event with volunteers. I do not know if you guys or the committee would be interested in running this event instead of the scheduled December Investment conference, but it is something I have considered. Having said that, I do know it would have to be a Jump$tart event. In other words, we would probably not be able to sell table space at this conference. Nor would we be able to slot our own time for comments and speeches like at the investment conference. It would be their show. But their speakers were either Econ Professors from State Universities, retired administrators from the Federal Trade Commission, or other people in financially based careers. It is a very polished workshop. We would provide the space and time. They will provide everything else and were even pretty sure they would be able to provide the lunches on both days. (At worst, we might have to charge in order to pitch in on the lunches.) So I think it is a win-win and would be a great event for our committee to support. So I am sharing this to you guys for your input. There is nothing wrong with scheduling this separate from the committee's conference in December. But it could easily function as a substitute for the December conference. Also, Jump$tart is doing this as part of a grant they got. (Complicated story and I am not sure I got it all). So the offer of this workshop may only go to the end of this year. For California Teachers only: You can follow this link to see their webpage about the workshop: http://www.cajumpstart.org/resources/financial-foundation-for-educators/181-financial-foundation-for-educators Eric (Steve's note: It appears that this offer is only good in 2018, start planning now. At least give them a call and let them know there is a need here in California! to continue the great program beyond 2018.) If you are from another state, look up Jump$tart in your state.
  24. This is a rare training program, the focus is on personal finance for you and your students. Details are in the image. You only have until June 8 to register! Here is the registration link: Click here
  25. sschullo

    What could I have done differently

    Hi Moe, We all have had the same experience talking with colleagues. I go back 30 some years ago and recall what I did to straightened myself out of the two fixed annuities that were sold to me. I was like everybody in the 403b world with k12 school districts, satisfied with my decision to start socking away some money. Then it happened! I first heard that annuities were not a good retirement plan by just eavesdropping on two guys talking about annuities at a party. THATS all it took for me. I did some research and low and behold I was screwed. I think I share what most of us who post or lurk here have that our colleagues don't have, WE LISTEN. And we take the advice of others into consideration. But that's only a part of it. I have listened to a lot of ideas, great ideas, from others over the years and implemented some in my life. We have all noticed that when even our friends ask for help and we give them some suggestions, and they do NOT follow through! Wow! and they asked for help!!?? Even though your idea is great and is supported by data, it's your idea and NOT your colleague's. People are so resistant to taking ideas, even good ones, from OTHERS! It might be a cultural thing, an American value of radical independence, which is supported throughout our history. Case in point. I know one friend I told to get rid of a huge stake of his retirement nest egg in gold. He also heard the VERY SAME THING from a fee-only fiduciary financial adviser to sell that horrible gold and diversify his portfolio. My friend is 78 years old and he rejected this advice and has not brought up the subject to me again after four years, when at the time four years ago he was VERY pissed off big time at his broker when gold fell 30% and my friend lost money. As far as I know, he has never said to me that he sold his gold. PEOPLE DO NOT CHANGE even when they know something is wrong, and two people told him to diversify. PEOPLE DO NOT WANT TO CHANGE even when good ideas are presented to them. We should all be fortunate that we listen and take care of our business and then try to help others. I know I am and I am a better person for taking in lots of other people ideas as I benefit in so many ways! Heck, that's what mentors do, and I had three as a young man. We have the mental and emotional capacity to CHANGE. That's all we can do, is try. Thanks for sharing your story, Steve