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Should I Trust My Tiaa Cref Advisors?

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Hi.. New here..

 

Iv have tried to educate myself on retirement investments. I have learned a bit. But I still don't feel comfortable creating a well diversified portfolio myself.

 

I'm a married 41 year old home owner and don't owe anything. No credit cards.. Nothing. I make $40,000 and my wife makes $20,000. My employer lets me invest 5% and then contributes 10% My savings account is around $45,000 and we can save between $500 and $1000 a month.

I Just started a Roth IRA with Vanguard in the Target 2025 with $4000. My wife is starting a simple IRA matched by her employer at 3%. We have two teens.

 

My TIAA CREF advisor recommended a aggressive portfolio which has remained the same since 2004 and looks like this.

 

15.00% CREF Growth

15.00% TIAA-CREF International Equity Fund - Retirement Class

25.00% TIAA-CREF Large-Cap Value Fund - Retirement Class

10.00% TIAA-CREF Mid-Cap Growth Fund - Retirement Class

10.00% TIAA-CREF Small-Cap Equity Fund - Retirement Class

15.00% TIAA Real Estate

10.00% CREF Bond Market

 

Last quarter it made 10.92%

=========================

 

My allocation choices are..

 

Guaranteed

TIAA Traditional

Equities

CREF Stock

CREF Growth

CREF Equity Index

CREF Global Equities

TIAA-CREF Growth & Income Fund - Retirement Class

TIAA-CREF Social Choice Equity Fund - Retirement Class

TIAA-CREF Real Estate Securities Fund - Retirement Class

TIAA-CREF International Equity Fund - Retirement Class

TIAA-CREF Large-Cap Value Fund - Retirement Class

TIAA-CREF Mid-Cap Growth Fund - Retirement Class

TIAA-CREF Mid-Cap Value Fund - Retirement Class

TIAA-CREF S&P 500 Index Fund - Retirement Class

TIAA-CREF Large-Cap Growth Index Fund - Retirement Class

TIAA-CREF Large-Cap Value Index Fund - Retirement Class

TIAA-CREF Mid-Cap Blend Index Fund - Retirement Class

TIAA-CREF Mid-Cap Growth Index Fund - Retirement Class

TIAA-CREF Mid-Cap Value Index Fund - Retirement Class

TIAA-CREF Small-Cap Blend Index Fund - Retirement Class

TIAA-CREF Small-Cap Growth Index Fund - Retirement Class

TIAA-CREF Small-Cap Value Index Fund - Retirement Class

TIAA-CREF International Equity Index Fund - Retirement Class

TIAA-CREF Small-Cap Equity Fund - Retirement Class

American Funds Washington Mutual Investors Fund

American Funds EuroPacific Growth Fund

Real Estate

TIAA Real Estate

Fixed Income

CREF Bond Market

CREF Inflation-Linked Bond

Western Asset Core Plus Bond Portfolio

Money Market

CREF Money Market

Multi-Asset

CREF Social Choice

TIAA-CREF Lifecycle Fund 2010

TIAA-CREF Lifecycle Fund 2015

TIAA-CREF Lifecycle Fund 2020

TIAA-CREF Lifecycle Fund 2025

TIAA-CREF Lifecycle Fund 2030

TIAA-CREF Lifecycle Fund 2035

TIAA-CREF Lifecycle Fund 2040

 

At the moment I'm concerned with my TIAA CREF and if it is well diversified. I feel since I still can work 25 years that I "need" to invest aggressively and take the ups and downs. Because I started it 8 years ago and my portfolio is only worth $51,000 today. I'm not sure if I like the returns on the CREF growth.

 

Did TIAA CREF recommend a well diversified profitable portfolio. Does it need to be readjusted? Or completely re allocated?

 

Thanks before hand.

 

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A few comments:

 

1) It is a pretty aggressive portfolio. This does not mean it is wrong for you, but you should be prepared for some pretty wild swings from time to time. The important thing when (note: not if) this occurs is to stick to your plan and continue to dollar cost average each month. This takes a great deal of discipline when values are falling. Are you prepared to do this? If not, then you might want to consider adding to your bond allocation.

 

2) It is a pretty diversified portfolio. You have some asset classes that do not correlate very much with each other. This helps to smooth out those wild swings. The Coffeehouse portfolio suggests even more diversification:

 

10% large cap

10% large cap value

10% small cap

10% small cap value

10% international

10% REIT

40% fixed income.

 

This is just a guide for you to consider and compare your portfolio against.

 

(Web site: http://www.coffeehouseinvestor.com/)

 

3) Perhaps you would like to consider greater use of index funds rather than actively managed funds.

 

Good luck in 2007.

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As far as dollar cost average. I think Im doing that with my monthly 5% contributions tripled by my employer The University of Iowa. I also make monthly investments into my roth IRA with vanguard.

 

Out of all my choices. These are the index funds I should consider or reallocate to?

 

CREF Bond Market

CREF Equity Index

TIAA-CREF Large-Cap Growth Index Fund - Retirement Class

TIAA-CREF Large-Cap Value Index Fund - Retirement Class

TIAA-CREF Mid-Cap Blend Index Fund - Retirement Class

TIAA-CREF Mid-Cap Growth Index Fund - Retirement Class

TIAA-CREF Mid-Cap Value Index Fund - Retirement Class

TIAA-CREF Small-Cap Blend Index Fund - Retirement Class

TIAA-CREF Small-Cap Growth Index Fund - Retirement Class

TIAA-CREF Small-Cap Value Index Fund - Retirement Class

TIAA-CREF International Equity Index Fund - Retirement Class

TIAA-CREF Real Estate Securities Fund - Retirement Class

 

 

I noticed the coffeehouseinvestor portfolio didnt recommend Mid cap at all. May I ask why? And it looks to be much more conservative than either of my portfolios.

 

Using the The Coffeehouse portfolio suggestions. Could you make a example with my TIAA CREF choices please?

Since I have two retirement companies. TIAA CREF and my new Vanguard 2045. I need to consider both when diversifying. Using both to makeup the short comings of the other. But the Vanguard is less than %10 of my total.

 

Vanguard Total Stock Market Index Fund 63.3%

Vanguard Total Bond Market Index Fund 20.5%

Vanguard European Stock Index Fund 9.3%

Vanguard Pacific Stock Index Fund 4.4%

Vanguard Emerging Markets Stock Index Fund 2.5%

 

 

Thanks apteacher.

 

 

 

 

Oh. Here is a recent performance chart of the funds available for me.

 

CREF Variable

Annuity Accounts

 

Bond Market $79.51 -0.02 4.10% 5.69% 4.91% 6.06% 7.18%

Equity Index $95.21 -0.46 15.23% 13.96% 6.77% 8.05% 11.08%

Global Equities $101.09 -0.09 19.09% 19.18% 8.75% 6.90% 9.61%

Growth $64.80 -0.22 5.49% 5.01% 1.11% 3.77% 7.89%

Inflation-Linked Bond $46.45 0.02 0.01% 3.68% 7.03% -- 6.73%

Money Market 10 $23.73 0.01 4.70% 4.63% 2.11% 3.70% 4.71%

Social Choice $125.52 -0.31 10.15% 10.20% 6.48% 7.72% 10.09%

Stock $242.15 -0.85 17.24% 16.65% 8.24% 7.97% 10.59%

 

TIAA Account

 

Real Estate $273.61 0.09 14.03% 14.88% 10.08% 9.47% 9.26%

 

TIAA Traditional Annuity

 

Retirement Annuity 5.25% 4.8% 4.6% 6.0% 6.7%

Supplemental Retirement Annuity 4.50% 4.0% 3.2% 5.5% 6.2%

 

TIAA-CREF Institutional Mutual Funds-

 

Growth & Income $9.00 -0.04 16.86% 14.06% -- -- 14.97%

nternational Equity $13.06 0.05 28.25% 30.51% -- -- 24.16%

International Equity Index $21.08 0.02 25.87% 27.86% -- -- 23.57%

Large-Cap Growth Index $12.34 -0.05 8.70% 7.90% -- -- 12.88%

Large-Cap Value $15.99 -0.09 20.93% 19.01% -- -- 20.42%

Large-Cap Value Index $16.12 -0.08 21.81% 19.86% -- -- 19.15%

Mid-Cap Blend Index $17.72 -0.09 14.69% 15.89% -- -- 22.29%

Mid-Cap Growth $17.25 -0.12 8.79% 10.16% -- -- 20.94%

Mid-Cap Growth Index $14.32 -0.08 10.22% 12.38% -- -- 20.90%

Mid-Cap Value $18.28 -0.07 19.95% 20.12% -- -- 25.23%

Mid-Cap Value Index $16.81 -0.07 19.63% 19.66% -- -- 23.47%

Real Estate Securities $16.22 0.07 32.84% 36.46% -- -- 27.81%

S&P 500 Index $16.03 -0.07 15.36% 13.83% -- -- 15.42%

Small-Cap Blend Index $15.50 -0.13 17.94% 17.00% -- -- 21.32%

Small-Cap Equity $15.41 -0.14 17.69% 16.65% -- -- 21.66%

Small-Cap Growth Index $15.36 -0.13 12.96% 12.95% -- -- 21.38%

Small-Cap Value Index $14.45 -0.13 22.93% 20.90% -- -- 22.89%

Social Choice Equity $11.55 -0.05 14.09% 12.89% -- -- 16.52%

 

 

Lifecycle Funds

 

Lifecycle 2010 $11.09 -0.02 8.39% 9.58% -- -- 9.30%

Lifecycle 2015 $11.23 -0.02 9.40% 10.42% -- -- 10.20%

Lifecycle 2020 $11.41 -0.01 10.26% 10.99% -- -- 10.90%

Lifecycle 2025 $11.49 -0.02 10.78% 11.43% -- -- 11.57%

Lifecycle 2030 $11.62 -0.02 11.72% 12.22% -- -- 12.13%

Lifecycle 2035 $11.73 -0.02 12.47% 12.70% -- -- 12.83%

Lifecycle 2040 $11.83 -0.03 13.12% 13.29% -- -- 13.42%

 

Partner funds

Western Asset Core Plus Bond Portfolio $10.54 -0.28% 6.77% 8.37% 6.81% -- 7.04%

 

American Funds

EuroPacific Growth Fund $46.56 0.13 22.17% 24.78% -- -- 15.74%

Washington Mutual Investors Fund $34.85 -0.46 18.32% 16.84% -- -- 7.62%

 

 

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Something like this?

 

 

10% TIAA-CREF Large-Cap Growth Index Fund - Retirement Class *** Morning star rating

$12.34 -0.05 8.70% 7.90% -- -- 12.88%

10% TIAA-CREF Large-Cap Value Index Fund - Retirement Class ****

$16.12 -0.08 21.81% 19.86% -- -- 19.15%

10% TIAA-CREF Small-Cap Growth Index Fund - Retirement Class ****

$15.36 -0.13 12.96% 12.95% -- -- 21.38%

10% TIAA-CREF Small-Cap Value Index Fund - Retirement Class ****

$14.45 -0.13 22.93% 20.90% -- -- 22.89%

10% TIAA-CREF International Equity Index Fund - Retirement Class ****

$21.08 0.02 25.87% 27.86% -- -- 23.57%

10% TIAA-CREF Real Estate Securities Fund - Retirement Class **

$16.22 0.07 32.84% 36.46% -- -- 27.81%

 

10% CREF Variable Annuity Stock *****

$242.15 -0.85 17.24% 16.65% 8.24% 7.97% 10.59%

30% CREF Variable Annuity Bond Market *****

$79.51 -0.02 4.10% 5.69% 4.91% 6.06% 7.18%

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Your first six look pretty solid. Index funds with lots of diversification. One caution, though: some of those have really had a runup in the last few years. Don't be surprised if they reverse course, and don't panic if they do. If you are truly a long term investor, you must stay the course. It's easy to say this, but unless you have gone through some dismal times (e.g., 2000-2002), it's hard to know how you will react when things go south.

 

You might consider dumping the variable annuties in favor of straight mutual funds.

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If you are truly a long term investor, you must stay the course.

 

Yes I am. And I will. But am I breaking that rule by reallocating now? And why did my T.C. advisor recommend my current portfolio as he did?

 

 

 

You might consider dumping the variable annuities in favor of straight mutual funds.

 

 

Like this?

 

10% TIAA-CREF Large-Cap Growth Index Fund - Retirement Class

10% TIAA-CREF Large-Cap Value Index Fund - Retirement Class

10% TIAA-CREF Mid-Cap Value Index Fund - Retirement Class added

10% TIAA-CREF Small-Cap Growth Index Fund - Retirement Class

10% TIAA-CREF Small-Cap Value Index Fund - Retirement Class

10% TIAA-CREF International Equity Index Fund - Retirement Class

10% TIAA-CREF Real Estate Securities Fund - Retirement Class

 

Partner Funds

 

30% Western Asset Core Plus Bond Instl WACPX added

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I'm not sure why your advisor recommended that portfolio. It's not bad at all, actually, and it sounds like you have had good results with it. If you are comfortable with it, then by all means keep it. I have a bias for passively managed index funds, and that is why I made those previous suggestions.

 

I also believe in not taking any more risk that is necessary, which is why I suggested that you consider a greater percentage of bond holdings. But again, the key thing is to determine your future needs during retirement, and then establish an appropriate asset allocation based upon those needs. If you need more risk to attain that goal, then maybe 30% in bonds is too much. If you need less risk to attain that goal, then perhaps 30% in bonds is not enough.

 

The portfolio that you proposed looks pretty solid. Adding mid cap makes sense, as does the bond fund.

 

 

 

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You certainly look as though you have a diversified portfolio. Switching to index funds isn't a bad thing either. It's personal preference. You could also remove some balances from existing holdings, move them into index funds, and add contributions to the index funds. Leaving some balances in the active managed will give you some potential for larger gains in up markets.

 

Something else to consider would be your diversity across your Roth IRA and wife's account. Maybe you should be more aggressive in the Roth IRA with sector funds or active management, and be offset that with the index funds in your 403(b). Also, depending on what options your wife has, and how aggressive that portfolio is currently, you should stay with your current solid choices and just re-balance out of the better performing funds to sell high, buy low.

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Thanks.

 

I was unhappy with the CREF growth and since it looked like it only just started a downward swing I transferred all of the funds (closed it) into a new TRVUX Mid cap value index fund which looked like it had fallen quite a bit.

 

So for the moment, I have..

 

25.00% TRLCX Large-Cap Value Fund - Retirement Class

15.00% TRVUX Mid cap value index fund-Retirement Class

10.00% TRGMX Mid-Cap Growth Fund - Retirement Class

10.00% TRSEX Small-Cap Equity Fund - Retirement Class

15.00% TRERX International Equity Fund - Retirement Class

15.00% TIAA Real Estate

10.00% CREF Bond Market

 

I can transfer funds to any of my available funds whenever I like without fees except for TIAA real estate which has a once per quarter rule. And reallocate whenever.

 

I want to concentrate on international equities. Large cap growth and value indexes. Mid cap growth and value indexes and back off small cap for a while. Back off the RE a bit and more in bonds.

 

Would there ever be a sell high buy low event when transferring from TRERX to TRIEX or TRGMX to TRMGX since they are the same class?

 

 

 

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