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Gina NY

choosing a 403b plan

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Gina, Tony explains your choice well. Use the Security Benefit NEA Direct Invest and the 3 index funds he listed, and rebalance once a year or so if needed. This is the lowest cost 403b plan for you. Or, use Aspire, choose to self-direct (an advisor costs 0.60% I think so don't buy that, you don't need it with a TR fund) and use a single Vanguard Target Retirement fund. This fund is as diversified as you can get and rebalances for you. It's a bit more expensive because Aspire adds a 0.15% fee to your balance, but I think it's probably an excellent choice for you. 

I would cross Lincoln Investment off your list of vendors, unless you are willing to work on long-s for a NY school district. 

I see your latest post about growth in 10 years. There's a handy rule of thumb called the Rule of 72. The average rate of return divided into 72 will give an estimate of the time to doubling. If the rate of return is 7%, the principal will double in 10 yrs. 

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GINA

1. Call Aspire (866.634.5873)and ask for an application. They can usually e-mail it to you or they may direct you to it on their webpage. Mention your school district. They will help you fill it out Call them with questions

 

2. Fill it out. Where it asks for investment choice fill in Vanguard Target Retirement  2030 (VTHRX) 

 

3. Write in SELF Direct  next to the fund name  in big bold letters and also write in No advisor needed.

 

4. Sign it and either send it to them or give it to your person in charge of 403b paperwork at your school.

5. Request from your school paperwork to start monthly withdrawals. Write in how much you want taken out each month. Turn it in.

Thats it.

I think at this point we have helped you all we can to get started. You need to grab the bull by the horns and get it done. 

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9 minutes ago, Gina NY said:

I’m definitely not comfortable managing the account myself. I will check Aspire since it does everything for you. That’s what I need! 

Also, if I was to, let’s say, have $10,000 in my current account what would the return possibly be in ten years? I know you said I can double that money. How much could I make with American Funds? (Roundabout figure)

You haven't told us very much about your American Funds, their ERs and their relative percentages. AFs are all actively-managed funds, which results in their have higher costs, both expense ratios and undisclosed costs. Although AF is a well-managed financial company (John Bogle the founder of Vanguard has said so), they levy a 5.75% load and have higher ERs of 0.6% to 0.7%. We have drunk the koolaid that broad-based index funds, over the long term, will outperform actively-managed funds, at least 80-90% of the time. 

Whether your particular group of AF funds will  outperformed our suggested group of index funds (or an equivalent target retirement fund) is not known. It's possible to compare individual fund's past performance and we can help you do that if you want.    

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GINA

All I can say is if I could double my money in ten years I would be very happy and so should you. The Vanguard fund I recommended did just that.

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You have both been so incredibly helpful and patient with helping me and answering all of my questions! I truly appreciate it!! I wish I knew about your site sooner. The only reason I came across it was because I was trying to research 403b’s on my own! It was overwhelming to say the least. Then I found you two! You make the process of choosing the right funds so much easier! I can’t thank you enough! 

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I do have one other issue that you could maybe help me with. I used to work for a company called Computer Associates, Inc. At the time we were given some stocks. My issue is that I can not do anything with the sticks because somehow Putnam Fiduciary’s Name is on the stock along with my name. Putnam is no longer handling the stock but the name was never removed. Putnam does not want to know anything since they are no longer part of this stock anymore. They won’t write a letter to say they are no longer part of this stock so I am stuck. Would I need to speak with an attorney to help me with removing their name?

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Gina

Have you thought about buying Dan Otter's Teach and Retire Rich? Its a great book written for teachers and its not very expensive. Check the homepage if interested. https://403bwise.com/bookstore

We enjoyed the exchange . Let us know what you decide to do. You need to keep reading on this site both on the homepage which has links  full of articles  and also this discussion page . You will absorb much and maybe someday you can advise others! Just remember to be careful about advisors. Some are just out to make a buck and will say anything. In my younger days I was lied to over and over.  I would again urge you to do the Vanguard Target Fund through Aspire and then save all you can until you retire. Also remember the market goes up and down so once you own the target fund hold tight , don't panic and by retirement time you should have a good nest egg to carry to forward.

I can't help you with the putnam issue. Have you thought about seeing a stockbroker?  and see what he/she thinks?

 

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11 hours ago, krow36 said:

You haven't told us very much about your American Funds, their ERs and their relative percentages. AFs are all actively-managed funds, which results in their have higher costs, both expense ratios and undisclosed costs. Although AF is a well-managed financial company (John Bogle the founder of Vanguard has said so), they levy a 5.75% load and have higher ERs of 0.6% to 0.7%. We have drunk the koolaid that broad-based index funds, over the long term, will outperform actively-managed funds, at least 80-90% of the time. 

Whether your particular group of AF funds will  outperformed our suggested group of index funds (or an equivalent target retirement fund) is not known. It's possible to compare individual fund's past performance and we can help you do that if you want.    

I used to own American Funds. Yes I paid the load. But at the time my only others option was an annuity!  I transferred all that money over to Vanguard eventually  but truly American funds aren't all bad. If Gina has paid the loads, at this point she could leave the money put with American Funds. if her expense ratio isn't to high. I know they have different classes of funds/fees. If she was in the load shares she probably now has a fairly low expense ratio.

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Gina

 Can you find the fund names for us and the share class. It might be on the statements they send you.

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That "A" after each fund name indicates your funds are class A funds, which means you very likely paid their 5.75% front end load. You can confirm that by comparing your pay stubs showing the amount of your payroll deduction, with your AF statement, showing the amount actually added to your account. I think it's very unlikely that the loads were waived but I guess it's possible?

I googled your funds and their ERs are 0.59%, 0.60%, 0.56%, I didn't look up the MM, and 0.64% (in order). These ERs are higher than ideal and over time they are a drag on the return of your account. Whether AF's management adds enough outperformance to overcome that drag is the question. Growth Fund of Amer. has done very well recently but it is not diversified and bets on a narrow segment of the stock market (large cap growth). I'm not familiar with the other funds. 

I'm a believer in using broadly diversified, very low-cost index funds, as is Tony I think, so that's our bias.

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These are some numbers on fees according to MorningStar.  If you know your allocation you can get a better idea of the weighted expense average.

Capital Income Builder A - Initial Sales Fee: 5.75%

Expense Ratio:  .59%

Management Fee: .23%

12 b-1 Fee: .25%

Fundamental Investors A - Initial Sales Fee: 5.75%

Expense Ratio:  .60%

Management Fee: .24%

12 b-1 Fee: .25%

Income Fund of America - Initial Sales Fee: 5.75%

Expense Ratio:  .56%

Management Fee: .22%

12 b-1 Fee: .25%

Money Market

Expense Ratio:  .37%

Management Fee: .27%

Growth Fund of America - Initial Sales Fee: 5.75%

Expense Ratio:  .64%

Management Fee: .27%

12 b-1 Fee: .24%

 

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The Management Fee and the 12b-1 fee are included in the expense ratio. This is from the AF website on Capital Income Builder A fund:  https://www.americanfunds.com/individual/investments/fund/caibx

Fees & Expenses

Fees

 

 

Annual Management Fees

0.23%

Other Expenses

0.11%

Service 12b-1

0.25%

As of each fund's most recent prospectus.

 

Expense Ratio

CAIBX 1

0.59%

Lipper Global Equity Income Funds Average 14

--%

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Oh thanks Gina, Jeb and Krow, I forgot that Gina sent the picture of shares above. Actually I went through this myself with American. Seemed like a good idea at the time. Now not so much. Heck my total expense ratio with vanguard is like 0.08% now. Fees are the achilles heal of not reaching your financial goals!!

You know, Krow has a point some folks get their load waived which makes it a little less hurtful. I never got mine waived so I paid dearly. The good news American has no surrender fees .

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