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JT1906

Reputable 403B Houston Area

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Good evening, I'm looking for a company where I can invest my 403B. After reading the reviews about AXA I have realized that I may have jumped the gun too soon to invest with them. I am a first year teacher and began investing with AXA about a month ago. After reading the post on here about AXA I have realized I need to discontinue with them and look for another company to handle my retirement. Any suggestions? 

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Can you list both the 403b and 457b vendors that are on your district’s approved list? Also, some states have state sponsored 457b plans...not sure if Texas does, but I’m sure that is google-able  

I documented the 5 best plans available in Florida here. All 5 are also available throughout the nation and hopefully in your district!

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EdLaFave's post has a link to his discussion of Fidelity, Security Benefit's NEA Direct Invest and Aspire. I agree with Ed’s ranking. Fidelity Investments would be an excellent choice for your 403b plan. I would stick with the 3 very low-cost index fund he suggested. However one of Fidelity’s Freedom Index Target Date funds that he mentions would also be a good choice, although slightly more expensive.

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Congrats, you’ve got some excellent choices on that list!

As Krow noted, Fidelity Investments is the way to go. There is a similarly named “Fidelity Security Life Insurance” company which I’ve never heard of, but based on their name they’re bad news. So don’t confuse the two.

A word of caution about Fidelity is that they give some of their funds very similar names where one fund is great and the other is rather expensive (this has been discussed previously on this board). I can only assume they’ve done this to trick the investor into paying higher fees than is necessary and this has even caused confusion for those well versed on the matter. So be careful and you may want to double check with the board about the funds you use.

Also, I’m not sure how advanced your knowledge is, but I wrote up an Investing 101 page that might be helpful to you.

 

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Thank you so much. I really appreciate it. Yesterday a representative from National Life Group stopped by the school. I listened in on her presentation and she mentioned how her company is designed to help teachers and are backed by teachers across the country. Are you familiar with them? Also do I need to contact Fidelity Investments, I believe I read on here how they do not have advisers.

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You absolutely do not want National Life Group. You want a vendor that lets you build a fully diversified portfolio at rock bottom costs. You don’t want an insurance company that is going to sell you some complicated, high cost, mix between insurance and investment that you’ll never be able to understand.

@whyme has setup a Fidelity account so they can probably answer some of your practical questions about enrolling. My guess is you can do it all online or you can call in for help.

Side note: anything with an adviser is going to be high cost and not in your best interest to invest in. You don’t need an adviser for any plan that I’ve rated highly.

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JT1906, the 3 vendors that Ed and I have suggested all have in common that they do not have on-site reps. They all 3 are internet based, with phone assistance available. They all assume that you are able to select your funds without the advice of an on-site rep. This is the secret sauce to maximizing your retirement savings. The on-site reps are supported by the fees of the products that they sell. So the reps have a conflict of interest--what's best for them is not best for you. The difference between index funds and expensive "managed" funds, after 20 or 30 years can be tens of 1000s, or more. 

So yes, contact Fidelity Investment, using the phone # on your vendor list. They help you to fill out an application form that will set up your Fidelity 403b account. Their 403b website will have lots of info on the 403b plan, and a list of the many mutual funds available. Please stick with either the 3 broad-based index funds that Ed described, or one of the Fidelity’s Freedom Index Target Date funds. Most of their other funds are expensive, their index funds being loss-leaders.  

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Greetings, it's JT. Based on what I have researched and the help of this website (You guys are awesome) I will be using Fidelity but now sure where to start. They seem to have a lot of different options. Based on my age 36 and when I plan to retire 66 I need to find the best option for me. Is it me or is there a lot of different options to choose from? 

JT, I've copied and pasted your post over to this thread, so you don't need to.

Fidelity Freedom Index Target Date funds are “all-in-one” funds, also called “fund of funds”. Each one is made up of several different stock and bond mutual funds. The percentage of stocks to bonds varies, with more stocks the further away retirement is. If you stay in a fund, it will gradually be rebalanced to have less stocks and more bonds.

You could start out with one of the Fidelity Freedom Index funds, maybe 2030 fund. It has 75% equities and 25% bonds, which considering your age of 35 and retirement age of 65, is reasonable. If you decide that this is too conservative, or too risky, in the future, it’s easy to change to the 2015 or 2035 or to whatever you decide. Here’s a link to all the Freedom Index funds. Scroll down to see the various funds, starting with the most conservative. 

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/SHDOCS/FXIFX/hosts/sh_comm_pmqa.002216.RETAIL_pdf.pdf

As I mentioned, the first thing to do is to call Fidelity and take care of the application form. They will have to confirm that they are on your district’s 403b vendor list. It may take a few days for your 403b account to be set up. Then you’ll have internet access to it.

You also need to contact your Third Party Administrator and tell them you’ve chosen Fidelity for your vendor. They will have a salary reduction form for you to fill out. That tells them how much you want them to send to your Fidelity 403b account. You can start with a small contribution (there’s probably a minimum) and change it later if you want.

Please don't hesitate to ask questions. If you need to read up on investing, this website is a good place to start. Also the Boglehead.com Wiki covers lots of investing topics. 

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There are an incredibly excessive amount of options. I argue that a major reason, arguably THE reason, that financial institutions do this is to overwhelm investors and drive them into the arms of expensive advisers.

The good news for you is that it really is simple once you cut through the noise and we will answer as many questions as you can conceive of. Check out my Fidelity page to drastically reduce your list of choices. You need to build a fully diversified portfolio and you basically have two easy ways to do that...

#1 is called the three fund portfolio. You own a domestic stock fund that covers every US stock, an international stock fund that covers the rest of the world, and a bond fund.

#2 is called an “all-in-one” fund or a “fund-of-funds”. This is a single fund that essentially holds the three funds mentioned above, but hides those details from you. One variant of these “all-in-one” funds are called target date funds and they increase your bond holdings automatically as you approach the target date. Another variant of these “all-in-one” fund is a fixed allocation where the bond holdings do not increase over time.

Option #1 has the lowest cost, but it is your responsibility to make sure the three funds stay in the correct proportion to each other because the three funds will not increase/decrease in lock step with each other. For instance, just about every paycheck this year I’ve had to buy international stocks because domestic stocks have done so much better. Having to do this manually opens people up to behavioral errors because it requires you to buy the worst performing asset.

Option #2 has a slightly higher cost, but you don’t have to do anything. Just keeping dumping money into that one fund every paycheck, over and over again. You can almost think of this fund as a nearly free adviser/manager doing the work for you!

I have option #1, but I think Option #2 is appropriate for most people.

The biggest decision you’ll have to make is what percentage of your portfolio should be allocated to bonds. Nobody can make this call for you because it is based on who you are as a person. Bonds will decrease expected returns, but nothing decreases expected returns like stocks dropping by half, freaking out, selling stocks at the bottom, and not reentering the market until the recovery is over. Or driving yourself into an early grave because you can’t sleep during the inevitable crashes you’ll experience. So ask yourself how much of your portfolio you can emotionally and financially afford to lose, think of it in absolute dollars and a percentage, know that stocks can drop by 50%, and pick a bond allocation that won’t cause you to lose too much.

For the record I have an old emergency fund in bonds and everything else in stocks. Others on this board have something like 70% in bonds I think. This is a personal choice, but it is critical it is true to who you are as a person/investor.

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EdLaFave and Krow36 I appreciate the time and effort in your responses. You two have extremely helped me out and I'm glad I stumbled upon this forum. I can't reiterate how grateful I am. Thank you.

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I appreciate the gratitude and I’m really happy you seem to have this sorted out. Please pay it forward by educating your coworkers because they’re likely being exploíted. If you’re ever feeling up for a project then work to reform the plans in your district!

Come back and ask as many questions as you need.

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