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Everything posted by tony

  1. We tend to over analyze scenarios here which can confuse. The only reason we mentioned Roth IRA is because that's the account the young lady is already in. A tax sheltered IRA would have been just as suitable I guess. Which is better depends, but saving in either one is a good move regardless.Considering she won't be saving more than the IRA limit, why bother even considering a 403b that is expensive and roadblocked with possible surrender fees and requiring the hassle of initiating a rollover. Looks like charter schools are just as ignorant about offering its employees decent choices as our public educational institutions. Unfortunate.
  2. Hey A Internet User Since she may be in New York for only a short while and depending on how much she plans to save during this time, continuing in a Roth IRA would be the easy smart answer. We like index funds here so make sure she is investing in a Fidelity Index fund or funds and is diversified across asset classes. We recommend a simple 3 fund portfolio here : 1) A Total Market Index Fund, 2) A Total International Index Fund and 3) a Total Bond Index fund. Or maybe even a target fund that corresponds with an estimated retirement date. Target Funds are my personal favorite for inexperienced/ novice investors who are just now trying to learn the investment ropes. Now if she plans on saving more than an IRA allows, you might want to list for us all her choices available in her school provider list. Also see if her district might have a 457b plan available to her in her school district. Frankly, I wouldn't bother with the 403b if she only plans to be in New York a few short years and if she won't be saving more than the Roth limit allows which is $6,000.00 max per year unless she is older than fifty then she can put in an extra $1000.00. This would especially make sense if all her 403B choices are high fee insurance products. By the way it is rare to find a school system that offers a match within a 403b. Some do but they are few and far between. Regards Tony
  3. On further examination. Actually, your NEA link does show Direct Invest as an option so The NEA Direct Invest is your best option You will have to go to the Security Benefit website , find the direct invest application and send it in. Pick The Vanguard Funds. Don't seek the help of an advisor as this is something you do on your own. I'm afraid they will draw you into the wrong funds. https://securitybenefit.com/individuals/product/nea-directinvest You could pick and be completely diversified at low cost Vanguard Total Stock Market Index Vanguard International Index Vanguard intermediate bond index
  4. NEA choice is not necessarily the best choice If you end up in the wrong funds program. They advocate some high fee choices. I imagine they are getting some kind of kickback for their endorsements. What you need to do is sign up for NEA Direct Invest and pick the Vanguard funds and do this on your own without any financial advisor interference.This will require linkage through Security Benefit which I 'm not sure you have . You will have to do further research. None of your other choices look all that appealing either. Valic might offer some non insurance choices that might be O.K if nothing else pans out better for you. TD ameritrade might allow you to open a brokerage account. If you can do that, that might be your best option but your list has no links to further understand what they are offering your particular school system. What state are you in? Does your state have a 457b plan available to teachers? Give us a little more info please
  5. SC Teacher You can always count on Krow's advice . He is probably the most technically/detail accurate poster on this forum. I think it's good from time to time to show our appreciation to our contributors like Krow on this forum who help others straighten out/ sort through their 403b/457b messes apparent in most school 403b plans. Unfortunately most school systems don't have a Krow on their personal staff. That would be helpful to most teachers but the insurance vendors would probably try and get him fired. So you have to come here which is probably quicker anyway.
  6. A Nice Tribute https://www.forbes.com/sites/johnwasik/2020/08/12/why-vanguards-jack-bogle-matters-in-times-of-global-financial-crisis/#119a8d33244d
  7. Sorry about the repetitive chart. Have no idea why or how it happened or how to fix it. I keep edit and deleting it but it comes back.
  8. For those who do have small cap value or an extended index in their portfolio, its saving grace could come on the other side of this Covid-19 induced bear market.Are we even in a bear market? a recession? Historically small cap stocks have earned a decent amount of their long-term premium in the aftermath of a bear market. Incidentally, to me adding smaller caps is not tilting. It's more like adding a supporting player. If you are going to do this, you need not time the market. You need to just own a slice of extra small caps through an index fund and throughout your investing experience.It might or might not be rewarding.
  9. ScottO Thanks for the flashback. Oh wow, I remember that Steve doesn't like Merriman! Investing isn't an exact science, and no one has the exact formula but I do know Steve owns the Extended Market Index now. I was torn between owning small cap value index vs small cap index vs the extended index. I chose the small cap index. From my experience it's been a good performer and it certainly doesn't hurt my performance. It's been a positive. At the same time, I know/knew a fellow teacher years ago now retired who owned only one fund, the 500 index, and did very very well with no diversification beyond the S&P 500.
  10. Scott 0 The simple answer here is diversify diversify diversify!!! You need to take those articles with a grain of salt. These journalists have to write about something to catch your attention. I'm not saying there isn't some truth in the articles just that they can sometimes be sensationalist to attract readership. You can learn from reading them but always stay cynical. Obviously the simple answer is diversify beyond the 500 index . A total stock market index has always been a better choice in my opinion but even there you need to keep your eyes open . Plus as the Morningstar mentions smaller stocks in a portfolio are always a good idea and thats why I recommend a 4 fund portfolio which includes an extended market index or a small cap index fund in the mix. I will hear from Ed about this I'm sure and he will have a pretty good reason why I am out of my mind with my comments, but I'm keeping my small stock allocation. I basically own the Vanguard life strategy fund ( index fund of funds) plus some Vanguard small cap index fund, plus some cash.
  11. This is kinda the hard part to decide.,which target fund would be best for her. I think slightly more aggressive might be best with hopes the market stays on her side. I am worried about our economy short term. Too much politics is in the air as well as this virus's impact on the economy. So far though the market seems to be saying DAMN The Torpedoes. The election results might deflate or spark the market depending on the outcome. I'm glad Whyme is back with us.
  12. Marian I'm late to this discussion so I will give you my two cents quickly and briefly. I don't want to add confusion as these discussions can sometimes get more intense than they need to be although, the advice is always very good if you can dig through all of it. I usually recommend the Roth for most folks. I see much higher taxes in the future based on what I am seeing in politics. In your case Marion I think it's not so much which you choose at your age although I think a Traditional is best for you in your circumstances. What matters now more than anything at your age is saving as much as you possibly can-lights out!! , especially since you say you have a meager pension. Fees, Fund choices, Roth vs Traditional are all important considerations but saving like crazy is what you need to do now. and yes, a Vanguard Target Fund 2040 is a good choice. You don't want too conservative of a target fund mix since you are trying to grow your account. Well not as brief as I wanted to be -sorry Oh one more thing-stay away from these 403b salespeople. They will hurt you more than help you in achieving your goals as contradictory as that may seem. Tony
  13. Ed Are you missing something or am I ? The S&P 500 he has available is not the Total Stock Market Index so a 10% allocation in small caps does help make his portfolio a little more diversified. I was not encourage him to tilt. I was encouraging him to try and be fully diversified considering the funds he has access to. I never recommended he go 50% small cap.
  14. I think you would be wise to keep some small cap allocation because the 500 index is larger cap funds. As far as international goes, I'm not crazy about them and only hold about 20% in my portfolio and they haven't done all that well in the last several years but today's Vanguard ,post John Bogle recommends 30% allocation. The 500 index includes American multi national companies so you are getting some international exposure there. Plus you say you already own some internationals else where. I agree with Whyme about bonds especially if you plan to stay in education and collect a pension/social security. That could count as your bond allocation.. Ultimately you will do fine if you stick with the Vanguard funds.. Let us know how you decide to proceed. Portfolio 3 keep in mind is very aggressive. In down markets that 50% small cap might retreat significantly. If you will be able handle that than it's all good. If losing 40% or more of your portfolio bothers you than I still think portfolio one might be better. You can always lower your small cap exposure when you get closer to retirement.
  15. Cranberry 44 You have some decent choices and you seemed to make a good choice with your selections but they are narrow in scope. I think you would be wise to allocate a portion -atleast 20% to Vanguard Developed Markets(international) Index and at least 10% to the Vanguard Small Cap Index. Something like this might work but keep in mind there is no exact formula for success although sticking to index funds is smart. Diversifying across all assets classes is always a good idea. 60% VFAIX 20% VTMGX 10% VBILX 10% VSMAX I hope I have helped and I wish you my best in your teaching career. I think you will do very well with this allocation long term. Tony
  16. Pardon me DK if I'm missing something from your excellent explanation . Seems like your explanation is about improper coding . You say a contract exchange is when you move money from WITHIN the plan from one vendor to another. So Reg can't do this because Lincoln Life is NO LONGER IN THE PLAN, it's been eliminated. This sounds like a basic "Transfer " that most school systems allow. But Reg says Lincoln is no longer in the plan. Now a plan to plan transfer would only apply to Reg if he was moving his money from a previous employer so that doesn't apply to him either.? So it seems to me this won't solve his problem. Somebody mail me an aspirin:) I'm confused. KROW?????
  17. I have had the error page come up as well sporadically
  18. Well Than if you have a surrender fee involved in all this and its significant than waiting out any move until your money is free and clear of surrender fees might make sense depending on the size of your portfolio and the amount of the surrender fee. I hope you can move it but from the responses you're getting it seems most of your "Experts" aren't sure either. If you can't move it considering where it is, it is very unfortunate and very unfair to you. Let's hope there is a way out for you. Please keep us informed because this situation may very well arise again for others and we want to make sure we can guide them correctly.
  19. Reg When we talk penalty are you referring to surrender fee or IRS withdrawal fee? or both?
  20. Yea so i had no interest to moving to something else but some teachers who had small amounts in Vanguard wanted to move it to something else in our 403 and couldn't. I remember that clearly. They told us it was a frozen account. That's the wordage they used.I'm hoping to hear from Reg and I hope he has researched this further.
  21. It happened to me just like it happened to Reg . I could not move it even if I wanted to move it once Vanguard was dropped. I think the issue is Lincoln no longer part of their plan document which freezes the account until retirement or separation of service.`It happens all the time. I agree it stinks to do that to an employee but we don't know the circumstances behind the move. What I see as weird to me is that they seem to have only one provider now ? It's great that it's Fidelity, not so great that employees don't have at least a few more options. Fidelity is certainly better choice than an insurance company like LincolnLife but, outside of their Index Funds, Fidelity is a managed fund higher fee entity. I think there must be some other choices but the fact is if Lincoln was dropped than the money stays with Lincoln. Now maybe the rules have changed but that's the way it was when I was working. The OP should investigate this further. I hope we will hear back from him.
  22. the quick answer is No. Congratulations . You may now be the proud owner of a frozen account if Lincoln is no longer on your employer's provider list as transfers are allowed only between institutions within the provider list while employed.Actually that happened to me. We got Vanguard, then Vanguard got taken away so If I wanted to I could not transfer those assets to something else. But my situation was positive because I had no interest in transferring Vanguard over to anything else.In your case it's just the opposite. You would be well served to be able to transfer your money into Fidelity. So that's a bummer. I think your employer owed it to you to notify you in advance of this happening, with the possibility of doing a transfer before eliminating Lincoln life. But Lincoln wouldn't want that to happen for obvious reasons. They can keep sucking your account of fees now for years to come. You only have one choice on your 403b List? That is rather unusual as most systems have too many choices. Once you retire you can move that money to an IRA. In the meantime stay the heck away from insurance companies and start investing in Fidelity index funds with all new money as we advise here. Read through the forums . Also if you leave your current job that too would open the door for you transferring your money over to a new 403b, a iRA, or I believe even a 401k plan.
  23. Here is a numbers comparison between Total International Fund vs Developed Market Index. As you can see International Funds have added very little to a portfolio's performance although it does add diversification. That doesn't mean it can't be the next big performer so its good to have some internationals in the mix. I personally barely have 20% internationals in my portfolio and I really don't care to have much more than that. If you go with the Vanguard Institutional Index, most of those companies already have international exposure. John Bogle if I remember correctly wasn't crazy about international funds and I tend to agree with him although Vanguard today advises about 30% allocation. Overall these two funds look and act very similar. https://personal.vanguard.com/us/funds/vanguard/compare?navigatingFrom=5
  24. Tan P Honestly I don't see that as a problem at all with using it ( Vanguard Developed Markets)in the portfolio in lue of Total International. Emerging markets are the most volatile stocks in an international fund. Developed markets would be more stable international companies and could be used for your international allocation. It could work at giving you adequate international exposure.
  25. Both the 457(b) and the 403(b) are similar. but the 457(b) doesn’t charge you an early withdrawal penalty if you decide to withdraw money from it when you leave your job. This lack of an early withdrawal penalty is one of the main differences between 403(b) vs. 457 (b) plans. I know some folks who use both because you can use both up to its contribution limits. Owning both helps you supercharge your savings. What you put in one doesn't effect the other. The 457(b) plan rules state that you don’t have to pay a 10% tax penalty if you resign or retire before age 59.5 and need to withdraw money from your account. I don't think the 55 age matters However, the 403(b) plan charges the 10% early withdrawal penalty. I usually recommend one or the other based on which has the best low cost options but i guess if you wish to exit your employment early, i guess a 457b would be better option. Here is some info I got off the internet Typically, police and fire departments were the participants in 457 plans for counties or municipalities. And typically, they would retire early on a disability,” she says. If the 457 plan didn’t have the exemption for early distribution, those workers would have been penalized and unable to access money that they needed. But while penalty-free early distributions allow flexibility, they could be a double-edged sword, since they allow workers to spend money that ought to be saved. Keeping the money invested in a tax-sheltered account as long as possible is nearly always the best option for building wealth. I would imagine right now plenty of police officers and firefighters are looking at their 457b plans as we speak if you know what I mean.
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