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Everything posted by tony

  1. Hey All, I'm hearing consistenly that index funds over time always outperform managed funds. My question is this : is one's risk reduced by having the active manager's hand involved at least short term, say five years or so? What advantages are there to managed funds? If they are not a good way to go why are there so many? Even Vanguard keeps adding managed funds. I assume its because there is more money in it to be made in fees? It just seems that if you at least want a chance to beat the indexes you should pick a highly rated managed fund. Those of you who swear by index funds seem secure that you doing better than those of us with some high quality managed funds in the mix? (I am not talking insurance products with excessive fees just a good basic mutual fund like Fidelity Contra for instance. Does anyone have anything negative to say about index funds? I am asking these questions only because I sometimes feel this site is definetly full of index lovers. Thanks, Tony Tony- The Yale article mentions only Fidelity Magellan by name. Looking at the text and tabular data in the article shows there are many other funds in the category of closet index funds. Best wishes, Readingteacherspouse Tony- The Yale article mentions only Fidelity Magellan by name. Looking at the text and tabular data in the article shows there are many other funds in the category of closet index funds. Best wishes, Readingteacherspouse
  2. Tony- The Yale article mentions only Fidelity Magellan by name. Looking at the text and tabular data in the article shows there are many other funds in the category of closet index funds. Best wishes, Readingteacherspouse Tony- The Yale article mentions only Fidelity Magellan by name. Looking at the text and tabular data in the article shows there are many other funds in the category of closet index funds. Best wishes, Readingteacherspouse
  3. My guess is that if they are non profit than they have to be a 403B. To expand on that issue can a 403b provider offer a match? Tony
  4. tony

    403b Abuses

    Interesting that you should bring that up. This past month my contribution took 20 days to be deposited and most months it takes about ten days. Even ten days seems a long time in this electronic age. Someone told me once that companies put all contributions in a money market for as long as they can to collect interest before crediting accounts Is that a possibility? Tony
  5. This truly is a great discussion-I agree This closet index funds issue is interesting. Whatwell known managed funds can you name that are well known closet index funds?
  6. Ap teacher You are most correct. I could have up to 30% in bonds and probably still maintain my current disposition towards higher returns while reducing risk. Not a bad idea Tony
  7. Joel I am not accruing a Defined Benefit as I am not in any type annuity within my 403B or oustside of it Tony Tony, I assume your all stock portfolio is via 403b salary reductions. A 403b is a Defined Contribution retirement plan where the individual assumes all investment risk. Many 403b contributors also have a Defined Benefit retirement plan which is nothing more than a fixed annuity payout during retirement. Some who have both types of plans feel comfortable with an all stock portfolio with their 403b because of the guaranteed nature of the Defined Benefit plan. This is why I asked if you are accruing a Defined Benefit pension. Peace and Hope, Joel Tony, But are you accruing a Defined Benefit pension? Joel
  8. But that is assuming Vanguard will out perform the Fidelity account. Its not all that cut and dry. Tony The trick is to pick out the funds that will beat their benchmarch in advance over a long period. This only rarely happens. Index funds with low expenses (which closedly match the benchmark) beats the vast majority of active managed fund because of the extra drag on expenses that active funds incurr, although appearing small on an annual basis become very considerable over time. Except for Fidelity's loss leader Spartan funds at 0.1 annual expense Vanguard's expense is about a half a percent less each year for comparable funds. It may not not appear like much, but on a $100,000 it comes out to $500.00 a year compounded over time ($5,000 plus over a 10 year period). I would rather have that in my pocket.
  9. Joel, I am assuming all risks in my 403b non-annuity portfolio. My wife has her money much more conservatively invested , and I am leaving her in the dust. I guess its the gambler in me . Still, I think inflation is the major threat we are facing. Stocks are the only way to beat it (inflation)long term if you can ride out the ups and downs and still sleep at night. You can still choose stock funds that are on the conservative side. My adviser always tells me "its not what you make, its what you keep" Certainly if you are five years from retirement or less and will need the money on retirement then being more conservative would make sense otherwise I think stocks are the only way to go. Tony
  10. Joel, I don't understand your question?? Tony- Are you accruing a Defined Benefit pension? Joel
  11. If I could add to this discussion. Fidelity and Vanguard are good fund companies. They are equal. Don't get up too hung up much on fractional expense differences. I have a mix of funds most are under one percent in fees but I do own some that charge a little more than that and have out performed over a ten period most index funds that have similiar investment objectives. So, it is possible to pay more and get more. Its just not the norm. You will have to research Money Magazine's latest issue has a fund scoreboard which shows how funds did in the awful 2000-2002 bear market. Pick funds that seem to hold up in down markets. Also I have 100% of my portfolio-retirement and non retirement in mutual fund stock funds. I own no bonds. Even though I am 52 years old I have no worries about being in 100% stocks. Bonds can be risky when interestrates rise as is now the case. Inflation is a major risk factor to be considered. Tony Opps. I meant Kiplinger's Magazine. Not Money magazine. Sorry.
  12. I would not do it. I believe taking a distribution can mean you'll get socked with a 10 percent IRS early-withdrawal penalty as well as federal and state income taxes. I'm not sure if there is any exclusions to this policy. It may be cheaper getting a loan. Tony
  13. tony

    Should I Bother?

    Dear KK26 As some one who has been there and done that this is what I would suggest. Make sure you make max your Roth IRA contribution in a low cost mutual fund perhaps a vanguard target retirement plan each and every year with out fail. I would still participate in a 403b plan because it lowers your taxes which might help you come up with a tax refund when you do your taxes and this may give you some cash to put into the IRA.Some folks don't realize making contributions to a 403 b lowers your taxable income and benefits you immediately as well as long term. I would explore the companies named and go with any of them that may not have a surrender charge. You can then periodically transfer money over Vanguard , Fidelity, or some other decent company that will accept transfers periodically using the 90-24 transfer form. From the looks of your list though, it looks like most will have surrender fees. Sometimes you can make an arrangement with these companies to allow you to put your money in a money market and transfer it out periodically with out surrender charges. Finally the real key is to share your knowledge with coworkers and check to see what school board policy is for your school system system regarding adding vendors. You may be able to garner enough signatures and support to get them to add a decent choice like Vanguard to the vendor list. I know this works because we just added vanguard to our school and its all because of a few devoted teachers willing to research and apply the knowledge they have gained by using and reading this site. I would also highly recommend Dan Otter's "Teach and Retire Rich". It is well written, easy to understand and will be a valuable resource as you attempt to change the current retirement culture in your school system. I am assuming here that you are an educator. Good Luck, Tony
  14. Tony: Would you care to tell us about the service, or lack thereof, that you received from the American Funds rep? What was his/her reaction when he/she learned of your desire to transfer to Vanguard? Joel, I found the American Funds very helpful and knowlegable. He always advised me well and rather conservatively. When I told him I may transfer over he said that was my decision but that he felt American Funds stack up well against Vanguard even with the load. He would only recommend American Funds to me although he sold others. Compared with my earlier adventures with insurance reps when I was younger and dumber, I'd say I was very pleased with my American rep My concern is the load which I don't have to pay with Vanguard. I also have concerns that American Funds are suffering from asset bloat. Most of the funds he put me in have a huge asset base. I am concerned that their performance will suffer down the road. The funds don't lose much but my experience is that they move up .very slowly. Everything I've read says they are decent funds I will be transfering over 100 K so i don't want to make any mistakes. I have some assetts with vanguard from an earlier transfer and i have been pleased with the results. It just seems I keep accumulating funds trying to jump to the better ship. We fought hard to get Vanguard so this should be my last parking place for my retirement money
  15. Hello All I am preparing to transfer money out of American Funds and into Vanguard. Does anyone know of good Vanguard equalivents for these American Funds?: Capital Income Builder American Balanced Capital World Growth and Income AmCap Washington Mutual Investors. I've been paying a load for several years but American was the only company available in my school 403B plan that had no surrendar charge and that was not an insurance product so I went for it. Now Vanguard is available so I hope I am doing the right thing. I need to stay in similiar funds because my portfolio is asset allocated and I don't want to mess that up right now. If you can help I would appreciate it greatly. Respectfully Tony
  16. I totally believe the Wayne incident is true. I had it happen to me years ago. I was transfering my money out from an annuity using the 93-24 transfer I learned about here. The "advisor" called me several times telling me that what I was doing was illegal. He went on to brag about the returns I was getting with his funds and about the surrender charges I would inccur. I had to call him at least 5 times on different occassions to get him to put the paperwork through on his end. It took 6 months to get this joker to act. I had to call the main office. If I remember correctly Vanguard helped me get this done when I couldn't get them to transfer the paperwork Not exactly a threat but very poor professional behavior and proof he was not looking after my interests. I have no doubt this is happening across the country although I would like to think not all Advisors would be bad Its a dirty little business.
  17. tony

    403 B Roth Option

    This is very good info. Thanks for taking the time. Tony
  18. I was wondering if anyone has any expertise as to how difficult it is for a school system to add a 403b roth? Is it just a matter of paperwork? Also can anyone address the pros of a 403b roth ober a regular 493b tax shelter? I do my own reading but I enjoy hearing from 403bwise folks who always offer fresh and truthful perspective Thanks, Tony
  19. tony

    Irs Rules

    Thanks for all the responses to my IRS question. I would like to add to my story. I must disagree with the first post about you only get what you pay for. Before I originally initiated a 90-24 transfer (thanks to this site or I wouldn't have known), I was with American Express. My advisor did nothing but put me in the most volatile of funds. When the crash came in 2000 I lost 50% of my retirement fund. What kind of advice is that? It seems that 50% in international is a bit much to me . I think 25% is about right. Since then, I transfered my money to Vanguard and I have been doing much better. I've educated myself and have diversified. We will now be getting Vanguard at our school and I'm excited about being able to contribute regularly to this HONEST company. I don't want the IRS to screw this up with its upcoming legislation. I loath most financial advisors. I see the bull they feed so many new teachers. I don't blame them personally but the way they are paid makes it difficult for them to be truly honest. Educators need to educate themselves and this site is a great beginning. Tony
  20. tony

    Irs Rules

    Hello Finally it looks like our school system will approve adding Vanguard to our vendor list. WE've been busing this!! I am concerned however that it will all be for naught. If I understand correctly will school systems have to pick an approved a vendor and dump all the other choices as off 2007 because of IRS rulings ?Can it choose more than one plan? Our school system is littered with insurance plans and I am afraid that their lobby efforts will prevail and we will be stuck with an extremely high fee insurance annuity I want to make sure that does not happen. Can anyone give me the basics on these questions? I've been reading your great website but am still confused. Thanks so much Tony
  21. I am trying to get vanguard introduced into our school system . The only options are American Funds(decent but does have a front end one time load) and a plethora of super expensive insurance tax sheltered annuities. Our benefits administrator told us that if we can get about twenty signatures showing interest, he would ask the school board to allow Vanguard as an option. His concern is that Vangaurd has no one who would be able to advise teachers. We feel we are smart enough to do it on our own using their phone reps and their website. My question: Does any one see any obstacles that may keep us from getting vanguard into our school system based on your personal past experiences? I'd like to be ready when the questions begin. Thanks Tony A.
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