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JudyS

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Everything posted by JudyS

  1. Route 99 -- I have been in your shoes, and will be again in October of 2008 -- and I have elected to roll into an IRA. Sueable? I don't know. You might check with the legal department at your fund family, and my experience with Vanguard is that the legal department tends to be extremely cautious. But if you roll into an IRA, it's likely is more flexible and you can invest any way you want inside of it. You say your State Farm account is low cost. Hmmmmmmmmmmmmmmmm. Maybe. You might want to double check that... can you find the expenses in that account in Morningstar? Now I have State Farm insurance and have for many years, but a low cost investment? That would shock me. JudyS
  2. AP1 -- Oh, I do have fits trying to reply properly!! Sorry about the goofy empty spot. The advantage of the 403b is the tax deferred aspect, and who knows what will change after the IRS changes the rules 1/1/09. Personally, I would invest in the 403b first, as least until then, at least in part because you may not have such a good option after that date. Maybe so, but who knows. Extra, after tax $$ lying around? Sure, go for the Roth. Diversification across types of investments (large cap, bonds, small caps, REITS, etc.) is good, but I personally think that it's not a bad idea either to diversify in types of accounts -- IRAs, 403bs, Roths, aftertax accounts, and so on. Lotsa people can argue that, tho, but that's my theory and I'm stickin' to it! JudyS
  3. Lincoln -- It is a GREAT thing that you started 7 years ago, and you should be proud of yourself. I am so impressed that you started so young.... shall I tell you about the 40 and 50 year olds I talk to all the time who have not a CLUE? "What's a 403b?" they ask. And here you are, miles ahead of the game. You have learned a lot, including the art of asking questions, self-discipline, humility and an awareness of the big investing world out here. Nearly all of us here (and I bet it's actually 100% of us) started out just like you, with an advisor that we eventually became suspicious of. If it makes you feel any better, you are figuring things out in JUST 7 years -- it took me (and some of the rest of us?) much, much longer to begin to get wise. Keep up the good work, and keep a good investing book on your bedside stand along with some good fiction and some stuff on other areas of interest. You did good, and you are going to be fine! Congrats, JudyS
  4. AP1 -- Stop your contributions to that plan and find a no-load fund family through your district -- American Century, Fidelity, Vanguard, TIAA-CREFF and TRowPrice are the most common ones, but there are a few others. Set it up to open an account there and begin investing pronto. Then go back to the one you had and call them... see what the penalties are. You may be able to roll some (or maybe even all) of it into your new plan. They may not be cooperative, tho, so you may have to get out your prospectus (or ask for a new one) to figure out the exact situation with the penalties. And you MAY figure out that it's worth paying the penalty -- I did some years ago with Nationwide (may their corporate souls fry in ****) Good luck -- and please know that all of us here have paid "tuition" as you are now. You will get smarter, wiser, and happier with this investing business! Judy S
  5. Edy -- I would for the time being invest every penny I could get my hands on in the 403b.... probably WORSE options will be available after 1/1/09, so you might as well put money there while you can and re-consider your options after that time. Make hay while the sun shines. After 1/1/09 I would take all my data on debt and investments to a CPA and pay for 2 hours of his/her time to figure out what would be the best course of action, considering taxes and all. In Stanley's book "The Millionaire Next Door" he found that wealthy folk skimped on lots of things -- but never on good lawyers or good accountants. I have taken that idea seriously ever since. JudyS
  6. WOW! Thanks for the link -- Steve -- what a handsome rascal you are!!! Great ad! Lincoln -- Again and again as I have learned more and more about investing and trying to do it well, I have recalled a piece of advice that I heard or read, heaven knows where. So here it is: Nearly all of the time, investing advice you get for free is far better than investing advice you pay for. Embroider that on a pillow and put it on your sofa so you can see it every day! And the investing advice you get from here, from Steve and Tony and folks like that is.... FREE! You can get free advice other places, too, and some of these guys may suggest some. Let me start with two: investing advice about asset allocation and such from Vanguard.com (I THINK you can go there without being a customer) and the recommended reading list from www.bobbrinker.com. Not to mention that you can go to your local library and find books by John Bogle. Oops, that's three! See how easy it is? Good luck... learning about this stuff is a never-ending quest. JudyS.
  7. BSECK -- The answers to your questions, in my opinion, are as follows: 1. Yes 2. I dunno. 3. Make sure you have your asset allocation just like you want it. This is easier to do when you are adding $$ (add it to whatever assets you want to increase the %age of) rather than later (when you might have to sell A to put into B and C to bring things to the proper balance). Good luck!!! Judy S
  8. Larri -- Payroll departments are subject to making errors, but are rarely held respnsible for them. Around here errors in calculating sick days, errors in overpaying a staff member, and all those sorts of things are considered "Oopsie!" and the staff member is stuck. I got my panties in a real knot about this until I thought through the extent to which I want to be held responsible for errors of the same magnitude. Of course, you can always write a letter of complaint and CC to the union, the business manager and the superintendent... making such errors public usually reduces the chances they will recur. Judy S
  9. VIGGALS, Sure, you can have more than 1 403b accounts. No problemmo. And now that you know how bad Met Life is (and other of it's ilk, too), get busy and get on any committee that you can that will influence the choices that will change 1/1/09 per the IRS changes. Those friendly guys and gals from those highly profitable insurance annuities will be doing all that they can to make sure that THEY are a choice -- or THE choice -- on what surely will be a much abbreviated menu available us! And if your school district is making slow / no progress in this arena, you may want to UP your contributions for 2008 because you may have no choices, worse choices, or fewer choices come Jan. 2009. Not to be too glum about it.... :{ (And I am usually the optimist in the crowd!) Judy Schneider
  10. Excellent, Tony. You ARE changing the investment world, and letting us in this article and others is a fine strategy. Merry Christmas, hero! Judy Schneider
  11. Steve -- Thanks for putting up this link. The critics of this legislation are right -- as you and I would undoubtedly agree. So how about some of us writing letters? They help! I adapted one written about a slightly different subject. Here's the body of that, if any of the ideas will give any of you something to bounce off... and note the address to send the comments to: US Department of Labor Employee Benefits Security Administration Room N-5655 200 Constitution Avenue NW Washington, DC 20210 To Whom It May Concern: Thank you for the opportunity to speak to the issue of fees in retirement savings and who should know about them. Since we are “just poor working stiffs” who hold a 401(k) with an insurance company and 403(b) products, our savings are crucial to our retirement. And as you know, the fees and expenses erode returns – therefore potential for a successful retirement. We need to know those expenses – not just the employers. After 20 years of working in schools we became aware that hidden expenses torpedoed any chance at real growth the wife’s money saved through a 403(b). Once we knew, we --- along with other staff -- requested better options (no-load) fund options. When the 401(k) came into the husband’s life, we repeatedly asked about expenses and fees. The arrogance of the insurance company staff was evident when the representative said, “What do you care what the expenses are? Isn’t the value of the account going up?” Of course the value was increasing – due to a generally bullish market at the time and continued contributions. They resolutely refused to answer questions about expenses, and perhaps because few people asked, they felt they didn’t need to. When we regular working families pass up privileges and enhanced lifestyle in order to save for retirement, we deserve the information needed to maximize the returns. We earned that. Having those returns stultified by excessive (and often hidden and unknown) expenses is an insult and a gross injustice. We need and deserve to know what the expenses and fees are – all of them. We should have the opportunity to make the decisions about which services we need or how much is a fair price. We make those decisions in regard to our homes, our automobiles, our after-tax savings, and all the other services and products we use; we need and deserve the chance to make those decisions in regard to our retirement savings. Thank you.
  12. M.E. -- But you had another question, I think, about what you should do now. You can check again and see if there are any OTHER no load or at least lo-load options available, like Dodge and Cox, Fidelity, Gabelli, Ariel or whatever. There are lots of them. Unless you have the unlikely event of a "match" in your 403(b), you can try a couple of other things, too. Texas MAY have a 457 or "Deferred Comp" option which MAY be a better deal. Give that a s###### by asking the state folks. Then there's the ROTH, if your income isn't too high (usually not a problem for teachers!). Finally, there is nothing wrong with having "personal savings" using after-tax $$, so setting up an account with whomever you please could work. If you choose the latter, it's especially important to put "tax efficient" products in there, like index funds. And you COULD call the state and see if you can figure out what districts are offering good 403(b) options, thereby taking care of their staff members. Then apply there and move if you get the job. Having people come to the districts who are doing a good job of taking good care of their staff would send a message to SOMEBODY, I should think. Good luck with this.... you are blazing a trail and there will be many of us following you as we get nearer to 1/1/08 and the new rules. Judy Schneider
  13. jyork -- This is so simple, I hate to say it.... Please don't take umbrage. But you might want to double check whether that $34 fee to invest in Vanguard is assessed for your regular monthly contributions, if you have it set up that way. If they assess it each time, you might want to consider amassing a little $$ in a free place (a money market?) for a few months and just buying in once or twice a year. Judy
  14. All -- Joel, to answer one of your questions, in my state (WA) we have the 457 option in addition to the 403(b) option and at the current time one can invest to the limit in EACH, permitting a huge amount to be put away. This is what I have been doing, actually; I retired early in order to participate in this way, since we figured that in the end we would have more $$ available by investing $$ instead of getting more credits for time in the DB program. Luckily, I was able to do a post-retirement re-hire. So the folks in my state will continue to have the 457; the Wisconsin deal sounds like a winner and that info should somehow be disseminated EVERYWHERE! Additionally, a state-wide system sounds like a fine option, if some good no-load options were made available. Good news: I talked to a fine fellow today at TRPrice, and someone there is following the thread begun by Dan, in fact! So we count. We're heard. Tony: the reason the companies need the uniform information-sharing form is that they would have some responsibility if someone had multiple accounts and tried to take withdrawals that are limited -- like loans, emergency or disability (I forget the term used) and so on.... in order to manage the system, ALL the companies would need to be aware of what was happening so someone could not illegally "work the system". Joel, I always enjoy your posts and learn something from you. So here's the good news: in the entire United Sates of America, there are about 10 people who understand this stuff (at least a little) and are passionate about it. They post here regularly! 10 is better than 0, right? And I am advocating in my district (they are ignoring me) and with the regional arm of my union (they are not quite ignoring me) and with my professional organization (they used to ignore me, but now I THINK they have Dan scheduled to some to Spokane to talk next year!) More good news: Better-Investing, which is the national organization with educational emphasis that supports individual and club investors has developed a nascent relationship with the NEA. And the NEA is recently more open to the idea of "educating educators" re: investing, I have heard. Could it be that NEA members or people here on this site are having an effect? Or could it be because there is pressure from the outside from other sources such as -- Oh, I don't know -- (drumroll, please) a lawsuit or something? So there you go -- talk more, write here, bug your district / union / congressman, or file a complaint, grievance or lawsuit. Get out there. Just do it. (Short skirts and pompoms optional.) Judy Schneider
  15. Dan -- Interesting set of thoughts you have expressed here. Even more interesting -- and frightening -- that some no-load companies have stopped advertising on this site. I have held onto the idea that the no-load companies will disappear in 403(b)s under the new rules. What I hear from district business office folks is three-fold. First, we are busy with the things we HAVE to do, and it sounds like a lot of "work" to understand and / or implement the new rules for a program that's optional, not required. Second, they do not know much about personal finance and the language seems foreign to them. Third, they are "frightened" to death of the new fiduciary responsibilities, perhaps fearing that any minor error may put the district at undue risk. Given that they don't understand the stuff, that they're fearful, and that it's a lot of work.... well, who wants to take all that on? And then, some personable salesman from one of the insurance companies or high colst companies will walk in and relieve them of all three things -- their fear, too much work, having to understand what is essentially a foreign language -- and it will all be handled so they don't HAVE to do any of those things. Of COURSE they will go with whomever is charming and promises they can handle everything. I would be happy to eat my words. Judy Schneider Dan -- Interesting set of thoughts you have expressed here. Even more interesting -- and frightening -- that some no-load companies have stopped advertising on this site. I have held onto the idea that the no-load companies will disappear in 403(b)s under the new rules. What I hear from district business office folks is three-fold. First, we are busy with the things we HAVE to do, and it sounds like a lot of "work" to understand and / or implement the new rules for a program that's optional, not required. Second, they do not know much about personal finance and the language seems foreign to them. Third, they are "frightened" to death of the new fiduciary responsibilities, perhaps fearing that any minor error may put the district at undue risk. Given that they don't understand the stuff, that they're fearful, and that it's a lot of work.... well, who wants to take all that on? And then, some personable salesman from one of the insurance companies or high colst companies will walk in and relieve them of all three things -- their fear, too much work, having to understand what is essentially a foreign language -- and it will all be handled so they don't HAVE to do any of those things. Of COURSE they will go with whomever is charming and promises they can handle everything. I would be happy to eat my words. Judy Schneider
  16. FABULOUS!!! Judy Schneider
  17. JudyS

    Need Help

    Hi, jyork -- This could be complicated, so you need to think about starting at the simplest possible place. This is the most likely to placate your admin staff as well -- at least the ones I know! So how about asking for language that requires the district to include 1 or 2 or 3 union members on the committee that will be devising the plan? (That way you're presuming there will BE a plan, but not dictating it... :) ) It's so simple they can hardly turn you down! That also give you time to do research and make sure you're included on the committee. The home page of this site has lots of ideas on devising plans, too. Judy Schneider
  18. JudyS

    Variable Annuities

    All -- Just a note of caution. There are certain rare circumstances for certain uncommon folks where annuities are a good bet. For instance, when my father was dying, the only way to ensure that my mother would have adequate income (but he could receive Medicaid) was to purchase annuities. This was on the advice of the best elder law attorney in that part of the state -- who by the way had no connection with the sale of the annuities. The annuities were of the type (Joel or Scotty or Tom will know the proper term) where the principal disappears upon her death. Also, I understand (but will never personally know!!) that certain annuities are a fine deal for certain of the very wealthy. Again, never during the accumulation phase and I wouldn't go near one without the advice of an excellent fee-only planner who had no hand in the sale. But for conversation sake, many charities offer annuitized payments upon the occasion of a gift to the institution. There are substantial tax benefits to this, as well. Anyone have any wisdom about these? Judy Schneider
  19. All -- I try to avoid these tiffs, but I really do think we can ease up here a little in regard to johnnydollar helping his friend. His friend, who knows nothing yet apparently, is in the position of driving from Boston to Tucson without a map, and he has asked johnnydollar to please hold the map for him. Getting where he needs to go without some trusted personal help will be a LENGTHY and time consuming venture, with many detours and dead ends, and he will be losing $$ the whole way. And he COULD get discouraged and give up and fall into the willing arms of a VALIC or Ameriprise advisor or worse -- then he would have "trusted personal help"! A friend who knows a little more and subscribes to the correct philosophy (i.e. no-loads!) is a blessing. I only wish I had a johnnydollar back in 1987 when we had been ripped off for the LAST TIME (we swore it!) and all I could think to do was sit in the library looking at Kiplinger and Money magazines with a pencil and yellow tablet alongside, making lists of mututal funds and trying to sort out what the heck a no-load fund looked like. This is complicated stuff. You go for it, johnnydollar. Give him some info, a homework assignment, and a kick in the patoot at the same time. Judy Schneider
  20. JudyS

    Bonds

    Joe Thanks for the reminder. I just visited it and bookmarked it. Tony Joe -- ARGH!!!! You are right -- I am so embarrassed to have gotten Swedrow / Swensen confused!!! Judy Schneider
  21. JudyS

    Bonds

    All -- I agree that Swedroe's fabulous... his book "Unconventional Success..." lands with Bogle at the top of the pile every time I recommend readings to interested parties. But the bond book? Watch out, Tony. I need a brain transplant (or at least an augmentation or implant!) to understand more than 10% of it. Respect your opinions though, Joe and Ira, and will take it with me when I go out of town in a week and take another run at it. There probably won't be much to do in Spokane that's much more exciting than Swedroe, anyway!! Judy Schneider
  22. Hello, all, Here are a couple of links to Morningstar articles relative to many issues often discussed here. These are more specifically about 401(k)s, but many of those plans have faults strikingly similar to those that we 403(b) types suffer. I have often seen comments on this board suggesting that ERISA makes sure all is well in the 401(k) world, but it isn't. Happy reading! Conversation with a Fiduciary #1: http://www.advisor.morningstar.com/article...amp;docId=13155 Conversation with a Fiduciary #2: http://www.advisor.morningstar.com/article...asp?docId=13469 Judy Schneider
  23. I'm with TR1982 with this issue. Many people smarter than I consider your age as a %age in bonds, BUT if you have a pension, that could be consideredthe equivalent of a bond or fixed income investment. So we figured it out backwards like so: 1. If/when you're withdrawing funds from your investments, the most common advice is to draw no more than 4%, which will allow for inflation and a little growth. 2. So let's make it easy... say your pension would be $40,000.... that could be considered equivalent to a $1,000,000 in fixed investments, since $40,000 would be 4% of $1,000,000. 3. So your "phantom" portfolio would be $1,000,000 + whatever you have in retirement savings. 4. Then take your "phantom" portfolio and adjust it (stocks vs. fixed income investments) accordingly to achieve the ratio you want (so if you wanted 60% in fixed income investments because you're 60 and if you have a $1,000,000 in investments along with your pension equivalent of $1,000,000, you would want to take $120,000 of your investments and put them into bonds / fixed income.) Huh. The clearer I try to make this, the foggier it becomes! Hope you can see through my foggy writing! Judy Schneider
  24. Dan -- I am not optimistic. In my teeny district, the powers that be are polite when I ask them about it, but there is no move yet to set up a committee to work on these issues. Most administrators and business office people have no idea about 403(b)s expenses and the disadvantagous position that provides for participants. They don't really understand 403(b)s at all. In fact, our previous (and popular) payroll person now sells insurance products, including 403(b) annuities! Additionally, the main concern I have heard from them involves avoiding any and all possible fiduciary responsibilities. I presume that a few districts will get it right.... and THOSE will have the advantage (one would hope) of using their superior 403(b) offerings as an enticement in employee recruitment. They will, presumably, get applicants who want to work for a district that cares enough to take decent care of the employees and are smart enough to know a good thing when they see it. But maybe that's far fetched.... Judy Schneider
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