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Posts posted by EdLaFave

  1. SS will still be there and the solutions to increase its solvency are so simple. Did you know wealthy people only pay SS tax on their first $132,900 of income? Complete solvency can be obtained by doing things like eliminating the absurdity of rich people paying a lower effective rate than regular folks and perhaps asking rich people to pay a higher effective rate like we do for federal income taxes.

    I hate the conventional “wisdom” that you should save % of your income. Often times is way too low and it gives people an excuse to not save as much as they can. You never know what life will throw at you, save as much as you can, reject materialism, and maximize your earning capability. How’s that for conventional wisdom?

  2. Just to restate the obvious, there are actually two questions at play:

    1. What types of accounts can 403b accounts be rolled into?
    2. We all know you can roll 403b accounts over when employment is terminated, but are there loopholes associated with simultaneously having multiple employers or simultaneously running your own business?

    The answers for #1 are obtained very easily.

    I'm not sure about #2. My gut tells me that you have to terminate employment regardless of whether you're working another job or running your own business. Please report back if you find a definitive answer. I suspect the answer may depend on the plans the district negotiated with the vendors...but I also think those agreements are pretty uniform across the country.

  3. I feel comfortable emphasizing fees because:

    • I think everybody understands that the amount of money they save (or don't save) is critical.
    • I think most people perceive excessive fees to be small because 2% isn't a "big" number, when in reality we know it steals more than half of your real investment returns.
    • Fees are the #1 predictor of returns.

    The formula is simple:

    • Invest in total market index funds with fees somewhere between 0% - 0.17% (roughly).
    • Invest in international and domestic stocks (pick a split and stick with it).
    • Invest in enough bonds so that when stocks go down you don't do something stupid.
    • Reject consumerism and materialism.
    • Take the excess money from each paycheck and buy more investments regardless of what the market is doing.
    • Never sell until you need money in retirement.
    • Reject the fantasy that you can predict anything in the short to medium term when it comes to the stock market.

  4. Just echoing the previous responses.

    I documented Security Benefit’s NEA DirectInvest plan here. I documented the specific steps I had to go through to enroll here.

    Blindly investing in something you don’t understand is a great way to be taken advantage of. So I’m going to assume you also want to understand investing. Please read the Investing 101 page I wrote and come back with some questions. It is a quick read that explains the heart of what you need to know, the only thing it doesn’t cover is the types of accounts that exist.

  5. 12 minutes ago, nashman50 said:

    Unfortunately, the district is unwilling to add any more vendors.  I was told that they only had Nationwide up until this year and since they have added all the others they don't feel like they need to add any more.

    This is the docile attitude that allows the 403b/457b mess to persist. One of the greatest Americans to ever live taught us very plainly that, "Power concedes nothing without a demand. It never did and it never will."

    OCPS (FL) didn't "want" to add Vanguard and Fidelity when I initially ask and they certainly didn't feel like they "needed" to. However, they relented when I refused to drop the issue. This is just how power dynamics work. If you're quiet and accepting, you'll be taken advantage of.

  6. In my experience it takes the same amount of effort to add any vendor. So choosing to add a vendor that is inferior to Vanguard and Fidelity is not a wise decision.

    Adding Vanguard and Fidelity to OCPS (FL) was in no way more difficult than it would have been to add Aspire. There is nothing unrealistic about accomplishing this, at all.

    ...if in some districts adding vendors takes varying amounts of difficulty, then it wouldn't be wise to begin with the inferior choice. Start with the best and work your way down from there.

  7. If you're going to go through the process of getting a vendor added to the list, and I highly encourage you to do that, then do not put effort into adding Aspire. Put all of your effort into adding Vanguard and Fidelity. Aspire is needlessly more expensive than both Vanguard and Fidelity.

    I got OCPS (FL) to add both Vanguard and Fidelity to their list of vendors. I wrote about that in a few blog posts. I'd be more than happy to help you navigate the process.

  8. Security Benefit's NEA DirectInvest is an elite 403b plan. I enrolled my ex-wife in that very plan.

    • I documented the details of the plan here.
    • I documented the exact steps to enroll in the plan through OCPS (FL) here.
    • You may benefit from reading the Investing 101 page I wrote here.

    Sadly this plan isn't offered as a 457b, so if you're able to max out the 403b then your next best option for the 457b is Aspire, which I documented here.

  9. Security Benefit's NEA DirectInvest is an elite 403b plan. I enrolled my ex-wife in that very plan.

    • I documented the details of the plan here.
    • I documented the exact steps to enroll in the plan through OCPS (FL) here.
    • You may benefit from reading the Investing 101 page I wrote here.

    Sadly this plan isn't offered as a 457b, so if you're able to max out the 403b then your next best option for the 457b is Aspire, which I documented here.

  10. If you need help choosing a vendor, it would be wise to post the entire list.

    Security Benefit's NEA DirectInvest is an elite 403b plan. I enrolled my ex-wife in that very plan.

    • I documented the details of the plan here.
    • I documented the exact steps to enroll in the plan through OCPS (FL) here.
    • You may benefit from reading the Investing 101 page I wrote here.

    Sadly this plan isn't offered as a 457b, so if you're able to max out the 403b then your next best option for the 457b is Aspire, which I documented here.

  11. He is lying.

    An advisor only has a fiduciary responsibility to a client if they explicitly sign paperwork with the client and that paperwork explicitly defines exactly what it means to be a fiduciary.

    Still, even with a fiduciary, a client is still paying the salary of another person. That’s expensive, profit margins are already narrow, and anybody can handle an all-in-one fund on their own and most can handle a 3 fund portfolio. 

  12. Vanguard is the way to go. I documented their plan here.

    You may or may not find the Investing 101 page I wrote helpful.

    One thing worth noting about the Vanguard 403b is that they charge a flat $60/year fee. So if you and your spouse are investing less than or equal to $12,000/year then you’ll be slightly better off using Vanguard IRAs instead of the 403b. On the other hand if you’re already maxing your IRAs then the 403b is an excellent option.

  13. ...you’re playing illogical mental account games by thinking you can treat one pot of money differently from another pot in terms of risk appetite. It is a dangerous game that lots of people play and it doesn’t make mathematical or logical sense.

    Yes, in my view it is “worth it” to buy the individual funds instead of an all-in-one fund. However, if you’re the type of person who won’t keep buying the under performing asset class or won’t/can’t take take the minimal time to understand what you’re supposed to do and then actually do it, then I’d strongly recommend and all-in-one fund to protect you from yourself.

  14. I think it is useful to address some deeper more fundamental questions than just the ones you asked.

    If the vendor is charging 0.5% on top of whatever they’re charging for the funds, this isn’t a very good plan. So it would be in your best interest to identify every 403b and 457b vendor your district has approved. Some states have state sponsored 457b plans that are relatively good and sometimes great. Come back and post your options and I can give some further guidance.

    I think you’d benefit from reading the Investing 101 page because it hits on several of the topics you’re asking about.

    With respect to which funds you should buy, you definitely want total market index funds because they’re really low cost and fully diversified (that’s how you pick a fund). The following three will give you a fully diversified portfolio: VTSAX, VTIAX, and VBTLX. However, you want your portfolio as a whole to meet your asset allocation, so which funds you should buy and in what percentage depends on what funds you own in your other accounts.

    It isn’t “correct” to say that having other retirement accounts means you can take on more risk in this account. Everybody has a specific amount of risk they’re comfortable with and their overall portfolio should always reflect that. If you decide to be “more risky” in this account it means one of two things: your other accounts were too safe to begin with or you’d be taking on too much risk.

    In my view you should recognize that stocks can lose approximately half of their value very quickly and take years (maybe even 10+ in a terrible scenario) to recover. However, stocks have a higher expected return in the long term. You want to own as much stock as you can such that when a crash does happen you keep buying stocks and you don’t do something foolish like sell. Having said that, only you know what that percentage is.

  15. 1. Definitely find and post every 403b and 457b vendor your district has approved. You may want to take a look at my page documenting the best vendors available throughout Florida (a good proxy for the nation).

    2. You do not need to pay anybody for advice. The industry makes it complicated, we can cut through the nonsense and make it simple for you. You may want to read the Investing 101 page I’ve written.

    3. Don’t feel shame, you may want to read a blog post I wrote that explains how you fell into something tailor made to trap you.

    4. I already know everything I need to know about your current plan...I would get out as soon as I identified my best alternative. 

  16. 29 minutes ago, NYAdmin said:

    Can I just go to any financial institution to do this (example, I have an existing account with Schwab) or is using a company such as Vanguard easier?

    You can basically use any institution you want. I have an all Vanguard portfolio so I opened mine with Vanguard. I believe some institutions charge fees if you buy another institution’s funds through them (again, not something I’ve had to deal with). The bogleheads have documented how to build a three fund portfolio with funds from various institutions.

    34 minutes ago, NYAdmin said:

    am wondering about your statement that the Three Fund Index takes hours per year to manage. I think I'd go with 50% Total Stock, 25% Total International and 25% Bond.  What is there to manage? Can't I just declare my funds, then let the sit? 

    So the reason it takes a few hours per year to manage is because you need to keep those funds in the right proportion to each other. When your portfolio is small this means putting new money into the funds that are “low” and when your portfolio is large it means occasionally selling what you have too much or to buy what you have too little of. If you wanted to literally do nothing then a target date fund or a fixed allocation fund like Vanguard’s life strategy fund will handle that for you.


    39 minutes ago, NYAdmin said:

    Also, it looks like my husband also has a percentage money from his 401K invested in Vanguard's Total Bond and Total International as well as a bunch of other Vanguard Funds. Is it not wise to both have money going into the same fund?

    Please read my blog post on investing in a marriage that hopefully will last, but may not. I wrote that before I got divorced and I’m happy it is something we considered.

    To answer your question directly, owning a fund in multiple accounts is fine, owning a fund in a single account is fine. That isn’t what matters.

    Let’s assume you won’t get divorced. You and your husband should decide on an asset allocation that works best for you two. You should view your entire portfolio as the summation of each account and buy funds in each account based on how cheap it is. Suppose everything in your husband’s 401k is expensive except bonds, you’d want to keep your bonds there (as much as possible), which would mean your other accounts would have to be more stock heavy in order to reach your overall desired asset allocation.

    ...if your husband has a bunch of funds that either means he is betting on specific sectors/asset classes, which I wouldn’t do, or his account is needlessly complicated, which I also wouldn’t do. It isn’t a huge sin, but it is something to consider. 

  17. To answer your question, yes, this is legal. Your employer can select and/or replace whatever vendor they want for a 403b. The same way they can swap out your insurance company every year. It is an employer sponsored plan; they’re in control. I suppose it is conceivable that a state or local government might voluntarily put restrictions on exactly how and if this is done, but that’s an area I can’t speak to.

    Your post was very short on details...

    100% vesting for what? Employer match to your 403b? Pension? What?

    What was the vesting schedule?

    What do you mean they “dropped” your 403b vendor? They stopped new participants from using it? They stopped existing participants from continuing to use it? They forced existing participants to roll the account over to another vendor? What?

    Your post gives the impression that you worked at this job for a long time after the 403b was “dropped”. So what was happening to the contributions you were presumably making? Did they just stop? Did you not notice? Did they get diverted to another 403b? What?

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