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Everything posted by EdLaFave

  1. I'd have to know the exact numbers to say for sure. However, every instance I've seen thus far has justified selling everything ASAP. Sounds like you've got it all figured out. Congrats.
  2. The things we do to each other. It is hard to justify optimism in the short or medium term.
  3. Because I'm such a nice guy I'd like to volunteer to charge sales loads on the author's investments. I'd hate to see what would become of his portfolio without me using fees to modify his behavior.
  4. Tony is 100% right. The philosophical idea is that we don't have any powers of prediction even though we feel in our souls that we do. The data on active management supports this idea. In 2005 when John Bogle reviewed the performance of the 355 mutual funds that existed in 1970: 223 funds (62.8%) were closed before 2005 (usually they collapsed because of abysmal performance). 60 funds (16.9%) lagged the market by 1% or more. 48 funds (13.5%) were within +/- 1% of the market. 15 funds (4.2%) beat the market by 1-2%. 9 funds (2.5%) beat the market by 2% or more. When we look at the big winners many of them have been getting crushed and owe their status to a period of early dominance. Then comes the matter of figuring out if they won because of skill or luck...I believe they were just as skillful as the rest, which means they got lucky. Their strategy happened to work. So if it was luck that means the chance of you picking one of the big winners is also luck. This is why I advocate taking what the market returns and instead of paying some fund manager to outperform...put those payments right into your own investments.
  5. I support virtually everything said in this thread. Here are a few of my thoughts: 1. I documented the fundamentals of investing on my site, which speaks to a lot of what's been said so far https://educatorsfightingforfairness.wordpress.com/investing-101/ 2. If you're going to make a change it is because you're moving into something better. Therefore, there is no reason to do it incrementally. 3. Any problems with your portfolio are "slow moving". Don't needlessly delay, but take your time and learn everything that is relevant. Then when you're 100% comfortable, make the changes. No rush, no pressure. 4. I would roll the traditional 403b into a traditional IRA. Assuming 3% inflation and 6% market returns then over ten years the 0.35% fee for your 403b will consume 13% of real returns. I'm not willing to give that up and get nothing in return. However, doing such a rollover makes performing a backdoor roth less desirable so there is a potential con. 5. I cannot stress enough how important it is to go through the exercise of selecting an asset allocation that you can live with in good times and bad. This is the key to wealth and sanity. 6. You want total market, low cost, index funds. 7. The things you've said lead me to believe you'd do great with an all in one fund at Vanguard (or any low cost provider). They have target date funds that get less risky as time goes on. They have LifeStrategy funds that remain static over time. This option will cost you 0.12-0.16%. Never pay more than that. 8. If you wanted to get fancy and save a little money, you could directly own the individual funds inside the all-in-one fund. Vanguard Total Stock, Vanguard Total International, and Vanguard Total Bond. It'll cost you about 0.07% but it'll force you to do a little maintenance work and it'll expose you to behavioral errors because it'll require you maintain your asset allocation by buying stock in a crash and selling stock in a rally...people are traditionally bad at doing this.
  6. Here in Florida the first choice an educator has to make is whether to participate in the pension or an FRS Investment Option (which has excellent low cost investment options and I believe an 18k/year limit). I believe they MUST do one or the other. Then the teacher has the optin to contribute up to 18k/year to a 403b vendor. Then the teacher has the option to contribute up to 18k/year to a 457b vendor. So make sure you understand all of the options available for your girlfriends situation. The 0.9% fee is unacceptably high, ridiculous. Keep taking advantage of the IRA for sure, but even at 0.9% it is still probably worth using the 403b and then rolling over to an IRA when employment terminates. Well Lincoln does have that self directed plan in certain areas, but you're probably not in one of those areas but make sure. Otherwise, I'm not sure if you have other options. It sounds like you're stuck then. But you can lobby for a better vendor as I'm currently doing in OCPS (FL) and I'd be gald to help you. Our district has a "Retirement Services", which can answer some questions but they provided us with flat out wrong information. Our district uses a third party plan administrator (TSA Consulting Group), which has a website that lists our available vendors but nothing else. Neither one would tell us anything about the plans. This is basically the wild west and it is all on you to fight through it.
  7. I will say this, I've seen first hand teachers learn about and understand the exploìtation, get upset about it, repeatedly tell coworkers, and then continue to be exploìtated despite having me and every resource at their disposal. I've not been able to conceive of a hypothesis to explain this behavior. Whoever figures it out will solve the K-12 issues.
  8. A few comments on this article... Most financial articles, like this one, aren't written to be helpful or to inform you. They're designed to push you into activity and support the incorrect belief that you have the ability to beat the market. This is the fundamental mechanism the financial services industry uses to take money out of your accounts! Nobody can tell you with any certainty if an asset class or sector is over or undervalued. Even if it were theoretically possible, you'd have to outsmart a sea of ultra-educated, super smart, folks with research teams, economic models, and god knows what else. This is a dangerous arrogance/optimism. Disabuse yourself of this notion. We know nothing. We have no predictive power. Own the entire market and call it a day! This idea of doing things based on "market conditions" is incredibly foolish. Most investors significantly under-perform the very funds they own because they act on "market conditions", which means they wind up buying high and selling low. Don't do something, just stand there!
  9. I love the bogleheads, but sometimes they leave me at a loss for words.
  10. 25% of the portfolio is invested in cash, which means you're conceding a loss equal to inflation. 25% of the portfolio is invested in gold, which doesn't represent any investment in economic growth/activity. As Bogle says, we should all be invested in stocks, bonds, CDs, etc. because they fundamentally represent economic growth/activity and are structurally designed to earn you money. With bonds you're lending somebody money and they're paying you interest. With stocks you're buying companies and in doing so you own a portion of their growth/profits. In contrast when you own gold it doesn't produce anything, you're just buying an object and speculating that irrational human behavior will generate a future buyer who will pay more for it than you did.
  11. As frustrating as it may have been to play these bureaucratic games about mailing addresses...Voya's core business, their regular operating procedure, is to take advantage of investors. That is what the company is founded on; this is the way it subsists. I don't have the actual data at my finger tips but here at OCPS (FL) Voya offers a glorified savings account returning somewhere around 2% per year (maybe slightly less). I believe they also charge massive surrender fees. This is an absolute disaster for a typical investor and I'd argue even an incredibly risk averse investor would do better, long term, with a 100% bond portfolio. Moral of the story, stay way from Voya (at least in OCPS (FL) but probably everywhere).
  12. I'm in east Orlando. I expect we'll be just fine. Our neighborhood has lots of wonderful trees and landscaping, which will surely be damaged, but we can live with that given the devastation that has and continues to happen elsewhere. I do believe with every fiber of my being that everybody is capable of investing on their own (I've been called a pessimist in the past, perhaps this is the other side of the coin). I also believe there are powerful forces at play that lead to people building imaginary road blocks, which are just as effective as actual roadblocks. In my view, these folks need two things: A community/resource that will make hiring a legit/ethical adviser far simpler than a 19 question homework assignment. A community/resource that can better tear down those imagined barriers. I tend to focus on the 2nd but the 1st would certainly be a valuable asset for many.
  13. Congrats! I'm waiting for the next post about lobbying the employer for a better 401k ?? Somebody once told me the best time to plant a tree was 20 years ago but the second best time is today. I think that same sentiment applies to investing. You need so much money to afford a decent retirement, no time to waste. Folks think of one million as if it's an absurd amount of money but a safe 4% withdrawal rate only gives you 40k per year. Take a lesson from Tony's son and get moving folks!
  14. I won't be paying for anybody's education so I'm not super knowledgeable on this topic. Having said that... If your 529 isn't pre-tax then in the best case scenario isn't it barely better than a low turnover index fund held in a taxable account? Isn't the main benefit of the 529 avoiding that big income tax bill? I'm quite surprised you don't have that perk. If I were considering paying for somebody's education then I wouldn't consider a 529 unless I was already maxing out all of my tax advanataged accounts. There are ways to get money out of those accounts early but the money in the 529 has to be used for qualified educational expenses or else. What if the kid doesn't go to college or doesn't need as much as you saved? It is my view that you've got to secure your own retirement. The kid can always take out a loan but if you need/want to retire but don't have the money then no such options will be available to you. Some will find my views to be cold or indicative of a bad parent. A lot of this is philosophical and personal.
  15. You and I only disagree around the margins. Anybody generally following your line of thinking or advice is going to do just fine. My opinion boils down to the idea that once you know enough to pick a "good" adviser then you also know enough not to need them. Regardless, I do love the idea of regular folks on the internet coming together to protect one another from financial èxploitation. Bogle's book and the bogleheads site really did save me. The underdog is starting to win and I love everything about it.
  16. Just my two cents but let me simplify this for any novices that might stumble across this. You don't need 19 questions.... Fire your financial adviser, you don't need to burden yourself with that cost (even if they are ethical but especially if they aren't...and they probably aren't). Vanguard will do the work of rolling the account over if you just call them and ask. Invest in a 3 Fund Portfolio (VTSAX, VTIAX, and VBTLX) if you want ultra low cost of 0.07%. Invest in a 1 Fund Portfolio (target date or lifestrategy) if you want simplicity and a cost of 0.16%. Enjoy your life.
  17. Vanguard wasn't exactly on the warpath here, but I'm glad they did something. If, as a nation, we're going to embrace mass incarceration then I see no reason why folks like the Wells Fargo board shouldn't be first in line. The argument about whether or not they get to keep their jobs always seemed hollow to me. Regular people are doing hard time for stealing 3 to 4 digits worth of money while this nonsense goes unpunished.
  18. I'd be absolutely shocked if the 401k deduction rules are changed in any significant way. I'd be slightly less shocked if they figured out a way to pass actual tax-reform (i.e. deficit neutral and permanent). I expect that they'll wind up passing tax cuts, mostly for the rich, in a way that is NOT deficit neutral and therefore expires in 10 years (due to the fact that they'll have to use reconciliation because Democrats won't vote for it). I don't think this is a fair analysis because it ignores that $1 today is more valuable than $1 in 30 years. Still I think the larger point still stands. I have every reason to believe the GOP is okay with taking tax revenue from the future and giving it to wealthy folks today in the form of tax cuts. If they were using those funds for infrastructure, education, or other purposes that produce higher future tax revenue then it might be fiscally sound. It shouldn't change anybody's behavior. Everybody should still put as much money in tax advantaged accounts as possible. It is my expectation that most people are in the same or lower tax bracket in retirement as they were working...so I don't expect this to help savers. The irony in this statement speaks for itself. This is exactly why I suspect nobody should shed tears about this potentially hurting savers. Folks like me are able to sock away $54k in traditional accounts (403b, 457b, 401k) and others may have even higher caps with 529s, HSAs, and a traditional IRA if they qualify. A good chunk of that would have been taxed at 28% and the rest at 25%. As it stands now, most of it will eventually be taxed at or below 25% during my retirement. Nobody should lose sleep over folks like me potentially paying higher rates...we'll be just fine, trust me. But then again, folks like me almost certainly have enough political capital to stop such a thing from happening.
  19. I don't know anything for sure. I've never heard of an IRS regulation that would have this effect. I don't think such a regulation exists. I don't know for sure though. I can't imagine the rule comes from the vendor side of things because the new vendor wants you contributing ASAP. The tried and true method vendors use to discourage you from leaving is to use surrender fees and unethical agents. But I doubt they'd want to make it harder for people to switch to them, anything is possible though. I can imagine the rule comes from a district that wants to discourage employees from making changes as a way to minimize the amount of work they have to do. I can also imagine you've been given bad information. I've never heard of such a rule before. Such a rule goes against the principle that you should have control over your retirement accounts without excessive restrictions...but it wouldn't be the first time that principle was violated and it won't be the last.
  20. The great lie of the financial industry is that it is complicated. Without this lie the financial services industry would collapse. We can all do it ourselves, you just need to cut through the disinformation and nonsense.
  21. Tony, I'm about to criticize the author like crazy...not you :) The author's #1 rule is nonsense. We teach children how to control temper tantrums, we too can learn to control ours. The author's #2 rule is nonsense. The best investor IS spending all of their time relaxing. The best investor does not research a single business. The best investor knows their evaluation of a company has no predictive power. The author's #3 rule is nonsense. The best investors realize their insights (except for the 'insight' to own low cost, total market, index funds) are worthless. The author's #4 rule is nonsense. The best investors know that the process cannot be improved...buy low cost, total market, index funds when you have money available. Easy peasy.
  22. I'm not convinced of the narrative but I'm certainly thankful for Bogle being born in the US.
  23. lol I regularly get creative to bypass this site's censoring. Try séxy.
  24. I'm a huge proponent of making practical issues like personal finance required learning in K-12. I applaud Va. I'm also a firm believer that kids are ready for topics FAR earlier than adults think they are. I like to think of kids as small humans instead of "kids", they're easy to underestimate. I feel sick. I use algebra constantly in my day-to-day life and especially when it comes to personal finance, which David Brown claims to support. Ugh. I think somebody's ignorance of financial matters is often proportional to their desire to see systemic changes to address that issue. I don't think they're ignorant of their ignorance. I don't think they're ignorant of the detrimental effects of their ignorance. I think a variety of forces prevent them from addressing their ignorance.
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