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Everything posted by EdLaFave

  1. Don't you hate when you go to the grocery store only to find you've lost your freedom to buy poisoned food? Shouldn't we be smothered in overwhelming amounts of freedom such that we're forced to become experts in literally everything or submit to a never ending string of exploìtation?
  2. You may want to check out my investing 101 page, https://educatorsfightingforfairness.wordpress.com/investing-101/ Personally, 30% of my stocks are international. I didn't struggle with this choice. I think the folks who invest according to market weight have the most pure/right argument. I don't think the 100% US folks are "wrong", but they shouldn't pretend they're equally diversified. I think they'll be just fine as long as the US doesn't have a general collapse of institutions, but I'm not willing to put all my eggs in that basket. ...by far the most important aspect of this decision is sticking with it forever.
  3. Interesting read. Much better than anti-index folks calling us Nazis. The idea that collusion leads to higher profits/prices is nothing new. I'm skeptical that Vanguard, Blackrock, etc would pressure companies to stop competing. I'm skeptical that companies would mutually decide to stop competing because index funds will buy their stock regardless. I have to believe "active" investment would kick in and appeal to greed within those companies. I also wonder what role individual people have, a lot of those guys are hyper competitive and ego-driven. What about the age old advice for diversification? For those who don't buy index funds, were they ignoring this wisdom and going all in on Microsoft while ignoring Apple? What about laws and enforcement of anti-competitive business practices? If we got to some point in the future and knew for a fact index funds were "bad", I wonder what that would mean for active funds. I can imagine a world were investors demand rock bottom costs from active management. I can also imagine a world were investors demand diversified portfolios from their active management and isn't that the same "problem"?
  4. Thanks! You and I are on the same page. Allow me to further endorse Vanguard because they offer excellent, low cost, all-in-one funds (target date and LifeStrategy). I think this is a particularly big deal for teachers because virtually every teacher I know would be best served by an all-in-one fund. Plus if Vanguard ever offers Admiral shares for these funds it'll only get better. As far as I know Fidelity's all-in-one funds are surprisingly expensive, not great for teachers. However, Fidelity is useful because it is my understanding, despite conflicting data from TSA Consulting Group's website, that Vanguard doesn't offer 457b plans. So if a cheap 3 fund portfolio is to be offered in a 457b then Fidelity or ASPire is necessary...and Fidelity is cheaper. ...I also push Fidelity, along with ASPire, because I'm fearful that if I only pushed Vanguard and OCPS denied it, for some reason that they'd never be able to justify, then 0 progress will have been made. I'm trying to cast as wide of a net as possible without including predatory vendors.
  5. I gave another speech at the school board, this time with a more optimistic/hopeful result. I wrote about it on my blog... https://educatorsfightingforfairness.wordpress.com/2017/08/08/chairman-bill-sublette-agrees-to-investigate-high-403b457b-fees/
  6. I'm really happy to read about people getting into these low cost plans. Please, please, please share your knowledge with as many colleagues, school board members, principals, retirement services, finance people, and union members/leaders as possible. The biggest problem is that people don't speak up.
  7. I'm working off memory here so hopefully I'm not introducing an inaccuracy... Vanguard Flat Fees = $96/year = $3/month (OMNI) + $5/month (Vanguard) Percentage Fees = Uninflated Vanguard ERs ASPire Flat Fees = None? Percentage Fees = 0.15% + Uninflated Vanguard ERs TIAA Flat Fees = None? Percentage Fees = 0.58% + Uninflated Vanguard ERs (limited selection) T Rowe Don't know. Clearly ASPire is better than TIAA so we can eliminate TIAA right now. Once your balance exceeds $64,000 Vanguard will be a better deal. Until then ASPire will be the least expensive. So assuming ASPire doesn't have any other flat fees or exit fees, then I'd use ASPire until I hit 64k and then I'd transfer to Vanguard. OR if I didn't want to put myself through that work or I didn't trust myself to not be lazy, then I'd go with Vanguard from the beginning. I may have said this earlier but you (as I would) are optimizing at a very low level...tens of dollars per year. If you're anything like the "average" person then that energy is probably better spent elsewhere. Picking up extra responsibilities for more cash. Moving up to a higher paying job title. Finding cheaper companies to buy products/services from. Optimizing your budget. And so on. I hate text because it can come across harsh and that isn't my intention. I empathize with the struggle people can have saving for retirement but retirement is a cruel beast. If you aren't able to find a way to save a massive amount then fees will be the least of your problems.
  8. I think a single fund of funds (target date, lifestrategy, etc) is best for most people. I like the 3 fund portfolio for people who want to save a little extra on fees, will stick with their plans during a collapse, and don't mind spending a little time maintaining their portfolio. Most people are their own worst enemies which is why I like a single fund of funds, a family member of mine just went that route!
  9. I haven't researched this so the reality may be more complicated. However, this approach aligns with the Republican philosophy that individuals should be responsible for their retirement income, not the government.
  10. I'm confused about your situation. It sounds like you're choosing between OMNI or Vanguard as your 403b vendor and either way you'd be purchasing Vanguard funds. However, when you brought up $51 dollars it sounds like you're merging the OMNI fee (36/year) with the current Vanguard fee (15/fund). Then when you brought up the $96 fee it sounds like you're merging the OMNI fee (36/year) with the new Vanguard fee (60/year). I'm not familiar with OMNI but I see no reason the fees associated with Vanguard as a vendor would apply if you're buying Vanguard funds through OMNI. What is OMNI's exact fee structure and available funds? Looks like there is a $36/year flat fee. Looks like you have Vanguard funds with access to Admiral shares? Looks like you have access to target date, but what about total stock market, total international, and total bond? What are the expense ratios for Vanguard funds (vendors sometimes increase these)? Is there a fee to close the account? Are there surrender fees? Is there an AUM fee? Any other fees? Suppose OMNI is charging a flat $36/year fee, with access to Admiral Vanguard shares, without increasing the expense ratios, and without any other fees. OMNI is then the superior choice (by $24/year) relative to the new Vanguard structure which charges $60/year with access to Admiral Vanguard shares. As far as target date funds vs individual total market funds, that is a matter of preference. If you don't mind the extra work then the individual funds will save you roughly 0.09% per year. Just a reminder that IRAs come in 2 flavors. One, the traditional, is pre-tax and the other, a roth, is post-tax. Some on this board have disagreed with me but I think the math is quite clear. Most people will benefit from traditional accounts because it will result in a lower effective tax rate. This is the short version of my argument... When you use a Roth account you're paying tax at your highest bracket. In retirement most people are at or below the highest bracket when they worked. When you eventually pay tax from a Traditional account you get to fill up the lower tax brackets before you get to the higher brackets. This results in a lower effective tax rate. Anther thought on 403b vs IRA from purely a fee perspective...it doesn't matter. If you've already got a 403b that hits you with a flat cost and charges the same expense ratios as an IRA then it doesn't matter where you put your money. At that point you'd have to begin looking at withdraw procedures and other regulations to see which is more appealing.
  11. The only significant factors are what index is being tracked and what is the expense ratio. If you really get into the details there are some subtle differences. Some funds track the index better than other funds. Vanguard funds return a little bit more profit because of some kind of fancy, proprietary patent/maneuver they have for ETFs. However, when you start talking about these things you're well into the margins of what matters.
  12. Speaking from experience of having transferred a 401k to a traditional IRA, which I assume is the same as a 403b to traditional IRA, yes. It is all still pre tax.
  13. I'm assuming you don't have Vanguard, Fidelity, or Security Benefit on your new vendor list? I'm not 100% clear on the rules for rolling over a 403b since I haven't had to do it yet. If you're able to roll it into an IRA then I'd strongly consider going that route. That way you could put it with somebody like Vanguard and avoid the AUM fee (0.15 percent?) that ASPire adds on. One con to this approach is that it makes it less desirable to do a backdoor roth (fancy maneuver for higher income people to get money into a roth ira) in the future.
  14. Well, I finally found something Rubio and I agree on, "obamacaring" the investment world. lol, what people will say to insure investors keep getting a raw deal.
  15. Keep posting! Your posts are essentially the only time I read articles about investing and I enjoy checking out the board for something new to read...even if it isn't a great work of literature.
  16. Yosemite is probably my favorite place on earth. Next time we head out there I'll drop you a line.
  17. Thanks. I couldn't agree more, having a wife who is committed to financial independence is a massive help/joy We've not had a single fight about money, which I'm told is a major point of stress in many marriages (even for wealthy couples).
  18. Healthcare didn't match anything Trump said on the campaign trail either. Unfortunately we can't have confidence in anything he says, whether we agree with it or not. The Republicans will try to pass healthcare through reconciliation in the senate, which means they can afford to lose 2 Republicans and every Democrat. The interesting thing about reconciliation is that after a decade it must be deficit neutral. That of course means every cut must be offset by an increase somewhere else, much opposition will be found to each increase. This is why failing to cut Medicaid/subsides was such a big deal. Had they succeeded it would have reduced federal spending, which would have allowed them to apply those savings to tax cuts in a permanent fashion. This is also why people shouldn't assume healthcare is done. The more likely outcome is Republicans will use reconciliation to pass tax cuts that simply expire after a decade, like the Bush Tax Cuts. Tax cuts of course aren't the same thing as tax reform. Should be interesting.
  19. I've never filed separately so I am not sure exactly what information you must supply. Remember you're allowed to file separately and use the Roth if you and your spouse didn't live together. It is quite possible the IRS has no way of verifying that and so assumed everything was in order. The IRS isn't funded well enough to look into each tax return. The public certainly isn't interested in increasing that funding, many/most want to cut it or eliminate it. They pick a few returns and hope that the fear of your return being picked is enough to keep you honest. In my view blaming somebody is a barrier to moving forward, but if I were to cast blame it would go to the wealthy people of this country who have spent lots of money to complicate our tax code in ways that benefit them. It doesn't have to be this way and several countries (I believe Japan is an example) are far superior.
  20. Deb, take care of the tax matter at hand first. I wish I could help more in this area but I only know enough to ask questions. Once you get that settled I invite you to come back and post about your finances. I am very knowledgeable on this front (as are other folks on this forum and bogleheads) and the fact that you have a financial guy is almost certainly bad news. Don't freak out about it, it is a slow moving problem and doesn't need to be immediately addressed. One thing at a time and the taxes are first. However I am happy to walk you through everything on the financial side, step by step. You're more than smart enough pick up everything, no need to be intimidated or stressed. Good luck ?
  21. I don't know about past years but that isn't strictly true for 2017: If you lived with your spouse then you can contribute a reduced amount if your modified adjusted gross income is less than 10k. If you did not live with your spouse then you can contribute under the same rules as a single or head of household filer. https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2017 It sucks, no way around that. However, the stock market has outpaced the 6% penalty so know that you're paying this fee with profits. That takes some of the sting out of it. As I understand the tax code, you can withdraw contributions at any time without paying a penalty. There are ways to withdraw the earnings once you've been invested for 5 years. If the IRS isn't requiring you to take action immediately you may want to do the math to see if delaying until the 5 year window and bypassing the early withdrawal fee is in your best interest. If the IRS is requiring you to close out your Roth entirely and you're already maxing every tax advantaged account then I suppose you'll have to put the post-fee money in a taxable account. If the IRS is requiring you to close out your Roth entirely but you're not maxing every tax advantaged account then increase your tax advantaged contributions for a time and use the post-fee money for living expenses...effectively moving the post-fee money into a tax advantaged account. If the IRS is not requiring you to close out your Roth entirely (I imagine they are) then you can pay the fee with excess money you have or cash out a portion of the Roth contributions to pay the fee and then leave the Roth alone. This would let you avoid the early withdrawal fee. ...these are the avenues of thought I'd begin exploring. I'm not a tax expert though. You're talking to a group of people who've all been cheated and lost money one way or another. It happens to the best of us. Part of my life philosophy is to minimize suffering, which means letting go of everything I cannot control and accepting everything that is or will eventually be. I do my best and fail regularly. In your case, you cannot control the past; it is over and set in stone. Beating yourself up or dwelling on it only serves to increase your suffering. It's a sunk cost; write it off and leave it behind. The only thing you can control is finding an optimal way out, so do that chore and move on with your life. My rough estimation indicates that this loss will not significantly impact your retirement. You didn't deserve this and there may be a good chunk of emotion now, but in the big picture you're in virtually the same place you were before this happened. Ask the bogleheads for help/perspective and take this opportunity to make sure you're living frugally and investing entirely in low cost, well diversified, total market index funds. If you're not doing that then you may be inflicting far more pain than this tax issue has done. I do my taxes by hand and I suggest everybody give it a go. Perhaps a more practical suggestion is to use TurboTax, people I know seem to love it.
  22. The baby boomers have only slightly more reasonable views than gen xers who have only slightly more reasonable views than millennials. This data doesn't put anybody in a very favorable light.
  23. I wrote a quick blog about how the potential for divorce makes saving for retirement more complicated. I also threw in a couple anecdotes about me and my wife to illustrate such complications. https://educatorsfightingforfairness.wordpress.com/2017/08/04/investing-with-potential-of-divorce/
  24. 3 years, 7 months, and 6 days, but who's counting? Question for the board, suppose you were in my shoes, how much money would you want in retirement savings before you'd retire? Expect we'll need 58k-68k per year to live our preferred lifestyle (in today's dollars). Wife wants to work into her 60s. She'll definitely become a school principal, which pays between 80k-135k, but may advance further. Seems we can expect wife's pension to pay close to 50% of salary. No desire to leave money for heirs but we'd like the portfolio to be self-sustaining...no interest in trying to hit $0 the day we die. Very comfortable with stock heavy portfolios even during retirement. We're close to 90/10 right now.
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