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Everything posted by EdLaFave

  1. Vanguard is the easy choice, I documented their plan here. If you eventually max out your IRA and your Vanguard 403b then you'll have to start looking at 457b plans, but that is probably an issue for another day. I don't know the fee structure of Kades-Margolis, but I can safely assume it is more expensive than Vanguard. So I'd be VERY surprised if it wasn't in your best interest to roll it over to Vanguard. A load is just a sales fee that goes to the marketers that sold you that product. It is not indicitive of a better product. In fact, the best products (total market index funds) do not have loads. I discuss this and other fundamental concepts in my Investing 101 page here.
  2. I'll save the discussion on Roth vs Traditional (you're right that having a pre-tax pension is one factor that favors Roth investing). However, one thing a lot of fans of Roth IRAs seem to overlook is the fact that you're often able to contribute to 403b and 457b plans with a Roth as well. Just wanted to throw that out there. I'm assuming this pension prediction (91% of your salary) is based on the current state of the pension fund? A lot can change in 30+ years, but let's assume his assumption is gospel. In retirement the typical person is free of several expenses (kids, large house, retirement savings, etc) and then you can add SS income on top of that savings (although some teachers don't get SS). If I were guaranteed those savings and that income , I'd feel entirely comfortable living on just that. Therefore, my ability to take risk in my other accounts would skyrocket, but the advisor is acting as if the opposite is true. The logic just doesn't add up. Yes you should open a 403b or 457b with Fidelity or Vanguard. I documented the Vanguard plan here and the Fidelity plan here. You should pick an asset allocation (split between stocks and bonds) that you can live with, you should max out all of your tax advantaged accounts if possible (IRA, 403b, 457b, HSA, etc), and then you should invest in a taxable account. You don't need to do anything fancy, in fact doing so will probably hurt you. You can read my Investing 101 page here. If the market crashes when you go to retire then that's fine (clearly suboptimal, but fine) because you shouldn't be retiring until you have enough money to sustain such an event. Depending on how soon you retire and your preferred asset allocation, I'd personally feel comfortable with somewhere around 25x-33x annual expenses (and I won't be getting a pension). Of course people will tell you that by the time you're getting ready to retire you should shift to hold more bonds, which would offset a potential stock market drop...of course the other side of that coin is that switching to more bonds decreases your expected returns, which means you'll have to save up a larger portfolio before retiring, which means you'll have to work longer (the exact thing you're afraid of if the market crashes with a stock heavy portfolio right before retirement). Krow addressed this well already, but let me add a couple points: People fall into a logical fallacy where they imagine their money in boxes (IRA vs 403b) and then they treat those boxes differently. In reality, you should think of your entire portfolio as a single unit. Do all of the pieces add up to match your risk tolerance? If the target date fund matches your risk tolerance then great, you're good to go in both accounts. People often confuse complexity with effectiveness/diversification. The target date fund basically owns all of the publicly traded stocks and bonds (minor exceptions of course). Don't let the fact that it is a single fund obscure the fact that a target date fund is fully diversified. Don't let the fact that there are all of these exotic investments that you/everybody probably can't fully understand obscure the fact that a target date fund is incredibly effective. Advisers like to make you believe they can save you from the down side and capture the up side. It is pure fantasy. When the stock market crashes, we all suffer. When the stock market soars, we all celebrate. An adviser will however use your fear to put money into their pockets. Pick a bond allocation that will allow you to live through (sleep well, not make foolish decisions like selling or stopping contributions, etc) the several stock market crashes you'll face in life.
  3. Mike, if you can provide this info krow will have you covered.
  4. 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?
  5. Just to restate the obvious, there are actually two questions at play: What types of accounts can 403b accounts be rolled into? 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.
  6. 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.
  7. whyme is 100% correct. If you want to read just a little bit more about those very topics then check out the Investing 101 page I wrote.
  8. Fidelity is arguably the best plan in the nation, with Vanguard being the only competition. If I were in your situation, I’d absolutely rollover the existing 403b to Fidelity. I documented their plan here.
  9. It looks like you'll need to be in the top 5% of earners to hit this goal and if you're at the bottom of that window then you better live in a cheap part of the country. https://www.investopedia.com/personal-finance/how-much-income-puts-you-top-1-5-10/
  10. The phrasing around FIRE drives me nuts. Was hard work and sacrifice at play, maybe? Was there a bigger factor in saving a million dollars in five years? Absolutely, otherwise we’d have a lot more millionaires running around.
  11. Thanks Steve, I actually just emailed them today. Hopefully, I'll hear back soon.
  12. 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.
  13. 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.
  14. 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.
  15. I just wanted to endorse what Krow said. Also, even if "all" you were being charged was 1%, that is absolutely egregious.
  16. 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.
  17. 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.
  18. EdLaFave

    So Many choices

    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.
  19. 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.
  20. 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.
  21. 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.
  22. ...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.
  23. 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.
  24. 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.
  25. EdLaFave


    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. 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. 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.
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