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mccook27

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  1. Steve I have not read that piece but I will check it out. I am in total agreement with your comments on Wall Street and the brokerage houses. I have recently finished reading The Four Pillars Of Investing by William Bernstein. It was not one of the easiest books I have read but I highly recommend it. Bernstein repeated what Bogle and many other well respected authors have been saying about Wall Street and the brokerage community. It should come as no surprise that they, Wall St and the Brokers are NOT your friends. A fact many of us already knew. Wall Street does not want Main St to realize that investing is NOT rocket science. Wall Street is there to sell it's products and spends millions if not billions of dollars on advertising. And all the talking heads on CNBC and the rest of the so called experts, amount to nothing more than just noise! These guys and gals do not know where the market is headed but they love to get on TV and act like they have a crystal ball and make predictions. Like you said, they contribute nothing and are paid handsomely. Imagine a broker telling his boss that he just placed all off his clients in Index funds and will rebalance their positions once per year if needed. Im sure his boss would get up off the floor after having fallen out of his chair and handed him a box so the broker could clean out his desk! A broker is trained to sell and trade. And the investments they sell are not going to be Index funds or No-Load actively managed funds with low expense ratios like Dodge and Cox. There is a conflict of interest between Wall St and Main St. Brokers are placed in a position in which they have to generate revenue, this is done by selling in house loaded funds with high expense ratios and 12b-1 fees, annuities and churning accounts. All of which are detrimental to an investor's financial well being. Wall Street has alot of people fooled into thinking they can provide a valuable service when in fact they amount to nothing more that a huge sales force looking to sell products too generate revenue at the investors expense. I can speak from experience. I worked at a major brokerage house on LaSalle Street in Chicago when I was in college and I can still remember the pressure these guys were under. They HAD to sell and when business was slow I remember brokers joking about calling their "whales" to churn them in order to get the floor manager off their back. It was a great experience and I will never forget it. I learned first hand and I can reflect back on those days and confirm that these guys are salesman first and foremost. And because they passed the series 7 or know what a PE ratio is, does NOT make them experts or suitable to manage your money because they can not do it in a cost efficient manner. I'd be willing to bet most don't know about Modern Portfolio Theory. This is the reason why it's imperative that individuals take their own finacial matters into their own hands and LEARN because they will be able to do a better job at controlling the expenses than broker or an advisor. I had a conversation with an "advisor" about one week ago. My wife maxes out her 403(b) with Vanguard and we want to start funding her 457. Unfortunately the only vendor on the 457 plan is AXA. I had the AXA rep send me the information on the plan. I knew what to expect and the material confirmed it. An annuity that charges a 30.00 per year administrative fee, a 2% M&E Fee plus the fees of the underlying mutual fund sub accounts and last but not least a surrender charge. I get all that for the privledge of having an advisor! When he called me for follow up I acted like I was new to investing and asked him if the 457 was already a tax privledged account then why do I need an annuity? Can't I just buy the mutual funds directly? His response was, annuities are the best way to invest, they provide you an advisor which you can not get when you buy a mutual fund. I could not believe what bull**** he was telling me. He also went on to say that all of the teachers he knows are invested in annuities because they offer you an advisor and then he went on to stay that if I wanted I could get in and out of funds every day if I wanted I could , that's the kind of service he provided that a mutual fund from Fidelity will not. I still could not believe my ears. This is the same sales pitch that he gives to other unsuspecting people. I finally could not resist and I told him I have been doing some research and I came across 403bwise.com and he said Oh yea I am familiar with it. I told him what you just told me is opposite of what is advised here and all he could say was it's up to you where you decide to invest your money. Once I made a few other points, like using an annuity in a 403b is like using an umbrella indoors he became more interested in ending the conversation as he no longer saw me as a potenetial victim, I meant client. Fidelity is a potential 457 vendor but I need 10 others to sign up and the district will Fidelity add them to the list. That is my mission at this time. I will do my part in helping spread the truth.
  2. In this month's issue of Money Magazine, Jason Zweig interviewed discount broker Charles Schwab. Zweig asked him what is the single most important piece of advice you can give an investor to which Schwab replied "invest in Index funds it's the smart thing to do." Charles Schwab did not suggets annuities or loaded funds. He specifically stated INDEX funds beacuse of there inherently low expenses. This is coming from a guy who stands to make more money if investors bought and traded stocks, purchased annuities or loaded funds. Charles Schwab is an example of an honest person that other "advisors" can learn from! Fortunately we have people like Charles Schwab to confirm that what we preach is in fact sound advice contrary to what so many teachers are told and sold in the teachers lounges.
  3. TR, 403(b)Agent are not advisors, they are salesman, period. An advisor that has studied and done his homework would not make comments about investing like these two have done. Fees ARE important and they are the ONLY factor one can use in detremining how a fund will perform. This was pointed out in "The Lazy Person's Guide to Investing: A Book for Procrastinators, the Financially Challenged, and Everyone Who Worries About Dealing with Their Money by Paul B. Farrell, J.D., Ph.D." In my opinion, TR and 403(b)Agent more than likely know this but can NEVER admit to it because they can NOT earn as good a living as selling the high cost VA products. They try and muddy the waters with their attacks but our vision here is clear. And when they try to attack our positions, it becomes even more clear and obvious that what we preach threatens to make their wallets a bit more slender. Does anyone really believe for a moment that TR and 403Bagent have not read books by Charles Ellis, John Bogle, William Bernstein, Larry Swedroe, and many other brilliant authors whom have nothing other than OBJECTIVE advice to offer, backed by academics. I believe they fear that as more and more investors become hip to their lies and sales pitches, they will earn less and less commissions. Money is the name of the game. We earn it and they try to keep more of it through very inappropriate, expensive products and they know it but will never admit it! Furthermore, TR and 403B really can not offer any good advice because they are SALESMAN who do an excellent job of fleecing unknowing investors. Hang your heads in shame! Would you really recommend the same lousy investments if the people you were pitching were your son's and daughter's, I think NOT. 403bwise is meant to educate and they are doing a great job. Through education people learn how to invest and what not to invest in. The research is on our side and Annuities that the majority of teachers are sold ARE HAZARDOUS to their financial well being, period! Avoid them like the plague and invest directly in no-load, low cost index funds, through providers such as Fidelity, Vanguard, T Rowe and TC. This needs to be said and repeated often. It's not being militant, it's being [/size][/b] about something that we believe in so that hopefully less people will fall victim to these shark attacks. Knowledge is power. When the moment arrives where you guys can't peddle these inappropriate products to savvy investors, you guys could always revert back to whatever else you sold prior to taking advantage of educators and other 403b participants.
  4. [size=5 I have found out through my research and further confirmed it with the IRS and an attorney. In regards to the 457 Plan there is no Fiduciary Liability under ERISA. 457b plans are exempt from ERISA because ERISA does not apply to governmental plans.
  5. Does anyone know the difference between Contractual obligation versus fiduciary liability? We are looking for a 457 Vendor and Fidelity looks real promising right now. I am concerned that another company may be suggested due to the "Contractual obligation versus fiduciary liability". Can anyone expound on this and how I can succeed in getting Fidelity on board if in fact "Contractual obligation versus fiduciary liability" presents an issue. My concern is that the another plan may be presented and sold to the Village under the presumption that it resolves the Contractual obligation versus fiduciary liability...I hope I made this clear
  6. I have found out that my police pension contrib. and the Medicare tax is computed on the Regular Gross. After that, My Taxable gross is used to compute tax for federal and Il. state taxes. Thanks for Your Help! I now have a new question. Does anyone know the difference between Contractual obligation versus fiduciary liability? We are looking for a 457 Vendor and Fidelity looks real promising right now. I am concerned that another company may be suggested due to the "Contractual obligation versus fiduciary liability". Can anyone expound on this and how I can succeed in getting Fidelity on board if in fact "Contractual obligation versus fiduciary liability" presents an issue. My concern is that the another plan may be presented and sold to the Village under the presumption that it resolves the Contractual obligation versus fiduciary liability...I hope I made this clear
  7. Does anyone know if for example I earn $2,000.00 gross per pay period and then contribute $200.00 to a 457 plan per pay period thereby lowering my taxable gross to $1,800.00 if I will owe Illinois State Taxes (3%), Medicare Taxes (1.45%) and Police Pension Contributions (9.91%) on my regular gross of 2,000.00 or will I owe taxes based on the lowered taxable gross of 1,800.00 ?? I am aware that federal taxes will be calculated on the taxable gross of 1,800.00 but I am not sure if the other taxes I mentioned will be computed on the higher gross or the lower gross as a result of my participation in the 457 plan. I am police officer in Illinois and work for a local municipality. Any help would be appreciated.
  8. mccook27

    457 Vendors

    Does anyone know if these specific vendors offer 457 plans: 1. Vanguard 2. T. Rowe Price 3. Fidelity Thanks in advance
  9. I would like to share my two cents on this topic. I started investing in 1997 and educated my self through various books from such authors as Larry Swedroe, John Bogle and Charles Ellis. In addition, I spend alot of time on the road on the weekends and listen to MoneyTalk by host Bob Brinker which aires on Saturdays and Sundays in my hometown. Throughout these years I have found the information I have learned priceless. When a person goes down the learning curve and learns how to be financialy savvy they have empowered themselves to act as their own money manager. But more importantly, they can rely on their knowledge to avoid becoming shark bait. Unfortunately, many people do not want to educate themselves and they rely on "financial advisors" to help them reach their goals. Some do and some don't. I have learned that the best money manager you can hire can be found by looking in the mirror IF you are willing to educate yourself! Personal Financial money management is not rocket science. Once you have gone down the learning curve you may agree with me that the majority of actively managed funds will not outperform index funds over the long term so you will invest your money in index funds which charge low expense ratios. Once you have decided to invest in Index Funds then allocate how much money you want between equities, fixed income and international. Once you have made your asset allocation sit back and readjust as you near retirement. For example, I am young and invest my money 90% Stocks and 10% International. And to accomplish this I invest thru Vanguard and didvide the money between The total stock market index and the total international index. If I ever decide to add fixed income I will add the total bond index to my portfolio. In the above example, a person can choose those three index funds and they will be much better off than the majority of investors who are putting their money with companies that charge exorbitant expenses. The bottom line avoid Loaded Funds, Funds with High expenses and annuity/insurance products promising high rates of returns. Buy term life insurance if you need it. Stick with Companies such as Vanguard, T Rowe Price and Fidelity. Personally I prefer Vanguard for their rock bottom expenses. And remember the most significant threat investors face that is not mentioned at all is the risk of underperforming the market. An index fund will give you what the market returns minus their expenses of course. Be wary of the "advisors" that appear at your school trying to peddle their high cost tax sheltered annuity, avoid them until you can educate yourself. The education will save you thousands of dollars in the long term. For those of you selling these products please do not tell us that the higher expenses are what the investor is paying for in the form of Investment Advice. That is a poor excuse, it's simply taking advantage of those less educated and informed. DO NOT fall prey to these salesman.
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