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Everything posted by kev

  1. Oh, I agree there. I don't really want congress to begin legislating their pay. I guess I am just frustrated with the concept that it is fine to lie and deceive average people out of their money (taxes or investors) if you are rich. It is definitely also the fault of the boards, and other higher up's as well. But, they are all doing the same thing too. A collective handful of people have brought our country's economy to its knees, all the while enriching themselves and their friends. And, ultimately, they will never have anything to answer to. Average people will lose everything they have worked for their entire life. But those responsible will simply have to figure out which of their houses they will visit this weekend, and whether to take the private jet or the boat to get there. One of the big complaints about Obama was that he wanted to "redistribute" wealth. Anyone who does not think that plenty of wealth was not "redistributed" over the past decade is kidding themselves. It is just that it was getting distributed to those who already had a lot of it. I also agree that the best solution is to no longer "buy" the shares of these companies. However,the vast majority of average people cannot really "sell their shares" in bad companies, because most that invest use mutual funds. I mean how do I go about selling my shares without sacrificing my ability to invest at all??? I don't know what the answer is, but right now, our country has a total lack of integrity. Personal greed in unimaginable quantities is commonplace in all areas that have any ability to do anything about this at all. No one, and I mean no one has done anything about the problems. Money has been thrown at the symptoms, but no one is willing to fix the problem. That is what frustrates me about the idea that Obama is "mad" at wall street. So what? Give me 50 million dollars and he can be mad at me too. If no one will do anything other than give them a stern talking to, while handing them another bag of money, why on earth would you expect that anything will ever change. Like I said, it is all very demoralizing.
  2. I voted for him as well, and hope that he can make a difference. However, I really don't care whether or not these CEO's get scolded - who is going to DO SOMETHING about it. I am sure there is a reason, and I am being naive. But, why do the banks and CEO's that dropped the bag, and now continue to show no concern for taxpayer money need to be the ones to get the economy going? I would love to see them come out and say - " These 10 banks (if there are 10) relied on solid lending practices, have a good business model, did not sell their soul for greed, gave out reasonable bonuses and as a result really do not NEED any bailing out. And, that is why we are going to invest the bailout money with them, while we let some of these others go under. We are confident that they will make the best use of the taxpayer's money going forward to get the economy back on track, and free up credit." It makes me so angry to see this going on. It is criminal. And yet, if you have a nice suit and more money than you can count, it is ok to steal - STEAL - from other people. How is it what is going on any different than fraud or embezzlement when it comes right down to it. If you walk in off the street and demand money from a bank cashier, you are put in prison. If you run the bank, lie about its viability, construct deceptive lending processes and then write yourself checks while the ship sinks, well, that is ok???? There is only one thing that the really rich fear - going to jail. These people need to be put in prison. REAL prison, for a long time. That is the ONLY way any of this will ever stop. New laws and policies just make new loopholes - more intricate and difficult to find than before. I find all of this so depressing. Is there an investment vehicle that has returns which hinge on the level of corruption in business, banking and government? Because that is really the only thing in the market that I have faith in right now - corruption growing and expanding.
  3. These are interesting points, and they make sense on the surface. However, if this premise is true, where can one invest?? If investing in stocks is now simply betting, what can a person invest in that is not based on speculation?? Based on the assumption that this is true, what would reasonable to invest in, and what would be reasonable to expect in the way of return and risk? Not arguing - I find myself agreeing with what you have written. Just curious as to where that leaves someone wanting to invest vs. "bet".
  4. kev


    I disagree with the premise that "not receiving help" cancels out the benefit of low fees. Especially this year. Everyone lost money (and a lot of it) this year - help or not. My wife got "help" from an ING rep, and her ING portfolio is down more than her Vanguard S&P 500 fund. She had previously received "help" from an American rep, and he advised that she should put her money in the Growth Fund of America (only). How is that any different that someone putting all their money in the S&P 500? The vast majority of research specifically shows that receiveing "help" - ie. being charged more money, leads to inferior returns over long periods of time. Yes, asset allocation is critical. However, it is kind of misleading to insinuate that it is necessary to "provide" all sorts of higher fee fund families in order to get "diversification." You are certainly right to say that someone who puts all their marbles in the vanguard s&p 500 index is potentially playing with fire. However, no more so (and likely less) than someone who has all their money in Growth Fund of America. The TWO most crucial factors in long term investing success, and the ONLY two with broad, sweeping, academic support are low cost and asset allocation. Low cost index funds in the S&P, total Bond fund, International index and perhaps a money market acct. can provide virtually every ounce of diversification a person needs. All can be had for virtually no fee, and can be constructed to fit a person's situation. Furthermore, if you lack the confidence/knowledge, you could simply invest in a Vanguard target date fund appropriate to your risk tolerace/age and do virtually the same. Or, simply use age -10 as the percent of bonds in portfolio. Either of these two SIMPLE options, at .2% fees will (with almost 100% certainty) out pace any similar portfolio constructed of higher fee funds over the course of 30 years. The problem with "providing" people with this "diversification" is that it has been PROVEN over and over and over, that NO ONE can consistently pick FUTURE winners. In fact, a relatively consistent sign of a future loser, is being a past winner. Also, virtually NO funds can outpace the avg. market return consistently. Those VERY few that do cannot be identified in advance. So, people providing advice about which high priced funds to invest in over the course of a 30 year period are wrong, and they are wrong 99% of the time over the long haul. So, as of now, it has yet to be shown that getting "help" is of any help at all. In fact, getting "help" is more likely to lead to lower returns, not higher. Even 1% difference in fees can lead to 10's of thousands of dollars - even 100+ thousand - in lost returns. That is an awful lot of money to pay someone for a service that has been academically PROVEN to not work. People who sell fund advice are the same as car salesman. They are selling a product (and it is not advice) in order to make money. If I walk into a ford dealership and tell them that I need a car that gets the best possible gas mileage, has a tremendous warranty and has great resale value, they are not going to suggest I look at a toyota or a honda. They are going to sell me a ford, simple as that. That is not selling good advice, that is selling a product for a profit and commission. People do not need access to 50 mutual fund families at a cost of $50,000 in fees over the course of a lifetime. What they need is someone to sit down with them for $75 for an hour, 1 time a year and help them look at the asset allocation they have in their .2% fee index funds and see if any changes should be made. But, that does not result in hefty long-term commissions, and, as is human nature, people would rather lose $10,000 in fees that they never see, than hand over a $100 dollar bill from their wallet.
  5. Our TPA signed with Vanguard. We did hear back from Fidelity, and the only option we have available to us, through them is the "Advisor" option. However, as of today, it does look very optimistic that we will be able to replace one of our other "Advisor" type options (oppenheimer) with T. Rowe Price. So, we should have Vanguard and T. Rowe Price as direct investment options and Fidelity and American as "Advisor" type formats. Then a trio of insurance companies and Pershing Brokerage Account option. These options are for 2009. We are a small (50 teachers k-12) school district and our TPA is working with several other relatively small area school districts. They administer our Health Insurance ( and other schools as well). Think they are basically doing it simply to further strengthen ties to the health insurance area. But, the end result is that they are very open to providing each district with whatever choices they woul like in their plan. For once, a perk to being a small district - they have really focused on what we would like in place as employees.
  6. kev

    Paying For Help

    Another option - invest in one of Vanguard's target date funds that seems to suit your situation/risk tolerance for the time being. That way, you get some index fund diversification, at no real extra cost. And, then you can read more and become more comfortable about making the allocations yourself. In the future, if you feel you want to make adjustments yourself, you can, and if you still feel you do not want to do this, you could pursue the fee only planner to help you.
  7. kev

    Paying For Help

    .25 - .5 one time, or annually forever? One time, maybe too much, maybe not - depends on your balance. Annually, forever, definitely too much - kind of defeats some of the purpose of low fee index funds. If I was goint to pay someone (and I think it is a good idea if you want the input), I would try to find a fee only planner that will charge you by the hour.
  8. Intruder - Sorry, did not mean that what you said was incorrect about Madhoff. You are right on Madhoff and what people assumed they were investing in. I just meant that every person has access to market matching returns, without risk beyond that inherent in all equity investing, and they can do it for virtually no fee - and yet, that is never "enough." The majority of people are so busy chasing things that do not exist, that they simply overlook the closest thing to the perfect plan - the good plan. It is IMPOSSIBLE to invest in equities without taking on the proportional risk of that investment. However, you can eliminate taking on additional risk, above that which is inherent in the equities you invest in. You can eliminate that additional risk for almost no fee, and, in return, you can exceed the returns of most other investor's by simply being average. What I was getting at is that as great (and utterly rediculous) as what was being promised by Madhoff seemed to be, EVERYONE can get almost that return, for almost no expense, and take on only the lowest risk inherent in the investment of choice - Index funds. But - as you kind of alluded to, that just is not enough. People want to think they can have it all, for free, with no risk. When something defies all known laws of a particular subject, well, it is simply too good to be true. Kind of like, "Eat whatever you want, never exercise, and lose weight." People love to believe the things they WISH were true.
  9. I posted this under another thread about Fidelity, but will paste it here also - we are having problems with Fidelity too - using the direct platform. I will post back when I find out something more. We are having some problems with utilizing Fidelity also. Our TPA WILL sign their ISA and other documents, but Fidelity is still saying that they don't want us. We have been told - just recently that we can use the "Advisor" platform, but not the "Direct" investment - ie. the entire reason for going with Fidelity as a No Load/Low Fee option. I am sure it is because we are a small district - maybe only 20-30 participants. Seems that we are not worth their time. Our TPA is still talking with Fidelity and there is possibility they may be able to obtain the direct option for us, but, this is a pretty good example of the problems of the 403b - our TPA is willing to sign any and all of their paperwork, and they still are not interested. We do have Vanguard in place and do have direct investment with them. So, it is not like all is lost. Also, we may be able to switch out one of our "Advisor" choices like Oppenheimer, and move Fidelity into that group with American, and then try to pick up T. Rowe Price to go along with Vanguard. Could be worse, but, still dissapointing that Fidelity does not want our business - even on their terms.
  10. I changed a couple areas in Intruder's post(hope you don't mind), because he makes a great point. Almost anyone would jump at the proposition of "guaranteed" superior returns, but few people seem eager to jump and the next best thing. My changes are indicated with (Parentheses) or . . . . . . . . . Funny how so few people actually choose this option - investing with idex funds through Vanguard or Fidelity. My favorite quote from Bogle's "Little book of common sense investing": "The greatest enemy of a good plan is the dream of a perfect plan - stick to the good plan." I do feel for the people who were stolen from, but, yet another reminder that simply paying almost nothing to be perfectly average over the course of 30+ years will make you far, far above average in the end.
  11. We are having some problems with utilizing Fidelity also. Our TPA WILL sign their ISA and other documents, but Fidelity is still saying that they don't want us. We have been told - just recently that we can use the "Advisor" platform, but not the "Direct" investment - ie. the entire reason for going with Fidelity as a No Load/Low Fee option. I am sure it is because we are a small district - maybe only 20-30 participants. Seems that we are not worth their time. Our TPA is still talking with Fidelity and there is possibility they may be able to obtain the direct option for us, but, this is a pretty good example of the problems of the 403b - our TPA is willing to sign any and all of their paperwork, and they still are not interested. We do have Vanguard in place and do have direct investment with them. So, it is not like all is lost. Also, we may be able to switch out one of our "Advisor" choices like Oppenheimer, and move Fidelity into that group with American, and then try to pick up T. Rowe Price to go along with Vanguard. Could be worse, but, still dissapointing that Fidelity does not want our business - even on their terms.
  12. What benefits are there to offering such things as 403b's or 401k's that could not be gained by just allowing everyone to contribute $20K per year to a personal IRA, and allow it to be deducted from taxable income in the same way that the 403b already is??? Seems like it would be much simpler.
  13. Why dont you ask the TPAs? Our's did sign vanguards - and fidelity's.
  14. Why not have TPA sign the sharing agreements provided by Vanguard or Fidelity? I have looked at this and still do not understand the problem with signing their agreements. I have heard general things, but nothing specific. What types of specific problems can occur if a TPA signs vanguards agreement? What "liability" issues are there - and how could they come about?
  15. Vanguard, T Rowe Price or Fidelity - just go to their websites. I would start with those 3 and go from there.
  16. I would max out the IRA every year with a low fee provider like Fidelity, Vanguard, T. Rowe Price, before using any of those options. I would look pretty close before transferring money from Janus to any of those options - unless you are forced to transfer it. It is likely you could get hit with load fees or other fees just to move your $$$. Questions - the main questions are fees. Make them write down the following percentages if they apply: front load surrender charge annual account fee 12b-1 fee fund managment expense provider fee transfer fees minimum balance fees mortality/expense fee "Optional" add on fees (Others I forgot???) Total fees you could possibly be assessed Also: How do you get compensated, how do you make your money in this process? Do you have a "self directed brokerage account" option within any of your vendor choices? If I had maxed out my IRA and did not want to invest in taxable accounts, or if I HAD to transfer my money from Janus, I would consider looking into oppenheimer - just because I think they are mutual funds and not annuity products. So, in spite of some of the fees (like 12b-1), they MIGHT be more reasonable. But, I do not know that for sure.
  17. Have you spoken with a union rep? My understanding is that it is not as simple as simply saying "we won't do it." Is there language in your master contract which addresses 403b's? In most places, a school cannot just throw out things that are addressed in their contract, generally, they need to be negotiated out if they were negotiated in. That being said, I know of a couple small districts around here that dropped their's - but that was basically because the employees did not care that it was dropped. Seems like a really shortsighted thing to do for a district - especially when your district has quite a few employees (at least compared to us.) It seems that the district would want something in place in order to attract administrator's if nothing else. Generally, people who make $100K or more a year like to have a tax deferred investment option at their disposal.
  18. thanks scott. That does make some sense, and I will try to delve into it further when the school year settles down a bit. I think one thing that makes a little difference is that our school district only has 25 403b participants, and our TPA works with a handful of similar schools - so no one cares if they have to do something manually - like hardship paperwork, because they may only have to do it once a year - or less. The scale of what needs to be done is tiny in comparison to school districts with 1000's of employees, and doing things manually is kind of the norm anyway. Thanks for the information.
  19. I can see why that might be an issue, but I don't understand what it is - specifically - about the Vanguard agreement that makes it bad. Vanguard is a reputable company - why would they construct an agreement that would somehow be skewed in a way that would harm their customers? I have read through their ISA - i am just wondering what specific thing makes it so bad - if any? To me, if it is a choice between signing a vendor ISA with a reputable company like Vanguard, or having a company like Security Benefits who is willing to sign our ISA - well, that is kind of a no brainer. What is there to skew in an ISA as opposed to what can be skewed by ripping people off through hidden fees. I am obviously missing something in all of this, because, to me, the ISA seems like a formality to some extent that needs to be in place to comply with the 403b regs. What impact does it have on individual investors in a plan, and how can it be "skewed" to harm a participant? Sorry for not understanding this, but I don't.
  20. I can see why there may be reasons vanguard or other companies do not want to deal with 403b's - but what is the big deal about signing their ISA?? I guess I just don't get that. It makes perfect sense to me why they would want to issue one standard ISA that all who decide to utilize vanguard sign - as opposed to signing 100's or 1000's of other ISA's and having to study each one. I am assuming that Vanguard is capable of producing an ISA that complies with federal regulations. Why is signing THEIR ISA a big deal? Is there something wrong with it? Am I missing something?
  21. Link to a similar discussion on Fundalarm. It has a couple good links in the post. http://www.fundalarm.com/wwwboard/messages/230720.html
  22. you will probably have to consider a number of things: 1.) Are any of these options changing on Jan. 1, 2009 for the new 403b regs?? If so, what are your new options? 2.) You will actually have to talk to the reps of these groups to see what it is they are selling you. Beyond the problem that several of your providers are traditionallly high fee/commission products, there is the problem that these companies offer a variety of plans and the fees/structure are not consistently the same. If you invest in the Vanguard S&P 500 index - the fee is always the same. But, if you invest in something through ING (or others) - who knows how it is actually set up for your individual situation. So, you actually have to find out about what they offer and ALL the fees. (perhaps others can post a good link to fees/questions you should ask about.) 3.) Do any of them offer an "Individual Brokerage Account" option? This is something I have seen with recent 403b legislation. This would give you access to a wide variety of funds outside your initial choices. 4.) Do you plan on investing MORE than $5000 per year, and do you currently max out your ira? If not, just use an IRA to get whatever you want. I am sure others can add to this.
  23. "When it comes to investing, you don't start by researching MANAGERS, but FUNDS." I understand that this is what people do - But, the OP basically was addressing the idea that there are knowledgeable, and savvy fund managers who can consistently outperform an index. I agree that there probably are some. However, the way you would find that is by looking at the MANAGERS, OVERALL record vs. appropriate indexes. Looking at the returns of a specific fund MIGHT tell you that the fund is run by a "savvy" manager. Or, those returns might simply tell you that the manager of your domestic, large cap growth fund included 20% foreign companies as allowed by the prospectus and 20% Oil companies as allowed by prospectus. The returns might simply tell you that the manager of that fund was in sector or investment category which was in favor for a period of time. The 5 or even 10 year returns of one fund might simply tell you they got lucky - remember, there are over 10,000 funds, and who knows how many stocks - when faced with very large numbers, and many, many chances - even the improbable becomes extremely probable. All I am saying is that if we believe that there are "savvy" managers who can beat the indexes - the best way to tell if it was actually the manager is to see if they have consistently beaten appropriate indexes in several funds, across their entire track record. Simply looking at one fund, for 5 or even 10 years and disregarding other funds, or longer time periods really gives no concrete evidence that it was the MANAGER which was solely responsible for beating the index. I think, ultimately, the argument for index funds is that over the course of your investing LIFETIME index funds will outperform any fund manager simply due to consistency and low cost - two hurdles that will eventually trip up even great managers in spite of 5 or 10 year runs of success.
  24. Are there any performance stats for managers?? It is pretty easy to look up a fund, find its 5, 10 and inception track records. It is also easy to see how long the fund manager has been there as well. But, are there any rankings of fund managers and their annualized return over their career for all funds they have managed, averaged together?? That would be an interesting stat. For instance, what I would like to see is a ranking of fund managers that has the following: Joe Fundmanager, 18 years, 6 different funds (list funds), average annualized return for career = 9.1% Can you somehow screen for that on any searches???
  25. I know you mentioned that these two are "young" funds, but I still don't really think you can use funds that are 2 years old, or less, as examples of funds that outperform a benchmark (on any consistent basis). There are thousands of funds that outperform benchmarks for one or two years. Ultimately, I think the problem is finding the ones than can do it 6 or 7 out of 10 years running - and doing so BEFORE those 10 years. Often, once a fund has a great 10-15 year track record, so much money has poured in that they cannot duplicate the results that set it apart in the first place. And, I have to admit, I prefer actively managed funds (TRP) to index funds also, although I have both.
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