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TXsaluki

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  1. Why would you want money sitting in a money market making almost no interest at all? It doesn't make sense. Get into high quality funds, keep investing (dollar cost averaging), and go for the long term...a money market should be a part of your overall strategy, but it just doesn't make sense to keep all your money there. 5% MM and the rest in bonds and stocks.
  2. I am a big opponent of fixed accounts. When you are receiving a 3-4% return, a couple of things happen. First, you are barely keeping pace with inflation. Second, the fees charged further reduce your return. It only makes sense (if you are going to use a plan that charges administrative fees) to go variable, get the 2% administrative charge and shoot for returns of about 8.5 to 9% over the long term. A note about administrative fees, look for a company that waves them when the account value reaches a certain amount. Big insurance companies are not always "evil"...remember some of the benefits of annuities vs. straight mutual funds. Mutual funds do not have a guaranteed death benefit, and you pay capital gains taxes. Also, "big" insurance companies are typically better because of their ability to pay claims. Look at Moody's, Standard & Poor, etc., and make sure the company has high ratings.
  3. Sorry, I still have to disagree. I can't imagine anyone in the history of the stock market that has said, "I wish to have fewer choices". Remember, diversification does not just relate to different stocks and bonds, but it also relates to using different money managers using their strongest players. Why limit one's self in investing? It just doesn't make sense!!!! Look at the choices that AXA Advisors offers: very impressive.
  4. Who in the world would only want one family of funds to choose from?!?!?!?!
  5. Simply lower your contribution. Money can generally be withdrawn for certain occasions, but I would recommend keeping it in there. Too often, people look at the 403(b) as a checking account...remember, it's for your retirement!
  6. What were the Top 10 companies on that list??
  7. 3% is high, but also look for companies that wave the fee once your account reaches a certain value. The reason fees are not always bad is that you receive what you pay for. In TIAA-CREF, you do not pay the fees, but you do not have access to a lot of quality fund choices. That is reality, and I know many will argue that point. Some good reputable companies charge an administrative fee, but your money is being invested with some of the best money managers available (Fidelity, Janus, Morgan Stanley, Putnam, Oppenheimer, etc.). Another piece of advice when investing in a 403(b). Never go with a fixed account if you have more than 7 years until you retire. Period. Get in the market, and continue to contribute through the ups and downs. By using dollar cost averaging, a down-swing in the market is not always "bad". Consider this example: If you invest $100 a month and that buys 1 share of a fund, when the market drops, you will buy more shares with the same $100. Let's say the market goes way down and $100 now buys you 2 shares. When the market rebounds, which it historically does, you will now have 2 shares worth $200 that you bought for $100. Pretty nice, huh? If you are worried about running your account straight into the ground, remember to have your assets properly allocated (bonds, LC stocks, S/M stocks). Again, this goes back to having enough quality choices...don't always assume administrative charges are a bad thing.
  8. It depends which company you choose to work with. Some offer fixed only, where you are not participating in the market, and some offer variable, which would. Variable: Different vendors offer different funds from different fund families. Ask the advisor or agent and they should be able to tell you which fund managers they use. In short, yes, there are vendors that buy shares of Fidelity, JP Morgan, Putnam, etc. funds. You don't need a variable account, but I highly recommend it as long as you have a long time horizon. As far as making money from you, there is generally an administrative charge and almost always a surrender charge. Higher admin. charges may be justified by the quality of funds provided, however, a high surrender charge is never good, especially rolling surrender charges. Hope this helps.
  9. AXA owns The Equitable...advisors (not agents) have college degrees, Series 7 licenses, Series 66 licenses, and insurance.
  10. The problem I have with TIAA-CREF is their lack of options to invest in, and their lack of guidance in asset allocation.
  11. TXsaluki

    403b Choices

    Agreed, a lot of people claim to be advisors when they are not. However, there are real financial advisors that offer fee based financial planning strategies for free to those enrolled in a 403(b) TSA retirement plan...they do exist, just ask for their credentials, and research the company. If the advisor has a Series 66 license, he or she is an Investment Advisor Rep., and is credentialled to charge a fee for their advice. Some companies only sell these annuity plans, but other are full-service financial planning institutions and the services their clients (teachers, etc.) receive for free are a huge plus.
  12. Again, what is "right" or "wrong" will depend on your own unique situation. Here's a few absolutes however: Wrong: buying a "403(b) plan". The term 403(b) is an IRS tax code...if your "advisor" sells a "plan" chances are it's a ripoff. Look for retirement plans that allow you to participate in the market. Right: VUL is a suitable investment. Besides the Roth IRA, it's one of the only investments that grows tax-deferred and can be withdrawn tax-free. Diversification does not only relate to portfolios, it relates to retirement strategies as well. A good mix of fully taxable, partially taxable, and tax-free investments is a sound way of planning for retirement. Just my 2 cents...
  13. My advice: 1.) Be 100% sure those are the only 2 companies you can invest with before you sign up...it doesn't seem right to be limited, it should be your choice. 2.) Make sure you understand their surrender charges if you wish to switch to a different company later...sometimes the surrender charges are outrageous (25+%). 3.) Do your research. It wouldn't hurt to ask the financial advisor if they hold a Series 7 and Series 66 license...this would allow them to buy/sell in the market and be credentialed to charge a fee for their advice.
  14. I agree that one should definitely buy what suits their individual needs, and should also shop around for the best prices and product. Just a couple of thoughts on term vs. VUL: 1.) "Buy term and invest the difference" sounds great, but a lot of people end up spending instead of investing. 2.) The cash value can be used to pay for a college education without making the child ineligible for scholarships or loans. 3.) Unlike an IRA or a 403(b), the money can be taken out at anytime, generally after the first 10 years. I favor VUL more so than term because term premiums are almost pure profit to the insurance companies. The numbers are staggering for the number of people that die without their policies in place because the premiums are out the roof in their later years. However, as with all investments, one investment will not always suit every investor.
  15. It's already in legislation to close this loophole in Texas.
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