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  1. whyme

    Zero fee ETFs

    Yes, but I don't think any of the Fidelity "zero" options are bond funds. (Though their low cost Bond offering is low enough to undercut Vanguard.)
  2. whyme

    Zero fee ETFs

    For those among you trying to drive every last penny of fund expenses out of your portfolios, I just stumbled across these, which were introduced earlier this year: BNY Mellon US Large Cap Core Equity ETF (BKLC), 0.00% ER BNY Mellon Core Bond ETF (BKAG), 0.00% ER I know nothing about them beyond what I've read: please take this post as an FYI, not a recommendation. It looks as if they are avoiding licencing fees for the famous indexes and using their own indexes (see the PS below). The Large Cap Core has a couple of hundred stocks, looks to be similar to the SP 500: the most heavily weighted assets of the BNY compared to the Vanguard 500 fund are nearly identical. This is the first zero fee bond fund I've run across: are there others? From the press coverage of these releases, it sounds as if BNY Mellon intends to keep these ETFs at zero fee permanently. (There is no talk of short term fee waivers or any such). Evidently the two zero-fund ETFs are their attention-getting marketing strategy: they are late to enter the ETF field, and they are at the same time offering a bunch of other ETFs that do charge expense fees. PS: The stock fund is using a US Large Cap index from Morningstar. The bond ETF uses Bloomberg Barclays US Aggregate Total Return Index.
  3. Sounds excellent! Get started now, the more you contribute each paycheck, the better (think about how much those contributions now will compound over time). Good work finding your way to this plan.
  4. Hello again, Eggbread. RE: The 403b third party--Krow (just above) has it right. This should work well for you, and you will definitely be able to have pre-tax contributions deducted from your paycheck regularly. If you haven't already, you should get the 403b setup immediately, so that you can start contributions now. If it takes a while longer to work out the rollover details (you might even decide that it is worth waiting for months or even years to avoid surrender charges, depending how severe those are), that concern should not interfere with your new, improved 403b. RE: the rollover. Krow has this right, too. Assuming that you are with the same employer and are not yet 59 1/2, it needs to roll into another of the 403b plans that your employer currently offers (in this case, a Vanguard 403b). As I recall you are with the same employer, so you should call Vanguard again, make that fact very clear and see whether you can get a more definitive answer. Before initiating the rollover, you should also contact AXA and try to get straight information about any surrender (or other) fees connected with rolling over that account to another 403b provider (you can mention this issue to Vanguard, too, but I'm guessing they'll refer you to AXA rather than sort that out from their end). Sorry to hear that the Vanguard rep left you confused and possibly gave you misinformation. I've never encountered that with their reps, but my experience is limited and Vanguard management has been changing. I hope that isn't a sign of things to come.
  5. Kudos, Marian! Do look into the traditional accounts and their relative impact on your take-home pay: if you could manage it, you can actually double the contribution limit by putting more funds into a 457 as well as the 403b (plus that personal Roth account!). Since you are or will shortly be of the age to roll your money into a "regular" (not inside an employer plan) IRA without penalty, the fees can be temporary and well worth putting up with to build the tax-deferred accounts. I don't know much about inherited IRAs, but I think that the inheritor has to pay tax (over a number of years) on withdrawals from a traditional account, whereas there isn't any tax on the Roth. FWIW, I encourage you to focus on building a good retirement income for yourself: don't let issues about possible future taxes and bequests stand in the way of your own security.
  6. I don't think Paul Merriman is in it for the money. I get the impression that he has been wealthy for decades; he seems to be a true believer who had his enlightenment experience when he went through the Dimensional Fund Advisors boot camp and he wants to evangelize. That approach, involving "factors" like company size and "value" (I think that is primarily determined by the ratio of book value to market cap), is grounded in academic research, notably by Eugene Fama who was awarded a Nobel prize for his efforts in this area. One can argue--as Bogle probably would--that Merriman's approach is overcomplicated, involves more fees and risks underperforming the broad cap-weighted market, which provides "Enough," to cite the title of one of Bogle's books. But to my mind some overweighting of small cap, "value" and maybe a couple of other categories (in low-cost passive funds) in an effort to capture the premium that those factors are demonstrated to have yielded in the past is within the circle of reasonable approaches to investing, so long as one sticks with it. If Bogle is right, those factors will revert to the mean and over the long run you'll end up with market returns minus fees, so you'll do slightly worse if you are paying higher fees. If Fama is right, in the long run you can expect a bit better than broad-market returns, but you must assume more short-run risk to get that premium. It is interesting to contrast Merriman with Rick Ferri, who was also a DFA, Fama and French-influenced slice-and-dicer (he wrote a book about asset allocation) but who seems to have drawn closer to Bogle's simple broad market philosophy in recent years, describing the basic decision to invest in stocks as "the cake," and questions about factors, etc., as "the color of the icing on the cake." I count both of those guys among the voices that will set folks on a good course, in stark contrast to the horde of brokers and insurance salespeople that prey on 403b account holders. We're doing fine if the arguments are confined to the icing.
  7. I don't think it will make a huge difference, so long as she can stay the course and consistently contributes a big percentage of her income. Target Date funds never go below 30% or so in stocks--even the 2020 fund is at 50%--so there will be some growth. If she's counting on this as the largest part of her retirement income, Marian may want to minimize volatility even though it means lower returns. One also has to be realistic about the fact that people who plan to work until 75 or older often find they can't stay in the workforce that long for health, family or employer-related reasons. So Marian should probably build the possibility that she may need to begin drawing on this portfolio sooner, maybe in 5 to 10 years, into her plan. If it all works out and she keeps teaching for another 20, that'll be all to the good. Thanks for the kind words, Tony. I'm here procrastinating on very daunting online class preparations. If I drift away from the forum again, take it as a good sign that I'm actually doing my job.
  8. Marian, Tony put his finger on the main issue: your first priority should be to invest as much money as possible. The traditional 403b will make that easier, because you are investing pre-tax dollars (your annual tax bill will be lowered and your take-home pay will be reduced less than the full amount of your contribution). That means aiming for the max contribution to the 403b--$26,000/year. Don't be discouraged if that sounds unattainable: start where you can, and keep ratcheting it up toward that goal. Once you get to that max, you could consider opening a regular Roth account at Vanguard. This would permit you to put in up to $7000/yr (in addition to your 403b contributions) and there are no added administrator fees. (There are income limits that you need to meet to be able to contribute to the Roth, so if this is ever something you consider, be sure that you are under the income cap.) If, as I think is very likely, the tax-deductible 403b will allow you to contribute more than you would to a Roth 403b, I would definitely pick the traditional. Taxes in retirement are a much smaller issue than income in retirement.
  9. As I think you know, the further away the date, the higher the percentage of stocks. You can go on the Vanguard site and see exactly what the percentages are for the underlying portfolio in each Target Date fund if you are interested. More stocks = higher expected return but also more volatility (i.e., the value of your nest egg could decline abruptly if you hold a lot of stocks). You can pick any of the funds--you are basically choosing the level of risk you are able to accept for the promise of better returns over the long haul. In every case, the target date fund has a "glide path," which means that it will slowly become more conservative (less stocks, more bonds) over the years. Pick one you think you can stick with and get started now. If upon further research you later decide you want to shift to a more conservative or more aggressive fund, you can do so without any cost. (But only do that after deliberate consideration when things seem stable--the worst thing you can do is sell in a panic when the market drops precipitously, which it will do from time to time.) If you have trouble deciding, pick the one closest to your expected retirement date, that should do the job.
  10. Good work on finding the "hidden" 403b! I'm not surprised that they would steer you toward the higher-fee option, and possibly toward the added-fee advisor. More money for the TCG administrator. The school or district was probably told the service would be free to them; the schools often have nobody who really knows much about this, so there's no one acting in the best interest of the teacher/investors. A few states have excellent programs set up by the state government (sort of like the Thrift Savings Program that federal employees get) but many more don't, leaving school employees to be preyed upon by insurance company salespeople and stock brokers. So far it sounds like the "traditional" 403b is the best fit for your situation. We can review some of the variables here if you want. If the tax deduction you get now (each year you contribute) will permit you to contribute more than you would to the Roth, that alone is a very strong argument in favor of the traditional version. Let us know when you locate a list of funds and any related costs with the Vanguard option. If your Vanguard plan includes that same list that Krow posted, you're in good shape.
  11. My mistake on the percentage of assets fee--I didn't see that page applied to the 457, thanks for the correction. So far it looks like the 403b is the better deal. I wonder what those two asterisks next to Vanguard mean--can you find that? In general, Vanguard is a great choice and yes, there will be fees paid to them as part of the deal, but they should be reasonable if those asterisks don't mean there's another fee...
  12. Hello Marian, and welcome. If you are really able to work for another fifteen of sixteen years, you'll be able to build up a 403b (or 457) nest egg that will be a meaningful addition to whatever other sources of retirement income you have (such as social security or pension). I suggest we break your problems into parts: 1. Let's figure out what the fees are for the 403b. 2. Then we can look at the fees for the 457. 3. After that, we can talk though which program makes and which fund(s) make sense for you. 4. If there's a question about choosing between Roth and traditional, I suggest we put that off to last. Bottom line is that both options are good. Does that make sense? If I read the TCG 403b chart correctly, the 403b is far from zero-fee: in fact the fees may be on the high side. The key sentence about fees is weirdly ambiguous and ungrammatical: it says there is a $22.00 fee per year (which is reasonable for such a plan) and then it talks about .25% of assets (which is not unheard of but can really add up). It leaves out the word that tells you whether the percentage of assets is in addition to or instead of the $22. My guess is that you have to pay both every year. On top of that, whatever fund or investment vehicle you use will also have a cost, usually expressed as "expense ratio." You don't get billed for that--it is built into the fund, but you are paying it nevertheless. By the way, beware of that "advisor" option with an additional .43% fee! You do not need any such advisor. So the next job is to locate the list of funds that are available in the 403b accounts, and see if you can find where they list the expense ratio of each fund.
  13. It's quite easy to make changes and there are no tax consequences. So if you want to rebalance or adjust your portfolio, you can do it. But trading to catch opportunities in the market is not advisable... academic research shows that trading and timing the market fails in comparison with ongoing regular contributions to a low-cost diversified buy-and-hold portfolio. Of course you will find many people touting market-beating investments or strategies: mostly, these are salespeople who benefit when others follow their advice. A simple unswerving commitment to any of the portfolios you are considering will likely surpass the results of the large majority of investors, including professional investment managers (counter-intuitive as that sounds, it's true). Your problem is not to find the very best portfolio--that's unknowable, since nobody knows the future. Settle on a sound portfolio (your current options are all in that category) and turn away from the many traps, fees and distractions with which the good people of the financial services industry manipulate human nature to their own monetary benefit (that will require some willpower). Keep your contributions high and costs low: you'll reach your goals in time. If you are interested in the research I refer to above, I recommend "A Random Walk Down Wall Street" by Burton Malkiel. Even online interviews with Malkiel (or John Bogle or Charles Ellis) would throw light on the situation. Maybe this is old news to you, since you've looked at Bogleheads' arguments for the three fund portfolio. There are small disagreements between all of these sources, but those are always around the margins: overwhelmingly they share the same message.
  14. Welcome aboard, Cranberry. You are definitely on the right track, and if you start contributing as much as you can manage consistently, you'll have a great nestegg to get you through retirement. I think what you're doing is fine, no change is required. But FWIW, a couple of thoughts: 1. Assuming that you are not planning to retire for 25 years or more, I wonder why you want bonds. Those are usually there to buffer volatility and to provide a stable source of income when you are drawing down the account in retirement. Traditionally, the amount of bonds is something to increase as your focus shifts from building wealth to preserving it. At your age, I think there's a good argument for 100% equity, which has the best expected return over multi-decade periods. 2. I agree with Tony that diversification into international equities make sense. But some very successful figures, notably John Bogle and Warren Buffett, think an all-US portfolio is fine, so I can't blame you if you line up with them. 3. It would be good to understand what sort of fees that TIAA is charging you, beyond the fund expense ratio that goes to Vanguard. There are almost always some charges related to the bookkeeping requirements of "qualified" retirement accounts. You probably won't have any control over this, but it would be useful to know when comparing among options in the future.
  15. Excellent advice, DK! I once had a similar issue with a rollover between IRA accounts. As I learned later, that should not have triggered a 1099, though I got one. The outgoing custodian mis-coded it such that the IRS interpreted it as a taxable withdrawal, and in a year or two I got a surprise tax bill. I was able to resolve it without cost by sending various records, but it was quite a scare.
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