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Everything posted by whyme

  1. My roughly 75/25 portfolio is up 9.5% for the first quarter 2019.
  2. Good work so far! As to the asset allocation going forward, there's no objectively correct solution. You'll get endless opinions on how to handle that if you ask online. What you are suggesting sounds reasonable to me. A couple of things I would consider, though: what is the long-term plan for this money? Is it just about assuring the costs related to your uncle's long term care are covered or is part of the plan to build equity for heirs and/or charitable donations (in other words, how much is money that will be needed within the next few years versus long-term investment)? Also, bear in mind that having two utility stocks isn't a good proxy for stock market risk. If the answer to the question above is that a big chunk of the money won't be needed for a decade or more and you want to build additional equity for the future, then some broad-market (including international market) equity funds could actually add the benefit of diversification, though they would likely be more volatile in the short run than bonds, especially short term bonds. (I'm not sure what VAIPX is--did you mean VTAPX, the short term TIPS fund? Or VPAIX, Pennsylvania tax-exempt bonds?)
  3. Hat's off to you, Dan. Journalism needs financial support, and society needs journalism if it is to hold onto any hope for justice, freedom or honest government. I've abandoned the printed newspapers (though I subscribe to print editions of the New Yorker and The Atlantic, and I always enjoy a printed paper when I travel), but I subscribe to the digital NY Times, LA Times and Washington Post. Note that the NYT and WaPo offer discounted subscriptions to educators, and even without a discount the online-only subscriptions generally cost less than print delivery.
  4. All of that language that is already in the Ed code. The bill, I think, is trying to make that description part of a mandatory course, rather than something that the governing board "shall consider."
  5. Here's the bill, Steve. Authored by Jordan Cunningham, a republican from the San Luis Obispo area. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB1087 Here's the section of the ed code that the bill wants to incorporate into a mandatory course, if I'm understanding it correctly: 51284. 5 Notwithstanding Section 51284, when the history-social science curriculum framework is revised after January 1, 2017, the Instructional Quality Commission shall consider including both of the following: (a) Age-appropriate information for grade spans, as listed in paragraphs (1) to (3), inclusive, of subdivision (b), on financial literacy that includes, but is not limited to, all of the following: (1) Fundamentals of banking for personal use, including, but not limited to, savings and checking. (2) Principles of budgeting and personal finance. (3) Employment and understanding factors that affect net income. (4) Uses and effects of credit, including the relation of debt and interest to credit. (5) Uses and costs of loans, including student loans. (6) Types and costs of insurance. (7) Forms of governmental taxation. (8) Principles of investing and building wealth. (9) Identity theft and security. (10) Planning and paying for postsecondary education. (11) Charitable giving.
  6. Fair enough, Steve, if you want to keep your focus squarely on 403b issues rather than investment policy. I'm not a fan of everything CalStrs does, but I think you are being a bit rough on their investment record... down 3.2% in 2018 is better than I did, and even your very conservative portfolio was down 2%, if I recall correctly. And January more-or-less erased those drops. They need market returns to fund pensions for decades or even centuries into the future (they plan based on an annual gain of 7%/year), so they need to have more exposure to market risk than an individual retiree with a much shorter time horizon. The state (led on this by Jerry Brown) has taken significant steps to keep the pensions funded and address that "liability gap," notably by increasing the participant contributions (I now pay 10.3% of gross pay, before tax) and district contributions (that is ramping up to something like 20% of salary, which is a big argument our district uses to cut health benefits and suppress pay raises, but I digress) and reducing the benefits a bit for newly hired folks (instead of getting the maximum "age factor" multiple at 63, new hires will have to work to 65). There are a couple of states with pension plans that are seriously underfunded and could flame out (Illinois is one, I think), but California looks pretty solid to me, though of course nothing is ever truly guaranteed.
  7. Steve, if you are curious about why and how Calstrs makes its investment decisions, this podcast features a long interview with the guy in charge of them: https://capitalallocatorspodcast.com/2019/02/10/ailman/
  8. Purely a guess on my part, but my application of Ockham's Razor would lead to the hypothesis that he just composed a bunch of emails to people he found on LinkedIn as a way of prospecting. It would have been interesting if he wanted to argue with you, but somebody who wants to think about those issues isn't long for that business.
  9. Thanks for that, Ed. So I guess that is some staffer's (or volunteer's?) summary of the to-be-announced plan. There's much in the actual document that remains hazy to me in terms of actual policy, and I think I saw where AOC said she thought of the GND as a kind of "request for proposals" rather than a concrete statement of policy. As you said above, it's basically an assertion of ideals, not law making. The universal income discussion would quickly wander pretty far from 403b matters, but it is compelling. One aspect that is interesting to me is how that idea comes into and out of fashion (or "the Overton Window") in different periods. President Nixon (!) actually proposed some kind of basic income for the poorest households in the late 1960s, and a minimum income was part of McGovern's presidential campaign promise in 1972, I think. I don't know my history well enough to know about the depression era, but I think it's a safe bet universal incomes were part of the discussion then, too (the Works Progress Administration seems like a variation on that concept).
  10. Tony, I think you may have been bamboozled by Fox News or a similar partisan source. Best I'm able to decipher, something -- a now-deleted blog post or a "fact sheet," depending on the account -- was "posted" or "sent out" before the "Green" resolution went public, which contained the "unable or unwilling to work" line. It still isn't clear to me who wrote it or authorized it, but more to the point, if you read the actual "Green Deal," you saw no such language. The document was submitted to Congress and is easy to find and read online. https://www.congress.gov/bill/116th-congress/house-resolution/109/text There is plenty to criticize: naive idealism (maybe one could say grandiosity) in calling for "prosperity and economic security for all people of the United States," or the head-scratching demand to "upgrad[e] all existing buildings in the United States," but the antithesis of the American Dream? Seems to me that dreaming about what a just society or a good government ought to be is a characteristically American activity. As a teacher, I've known many a student whose exuberant idealism exceeded their grasp of practical reality; I hear echos of them in that document, a sign of great ambition, not shirking work.
  11. Kudos. If my experience rolling assets into Vanguard is any guide, the Vanguard folks will make it as easy as it can be--I seem to remember a phone call that was followed up by forms emailed to me with almost all of the information filled out, I basically just had to sign and submit. I wasn't dealing with a guardianship, though, no doubt that adds a significant layer of complication. Anyway, good work!
  12. I think Krow found some boilerplate language that probably doesn't apply beyond the fee description I copy-and-pasted above. I'd put nothing past Nationwide in terms of sneaky fees, but I suspect the state mandates fee transparency in such accounts. So I'd guess that that list covers it. If you are concerned and are considering this plan, you might want to also post over at the "Bogleheads" forum--there are a larger number of participants there, and you may find people who actually have accounts with the Maryland state supplemental retirement plan. (Especially given that that program also offers 401k accounts.) Again, if you can fight your way past the "advisors," Security Benefit DirectInvest looks like a great option. I read Ed's account of picking the DirectInvest option for his wife's plan (https://educatorsfightingforfairness.wordpress.com/our-story/)--it is harrowing! An advisor actually enrolled his wife in a different high-fee plan when she submitted the paperwork for DirectInvest. Wow, that is profoundly unethical. I hope you don't encounter such shenanigans. PS: I posted this before I saw Krow's post above. Bottom line, we both think that list of fees covers it.
  13. Krow, I was only able to find that fee page via the search box. The state must have mandated that. I have a Nationwide 457b (the only option in my district), and I'm still not sure I've sussed out all of their fees: they bury them, layer them and pretty much do everything possible to avoid transparency.
  14. PS: I just looked at Ed's file about Security Benefit DirectInvest. If I understand it correctly, they just charge a $35 annual fee, which is waived for account balances over $50,000. It looks like they have slightly higher-cost (non-institutional) versions of the same Vanguard funds that the Maryland plan has, but those are still very low cost funds. If I've got that right, the DirectInvest plan would probably be preferable over the long haul, because it doesn't have any fee tied to the size of your balance. Getting started, that .14% is small potatoes, but it will add up over the years as your balance grows. (Still, .14% is a lower fee than most 457 plans offer.) One thing I note in Ed's documentation of the plan--he said it was difficult to access (sounds like they have a sales force steering folks into higher-fee options, another argument for fiduciary regulations). I'm sure Ed will be a great resource if you do decide to open a DirectInvest account, Tricia.
  15. I'm baffled by what krow36 found--I can't replicate it. I clicked through the link and got a list of funds. I also went back and looked at 403b as opposed to 457 options, and at a glance both the fund choice and the fee statement appeared identical. I don't know anything about Security Benefit's options, but perhaps someone (Ed, you up for this?) will jump in with a comparison.
  16. Very strange! I clicked on the Maryland plans and got different info! https://www.marylanddc.com/iApp/tcm/marylanddc/index.jsp I clicked through to see the 457 offerings (they also have 403b and 401k plans that I didn't investigate): they have some excellent very low fee Vanguard offerings, which you'll need to pick from a list of much higher-priced funds. (These include institutional class Total Bond, Total International and SP500 funds.) I searched for fees and it appears there are additional fees as follows: 0.14% of your total balance per year, paid monthly, to a maximum of $2000/year. Plus an additional fee of 50 cents per month (weird). I'm made a little queasy by the fact the plan is operated by Nationwide, who are notorious for making it difficult to discover all the expenses. Here's what I found at https://www.marylanddc.com/iApp/tcm/marylanddc/about/how_do_they_work_fees.jsp Retirement Plan Fees Maryland Supplemental Retirement Plans (MSRP) is required by Maryland law to pay all costs associated with the plans. The Board of Trustees (the Board) collects these fees by charging participants, based on account balance. Annual account fees The annual fee per participant is currently 0.14 percent of your account balance. This fee: Is charged monthly and reported on your quarterly account statement Covers services provided by the Board of Trustees – 0.05 percent, and Nationwide® Retirement Solutions (Nationwide) – 0.09 percent Can’t exceed a maximum of $2,000 per account, per calendar year Additional administrative fees In addition to the 0.14 percent annual account fee, a monthly charge of 50 cents is charged to all 401(k), 457(b), and 403(b) plans. This fee: Is not charged against 401(a) match plans Is not charged against accounts of less than $500 May be adjusted periodically at the Board’s discretion to sufficiently cover service provided by MSRP and Nationwide Mutual fund fees There are costs associated with the mutual funds that are available for investment. These costs are detailed in the fund prospectuses, and are deducted from the return on your investment.
  17. https://www.philly.com/columnists/john-bogle-vanguard-scraps-plain-talk-no-profit-at-cost-20190207.html
  18. Bill, you have obviously paid attention to the holdings and taken the actions of posting here, contacting Vanguard, etc. That ain't nothing. Seems to me like you are doing a great job so far--it's a strange position to find oneself in, you are correct to make moves deliberately, if at all. (That is pretty good advice for investing in general, come to think of it.)
  19. So, if I am correct , Bill can move the stocks and other assets to Vanguard and, later, develop a strategy for moving money into Vanguard funds. This might unfold over many years to avoid any big tax hit. Again, a Vanguard consultant would help with this, and if he's bringing multiple millions to Vanguard I suspect he could get a good bit of advice for free. More please-apply-salt-I'm-no-tax-specialist musing from me: If I found myself holding a utility stock with a million dollars in unrealized capital gain, I would not sell a large fraction of it at once. My first thought is to consider redirecting the dividends into diversified Vanguard funds. Then, if the dividends were being used for living expenses, I would consider whether I could sell enough of the utility stocks each year to replace that income, in other words, draw the desired amount of income from the sales of a small fraction of the utility stocks each year instead of from the dividends. (If you are stuck with a huge tax due to that buyout, then my thought would be to avoid any further selling at all during the same tax year, unless there is something that can be sold at a tax loss.) One more thought: everybody here is convinced of the wisdom of investing in diversified funds. I think that can sometimes lead to a sort of panic in the face of concentrated individual stock ownership. The truth is that lots of folks have done ok over decades with just a handful of dividend paying stocks--in other words, a small number of utility stocks is definitely not an optimal portfolio, but it's been working and there's no reason you can't make the changes slowly.
  20. While Bill would certainly want to confirm this with someone who knows the details of his situation before making any move (Vanguard can probably walk you through it), I'm pretty sure there would be no tax consequence to moving the stocks"in-Kind" to Vanguard. Just E-trade's transfer fee. As I understand it, capital gains tax is only triggered when something is sold, not when it is moved between brokerages.
  21. My 2¢: bring your cash to Vanguard and make new purchases there. Eventually, you'll probably want to consolidate everything at Vanguard. They'll charge $0 to buy or sell Vanguard mutual funds or etfs (including non-Vanguard etfs), and if you have a substantial balance held at Vanguard, the cost of buying or selling individual stocks becomes negligible (at 500K+ total in Vanguard accounts, stock transactions are $2, at one million plus, the first 25 transactions are $0). The only downside I can see to moving assets "in-kind" from ETrade (that is, transferring assets without selling anything) is that Etrade slaps a fee on you for transferring the account out. I think it is $75 if you transfer out the entire account. Given the dollar amounts you've described, I personally think it would be worth that small hit to make the transfer and handle everything at Vanguard in the future.
  22. Thanks, Steve. At the risk of persecuting the proverbial dead horse, I'll also point out that the hypothetical example in the article does not reflect the vast majority of real-world situations. 1. "Susan" retires with virtually 100% salary replacement from pensions (she is obviously bringing in more than 30k total in Social Security, since part of the SS benefit is not taxed). 2. She retires at 70--maximizing SS and minimizing any chance to roll money into a Roth during the typically lower-tax years at the beginning of retirement before RMDs. 3. She has both a substantial public pension and full social security -- this is possible, but school employees in fifteen states (including Texas, Illinois, Massachusetts and my own California) do not contribute to Social Security at all, and if they qualify for benefits based on other employment, the amount of the benefit can be sharply reduced (via the "Windfall Elimination Provision"). The states that enroll school employees in SS tend to have lower pension benefits -- many have median benefits for new retirees hovering around $20,000/year. 4. While drawing a modest salary and paying into both pension systems, she managed to roll up one million in a 403b. Good work, Susan, but if my anecdotal discussions about retirement with my colleagues are any indication, this is an unusual scenario (unless there's family money or another supplemental income source). In other words, "Susan" is designed to push a point about Roth options, while conspicuously failing to note that only a tiny fraction of retirees are in her situation. More typically public retirees' combined pension and social security will replace a relatively small portion of their final year earnings. For one thing--I'm thinking now specifically of K-12 teachers, college professors and academic administrators in California's CALSTRS system, one of the most generous public pension systems--most retirees don't work 35-40 years in the same pension system, the point at which pensions approach full salary replacement. It's far more common to retire in one's early sixties with something like 20-25 years tenure: in California, 20 years "service credit" (for someone at least 63 years old, it's less if you are younger) would translate to a pension (without survivor benefits) of 48% of base salary (based on the average of the three highest-pay years, so the actual percentage replaced would be a little lower). There is a sort-of COLA with that, but it is weak, so the purchasing power is virtually guaranteed to erode over the years. And, as mentioned above, no Social Security on top of this, at least not for the years of Calstrs covered employment. In conclusion, Susan's colleagues should be encouraged to contribute as much as possible to those tax-deferred 403b accounts.
  23. A large taxable income in retirement is a very good problem to have, don't you think? The advantages of using a tax-deferred account for retirement savings are 1. you get an immediate, known tax reduction at the time of contribution and 2. that deduction allows (and encourages) many to contribute more than they would to a Roth. I would not discourage anyone from contributing to the traditional tax-deferred accounts, including teachers expecting a pension. Roths are also attractive, and if you are willing and able to max out a Roth, great, go for it. Ditto for splitting the contributions between Trad and Roth, or rolling money into a Roth when you have a relatively low income (maybe during the retirement years before the RMDs kick in?). But I bristle a bit at the suggestion that tax-deferred retirement saving is a questionable practice. Are there really many retired folks who wish they had contributed less to such accounts?
  24. I have no experience with that fund (or any tax exempt fund), but I believe krow36 is mistaken to consider it a junk bond fund, as roughly 83% of the holdings are "investment grade," (BBB or better), about 7% are at the higher end of "junk" (B or BB) and about 10% are not rated. Compared to an intermediate-term fund VWALX has much longer-term bonds and a bit of that riskier "junk," hence it would indeed be expected to be the more volatile of two, but unlikely to match stock-market price swings. The name of the fund promotes confusion, I think. Vanguard's taxable junk bond fund (VWEAX--almost everything it holds is rated BB or below) is also called "High-Yield."
  25. First of all, BK10s, I feel for you. I've also found myself with unexpected responsibilities for family members--my situation hasn't yet gone so far as yours, but I've experienced some of the emotional and mental weight that comes with those circumstances. You are responsible for managing his finances (it's great that he has such resources, even though at the moment the decision making may be nerve-wracking), so I advise you to ignore what he did with his investments under different circumstances years ago--that's not relevant. You'll be doing a great job for him if you put the money in some version of the three-fund index portfolio. You may want some professional help, though, to make decisions about tax management (if this $2 million is in a taxable account, you'll probably have a six-figure tax bill, unless there's some way to defer the capital gain by reinvesting in the "new" outfit) and to decide whether and how to replace the ongoing dividend income that the utility shares provided. If you qualify for a free CFP consultation with Vanguard (I think that depends on the amount of Vanguard funds and ETFs in your linked Vanguard accounts), that would be a great place to start. Otherwise, you could either pay Vanguard the 0.3% for as long as it takes to get this situation settled (then say thank you and end that fee), or look for a local fee-only fiduciary financial planner who will review the situation with you as needed, for an hourly fee. There are networks of the latter, some of the folks here might be able to supply referrals.
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