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Dan Otter

The 403(b) Commandments

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Hey Folks,

 

Just posted a story called the 403(b) Commandments. We are curious about your thoughts on these...What would you add, what would you subtract?

 

Story is below and at:

http://www.403bwise.com/features/403bcommandments.html

 

Commandment 1. Thou Shall Start Early

The sooner one starts investing in a 403(b) the more one should accumulate. By the same token it is never too late to start.

 

Commandment 2. Thou Shall Invest with Quality Companies

You can't control the market, but you can control who you invest with. Two great places to research investment companies are: Morningstar and Motley Fool

 

Commandment 3. Thou Shall Know All Fees and Surrender Charges

Some companies go to great lengths to bury fees and surrender charges. Avoid these companies. The best time to unearth fees and surrender charges is before you invest. Dig. Dig. Dig. And asks lots of questions. You can't control the market, but you can control how much you pay for investments.

 

Commandment 4. Thou Shall Diversify Investments

Studies indicate that more than 90 percent of your portfolio's long-term return is the result of asset allocation — the process of distributing your investments across various asset classes in an attempt to moderate the inevitable ups and downs of your portfolio. See: Allocate Investments Wisely for more information.

 

Commandment 5. Thou Shall Increase 403(b) Contribution Annually

Got a pay raise? Congratulations. Now divert a percentage into your 403(b) immediately if not sooner. Didn't get a pay raise? Sorry. Still increase your 403(b) — even if it's just by $25.

 

Commandment 6. Thou Shall Fight For Better Investment Choices

Most 403(b) plans are pretty poor. You deserve better. Don't be discouraged if your initial attempts are rebuffed by the powers that be. Remember "David and Goliath"? See: Get Better 403(b) Investment Choices for more information on how to initiate change.

 

Commandment 7. Thou Shall Take a Long Term View

The 403(b) is a retirement plan. Retirement for most of us is pretty far off. If you have followed the first Six Commandments don't obsess daily about your 403(b).

 

Commandment 8. Thou Shall Have Entire Financial House in Order

We love the 403(b) and you should too. But it should be only one part of your financial plan. Do you have credit card debt? Make a plan to pay this off. Do you have enough insurance — life, disability, long-term care, property, casualty, auto? Do you have a Will, trust and Power of Attorney? There is no shame in hiring a professional to help with these critical policies and documents.

 

Commandment 9. Thou Shall Continue to Educate Oneself

It would be great if retirement plan rules and investment information never changed. Sadly they do. Often. One needs to stay abreast of the latest developments. We will do our best to help in this department.

 

Commandment 10. Thou Shall Share Knowledge With Colleagues

Go forth and share your knowledge with co-workers and friends.

 

Dan Otter

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Guest Alec

Dan,

 

Perhaps and addendum to #3 could be, "Read Thy Prospectus." Companies usually don't voluntarily disclose fees in meetings, presentations, or over the phone (especially high fees).

 

Alec

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Hey Alec,

 

Thanks for the suggestion. I worked it in this way....

 

 

Commandment 3. Thou Shall Know All Fees and Surrender Charges

Some companies go to great lengths to bury fees and surrender charges. Avoid these companies. The best time to unearth fees and surrender charges is before you invest. Dig. Dig. Dig. Ask a lot of questions. And read thy prospectus, which is the legal document spelling out an investment's terms, objectives and other relative information. These can be boring and hard to read, but they will empower your decision making. You can't control the market, but you can control how much you pay for investments.

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Hey Dan,

 

As usual this is brilliant, congrats. It is the commitment to quality that has made 403bwise what it is today and the commandments are another step along the way to reforming the 403(b). Great job.

 

ScottyD

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Dan,

Ditto to ScottyD. Just a thought about specifying to those folks who are currently participating but have no clue as to what they have. Might imbed it in Commandment 2 or 3.

Great job,

Steve

 

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Guest Eddie

Commandment 3:Thou Shall Know All Fees and Surrender Charges

Some companies go to great lengths to bury fees and surrender charges. Avoid these companies. The best time to unearth fees and surrender charges is before you invest. Dig. Dig. Dig. And asks lots of questions. You can't control the market, but you can control how much you pay for investments.

 

 

 

In re Mason, Moran & Co., Exch. Act Rel. 4832 (Apr.

23, 1953) (while registrant claimed it complied with disclosure requirements of the federal

securities laws by furnishing the customer with a prospectus which included breakpoint

information, the Commission held that while the prospectus requirements were intended to

provide the investor with more information than had theretofore been generally available in the

ordinary securities transaction, these requirements were not intended to abrogate the greater

disclosure duties traditionally imposed on brokers and dealers in a fiduciary position).

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Guest jan

I think the commandments are a great reference. I have one thought about #3. To me, the rule is to keep expenses low, which goes one step further than knowing what the expenses are.

thank you for creating this!

Jan

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Guest Guest_Ted Leber

Dan, I have been away from my computer for a bit...your readers should learn something from the Commandments. Wonderful. Press On.

 

Ted

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