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Ray_CSU

Investment Choices

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The impending changes in 403(b) choices for 2009 have got me really looking at my investing options, which of course are much more limited than before. As a CSU employee I still do have access to Fidelity and TIAA-CREF, so perhaps I shouldn't complain, but even so the actual mutual funds available are far fewer than before. As to the various annuities being offered, I may not be an expert yet, but I at least know that is not the direction I want to go in.

 

I have never considered a Roth TSA before, as it seemed to make more sense to use the 403(b) option and invest pretax money. My monthly contribution to my 403(b) has been pretty nominal over the years, only $100-$200 until the last couple of years, when I increased it to $850 a month. Thus, I do not have much saved in this retirement account, and it is a small part of my retirement plans, as I'll be mostly relying on my pension. Still, I want to build it up as much as I can during the next 3 years or so before I retire.

 

I have been investing with Fidelity, in the following funds:

FID CONTRAFUND (no longer contributing to this one, but keeping what I have there)

FIDELITY LOW PR STK (20%)

FIDELITY US BD INDEX (10%)

SPARTAN INTL INDEX (20%)

SPTN TOTAL MKT INDEX (50%)

 

I added the last 3 index funds about 2 years ago; before that I was fairly aggressive (and not very diversified) and just contributing to the Contrafund and Low Price Stock funds. Fortunately, they have both done fairly well over the years. The percentages following each fund is the percent of my total monthly contribution that I am currently investing.

 

Of those funds, the only one still being offered by Fidelity as of 2009 is Low Price Stock fund. That bothers me, of course, as I had put some thought into my mutual fund choices, and was comfortable with what I've been doing.

 

The funds available via Fidelity for next year are:

Allianz NFJ Dividend Value Fund- Admin Class

Allianz NFJ Small-Cap Value Fund- Admin Class

American Century Estate Fund- Investor Class

Fidelity Balanced Fund

Fidelity Freedom 2000 - 2050 Funds

Fidelity Fund

Fidelity International Discovery fund

Fidelity Low-Priced Stock Fund

Fidelity Small Cap Stock Fund

Fidelity Growth Company Fund

Janus Mid Cap Value Fund- Investor Class

Morgan-Stanley Institutional Fund Trust Mid Cap Growth Portfolio- Class P Shares

PIMCO Real Return Fund- admin class

PIMCO Total Return Fund- admin class

The Hartland Small Company Fund- Class Y

Vanguard Long-Term Bond Index

 

I also have the following mutual funds available via TIAA-CREF:

American Funds EuroPacific Growth R4

American Funds Growth Fund of America R4

Columbia Small Cap Value I Z

Dryden Small-Cap Core Equity Z

Eaton Vance Large-Cap Value I

First American Mid-Cap Value Y

Lazard Emerging Markets Open

Lazard Mid-Cap Open

Munder Mid-Cap Core Growth Y

T. Rowe Price Capital Appreciation

TIA-CREF Small-Cap Blend Index

Wells Fargo Advantage Small-Cap Growth A

 

I'm not bothering to list the annuity offerings, as I have no interest in those.

 

I have a few questions (for anyone who is still reading all this!)

 

1) I am considering opening a Roth TSA with Vanguard, so I can invest in their index funds as I have wanted to do all along. I am in a 15% tax bracket so I don't think that I am losing that much by investing after tax dollars vs pretax dollars via my 403(b). Make sense?

 

The funds I am considering there are:

Total Stock Market Index

Total International Stock Index

Total Bond Market Index

Vanguard REIT Index Fund Investor Shares

Vanguard 500 Index Fund

Vanguard Small-Cap Index

Vanguard Long-Term Bond Index

 

I obviously would have to narrow that list, as I could not initially invest in all of them at once.

 

2) I notice that the fund sponsors that the CSU is making available for 2009 often offer funds that are actually from another mutual fund family. For example, I can get the Vanguard Long-Term Bond Index from Fidelity through my 403(b), if I choose to do so. I am a bit wary of doing that though, as I assume that I would be paying extra fees. So, am I correct in thinking that I should avoid doing that?

 

3) I am undecided about what to do about my 403(b) at this point. They say I need to reenroll this month to keep my monthly contributions being invested. I am starting to think I should just wait until next year and enroll again then. I have read that the IRS is considering delaying the new rules, and also it seems like the CSU may be offering more investment options at a later date. They haven't said that in writing anywhere, but something to that effect was said in one conversation I had with them. So, I am thinking that perhaps I'll hold off until the 'dust' settles, and just set up a Roth IRA for now. (Note- the CSU does not offer a 403(b) Roth).

 

Some facts about me:

15% tax bracket

About 3 years from retirement

Not likely to need my retirement funds right away, and actually would like to keep investing even after retirement (via a Roth)

 

Ok, so this is a ton of info, and I'm obviously asking for some advice regarding my investment options. I don't know if anyone here offers such specific advice; actually I'll be amazed if people actually read all thhis and reply! But, it doesn't hurt to ask, I guess.

 

TIA,

 

Ray

 

 

 

 

 

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