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edietel

Alright, You've Convinced Us - Now What?

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Hi all,

 

After spending the last few months poking around 403bwise, reading everything I can get my hands on, and listening to 2/3 of the Teach or Retire Rich podcast (including crying like a baby through episode 25), you've convinced us! My wife and I are starting 403(b)s! I'm 31, and she is 30, and we are both public school employees in New Hampshire.

 

Our contributions will start next week. I'd like some help deciding how to allocate our contributions to get us off to a good start with our retirement investments. Would anyone mind taking a look at this post and offering up some of that expertise that I don't have (yet)?

  • My school district has Vanguard, so I set up an account with them. I've tentatively selected the 2045 target retirement fund, and I'm putting 5% of my salary in there every pay period.
  • Her district had 4 vendor choices (Horace Mann, VALIC, Wells Fargo, and Aspire) so, following the advice of those on this board, we elected to go with Aspire. She is contributing 5% of her salary too (3% from her, and 2% from her district).

 

I can do whatever I want (it seems) with Vanguard. I know the target date funds are a safe bet - should I be considering other options there?

 

Her choices are more limited. I logged into Aspire this morning for the first time, and noticed that her fund options are limited to 4:

  1. RAAXX - American Funds US Govt Money Market R1
  2. PTRXX - Federated Prime Cash Obligations R
  3. TRRKX - T. Rowe Price Retirement 2045
  4. VTIVX - Vanguard Target Retirement 2045 Inv

I was surprised that we only had 4 choices - I was anticipating being able to pick from the entire Aspire menu. Nevertheless, there looks to be a couple of good choices on there.

 

We won't be coming close to maxing out our 403(b) accounts - I think I'll have around $2,600 in there by the end of the school year, and she will have around $3,000 in hers. But the cost of living in NH combined with the amount of debt we are carrying means that we are contributing what we can. I'm hoping to increase those percentages as we get raises in future years.

 

 

Thank you, Thank you, THANK YOU for any help or advice you can provide. I'm beginning to think that discovering 403bwise is a significant blessing to our family.

 

Best,

 

Erich

 

 

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Erich

 

Looks like you got Vanguard so you have nothing left to do but save all you can through the years. The target fund is an easy and wise choice.

 

Your wife should call Aspire. They will explain the self direct option which will let her choose any fund she wants beyond the list. The current list is woefully inadequate IMHO.

 

Let us know what Aspire says.

 

Tony

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Thanks for the quick response, Tony. We will make that phone call and report back.

 

I have to ask, though, in the meantime: If the target 2045 is a good bet, would we be doing ourselves a disservice by directing my wife's contributions into that same target fund via Aspire? Would we be putting all of our eggs into one basket and making some kind of blunder?

 

Also, can anyone explain to me what the first two fund choices are all about? Money/cash markets are confusing to me.

 

Erich

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The target funds are already diversified and managed for you internally by vanguard. You would not be putting everything in one basket. The funds are made up of total stock market index, total international index, and bond index. Don't make the mistake I made thinking more funds is better. I had over 28 funds and my portfolio never performed better than the 500 index.

 

Keep things simple. Both of you can invest in the same target fund and your performance over time will be in the top quartile. You will be diversified. And it will be adjusted for you as you get older. Trust me. This portfolio is good enough to get you to a comfortable retirement t if you leave it alone and keep adding to it. And be patient!!

 

 

 

 

1.Vanguard Total Stock Market Index Fund Investor Shares53.7%

2 Vanguard Total International Stock Index Fund Investor Shares 36.3%

3 Vanguard Total Bond Market II Index Fund Investor Shares† 7.1%

4 Vanguard Total International Bond Index Fund Investor Shares 2.9% Total100.0%

Characteristics as of 07/31/2016

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Thank you again, Tony, for taking time out to help me with some of this. It means a lot.

 

Does anyone know the difference between a target date retirement fund and a money market fund?

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Erich

 

You might want to google investopedia. Great site for quick investment info.

 

A money market fund is where you can park cash . It really isn't somewhere you would want to leave money in long term because it pays next to nothing.

 

Steve good to hear from you. Things have been rather silent here lately. How you are doing well.

 

Tony

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Awesome info guys, thank you again for your time. Tony - you read my mind. My remaining question had to do with utilization of (and the growth potential in) money market accounts. You are doing quite well at your mind-reading these days!

 

In all seriousness, it is much appreciated. It looks like the Vanguard fund has a fee of .16% and the T. Rowe Price fund has a fee of .75%. Given these, and knowing that Aspire is going to charge a small fee on top of whatever we go with, My wife and I are going to have all of our contributions going into the 2045 Vanguard Target Retirement fund. If we hear anything from Aspire about expanding our choices through self-directing, I will let you know.

 

Thanks, gentlemen!

 

Erich

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Erich

 

Looks like you got Vanguard so you have nothing left to do but save all you can through the years. The target fund is an easy and wise choice.

 

Your wife should call Aspire. They will explain the self direct option which will let her choose any fund she wants beyond the list. The current list is woefully inadequate IMHO.

 

Let us know what Aspire says.

 

Tony

 

Tony - below is the response from Aspire. It sounds like the next step is to tell Aspire what specific fund(s) I want added to my fund options. The ball is in my court. So, what makes sense at this point - to stick with the Vanguard Retirement Target Date, or add something else? Do you (or anyone else on here) have any specific funds in mind that would be wise to add (and for us to consider investing in)?

 

The more I read, the more it sounds like it is unwise to invest in another fund along with a target date fund; the most common advice seems to be to invest all contributions in a target date, or in a separate portfolio, not in both of them. Do you agree?

 

Thanks for all of your help!

 

Erich

 

-------------------------------------------------------------------------

You would have the same choices as someone who has a financial advisor. If the fund you’re looking for isn’t listed, please send and email to enrollments. Please include your full name, account number, the ticker and fund name you want added to your account. Once the funds have been added, you will receive an email of confirmation. Make sure your employer investment are open.

 

Enrollment Email: 403b457services@aspireonline.com

 

You may contact our Client Services department at 866-634-5873 for further assistance. Representatives are available between 8am – 8pm EST, Monday through Friday.

Have a Great Day!

 

Thank you in advance for your assistance.

 

Customer Services | 12

Aspire Financial Services

 

-------------------------------------------------------------------------------

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Erich

 

Keep in mind the target fund is a fund of funds as explained above. So what you are getting is 4-5 index funds . Its really all you need. You will own the whole diversified investing universe. No need to add anything or rebalance or buy and sell.

Whats not to like? It will get you to retirement with a healthy stash if you keep investing. No other investment needed. Target fund allocations are adjusted for you as you get older. They get more conservative. Simplicity in investing is a winning formula.

 

Hope I've helped and answered your question.

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