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Kelly Engelman

Kelly Engelman, Payroll Supervisor

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I am looking into contributing to a 403(b) in addition to a school pension plan.  How do I choose the best 403(b) provider?  The list below is who I am able to choose from.  Does anyone have pros and or cons for any of these vendors? 

* Ameriprise Financial

*AXA Equitable

*Horace Mann Companies

*VOYA

*Kades Margolis

*Lincoln Financial Group

*Lincoln Investment Planning Inc.

*Mass Mutual Financial Group

*MetLife

*MetLife Investors - New England Financial

*MetLife of CT

*Planmember Services Corp

*Security Benefit Life

*Valic Annuity Life Insurance

*Thrivent

*Vanguard

 

Any help would be appreciated, thanks!

 

 

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Kelly

I'm surprised no-one has jumped in to help sooner.

Your question is easy to answer. Vanguard!!! Stay away from the others most sell insurance products or higher cost funds. Don't do it!!

If you like a hands off approach pick a Vanguard Target Fund closest to your retirement date. This is your easiest choice since its self managed for you on a continuous basis. Go to their website for fund info. Vanguard offers very low fees. You can trust them to do you right. Here is a Target Fund Link :https://investor.vanguard.com/mutual-funds/target-retirement/#/

If you like to do it yourself I would pick individual index funds.

Here is a simple but effective model

Total stock market index about 60%

Total International about 20%

Total Bond about 20%

I don't know your age so this above portfolio percentage may or may not be  appropriate  but is just a sample.  I think you can't go wrong with a Vanguard Target Fund and that's my suggestion.

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As an add on

If going with a Target fund you don't necessarily have to pick the one closest your retirement. If You want a more aggressive approach you can pick a different target age fund if you prefer, one with a higher percentage of stocks than bonds. Some people do that. Just as long as you understand that the more stocks the more possible rewards BUT also in a down market more possible risk.

Vanguard would probably recommend you stick to the fund closest to your retirement date however. If you don't feel comfortable with your financial acumen than I would suggest you do that too.

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Kelly, 

Welcome to the site and board. Are you able to share where you work? BTW: Many, many teachers wish they had access to Vanguard. 

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Hands down VANGUARD! As Dan said you are very very lucky to have Vanguard as a choice.

Almost everybody who frequents this board and the massively popular Bogleheads.org has their money in Vanguard because of the very low costs, diversified index funds in both bonds and stocks.

Target date funds are fine to get you started, as Tony said.

I have used Vanguard Wellington when I was younger, which is a balanced fund but aggressive with 65% stocks and 35% bonds. It is balanced for you.

Vanguard Wellesley is the conservative fund with 65% bonds and 35% stocks. It is also balanced for you. 

The general rule of thumb is that if you are younger than 55, use Wellington if older use Wellesley. 

If you don't know much about investing I would suggest you read Bogleheads Guide to Investing. https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

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Kelly,

My guard is up because I met a rep who promises you can invest in Vanguard funds, leading you to believe it is wonderful and low-cost. He failed to mention you can do it through his company and he will get the AUM fee. 

However, the way you listed your options leads me to be hopeful you can use Vanguard directly (unless you received an out-of-date list).

Let us know how you do.

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On 5/31/2019 at 10:02 AM, Kelly Engelman said:

How do I choose the best 403(b) provider?

The best provider is the one that allows you to build a fully diversified portfolio for the lowest price. In practice that means the vendor with low fees and total market index funds.

The only vendor that is arguably better than Vanguard is Fidelity...so you’re very fortunate to have Vanguard! The gap between them and everybody else is large. I documented the Vanguard plan here.

Your question was fairly basic leading me to believe you might have some other fundamental questions. I wrote an Investing 101 page that might help you. Please come back and ask as many questions as you need (how to pick the right funds, how to split money between stocks/bonds, and so forth).

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15 minutes ago, EdLaFave said:

The only vendor that is arguably better than Vanguard is Fidelity..

I must disagree with this with all due respect to Ed. It's true Fidelity has a few index funds priced insignificantly lower than Vanguard's. They are worth owning . However, Vanguard's corporate culture  is superior as they are a not-for profit organization while Fidelity is very much in the business of making corporate profits.  If you were to average the expense ratios of all funds that Vanguard offers and then do the same with all of Fidelity's funds you may be shocked to see the disparity. Vanguard would win by a mile.  Steve just posted a very good article about expense ratios and how it is used sometimes to lure investors into not so good or cheap products. I used to own Fidelity funds and the right ones are great but  Fidelity is only better than Vanguard in only a very very limited way.  

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1 hour ago, MoeMoney said:

My guard is up because I met a rep who promises you can invest in Vanguard funds, leading you to believe it is wonderful and low-cost. He failed to mention you can do it through his company and he will get the AUM fee. 

 

This is an important distinction. Vanguard is  the largest or second largest financial investing company now. Obviously others realize they cannot compete with them on low costs. So they like to say they carry Vanguard or they too have index funds. They are trying to jump on the Vanguard bandwagon but they will charge you more in one way or another with added fees. Beware. 

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1 hour ago, tony said:

I must disagree with this with all due respect to Ed...Fidelity is only better than Vanguard in only a very very limited way.

I agree with you and that’s exactly why I used the word arguably. No real conflict between our opinions. I also share your instincts about the culture (to a reasonably large degree).

However, it is an undeniable fact that Fidelity’s 403b fees are roughly half of Vanguard’s (which you’ve correctly characterized as already being very low). However, I would give some handholding to a rookie because, as we’ve discussed in previous threads, Fidelity does things like have two types of target date funds—one is good and one is quite expensive. Vanguard has nothing of the sort.

At the end of the day my web site has Fidelity and Vanguard listed as tied for first place because I’m unable to decide who is best. If Fidelity’s prices were greater to or equal to Vanguard then I’d be comfortable naming Vanguard the winner...but Fidelity’s prices are lower. 

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56 minutes ago, EdLaFave said:

.but Fidelity’s prices are lower. 

I don't get where you are getting that Fidelity's prices are lower . Overall they are not. Just a few funds. Just a few funds.

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I say they’re lower because you can build a fully diversified portfolio at Fidelity with a lower expense ratio than you’d get if you did the same thing at Vanguard. 

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