Jump to content
Sign in to follow this  
dpfromrockhillsc

Switched From Valic To Edward Jones

Recommended Posts

The "academics findings" is just that, theory and hypothetical. Almost everyone of the 10-12 equity funds at American Funds beats your index for their lifetime and with the sales loads. "Have a low probability" what do your know? The history of the funds speak for themselves and the history for many of the funds goes back 30-50 years. Steak cost more than hamburger. 12-2 beats 10-.2 every time.

Share this post


Link to post
Share on other sites

Ira,

 

Some good points. I agree that low cost index funds are great in that they are low cost. However, I believe many teachers are in only one or two low cost index funds in their portfolio and they think they are diversifed and have no need to ever change their portfolio. I know teachers who are in their 50's that still only have a S+P 500 index fund in their 403b. I know this does not match their current risk tolerance AND that it is not a well diversified portfolio (even for a younger teacher). They are only focused on cost. It may come back to haunt them.

 

For people like us, who take the time to really learn about investing, diversified, low cost 403b's are generally the way to go. However, Many teachers need advise from a GOOD financial planner. That is the real problem... There are too many salespeople and bad annuity products in the 403b market.

 

For example, Nine years ago I was sold a fixed annuity 403b. It has a low rate of return (or high fees if you see it that way). I will not move the money for at least 7 more years due to high surrender fees. However, I would have waited many years to start a 403b and probably would not have really started learning about investing except for my "experience" with that salesperson. Plus I have $40,000 in that account (which I probably would have pissed away over the years). So looking back, I wish I was in a TIAA portfolio the last nine years, but I would really wish that I was in an American funds portfolio over that same time period, but at least I was in some 403b! I don't know which portfolio will do better the next ten or twenty years, that's why I have multiple 403b's (even more diversification).

 

The thing I really disagree with you on is your 300k example. If a person STARTS with 300k paying 1% for 30 years and has only 1% annual growth than your example is correct (90k in fees). I would think most teachers start with $0 and end with a value of less than 150k in their account. In this situation, the fees in year 30 would be $2250 (150k x1.5%), in year 10 it may only be a few hundred dollars. If in the average year the cost was $1500, the total cost would be $45,000. This would be less than 25% of the portfolio (195k without the higher fees). By the way, to get this (150k pre-tax) a teacher would only have to contribute 100/mo. pre-tax for 30 years (36K total) assuming portfolio returned 8% annualized (net of fees). Not too bad even for a "high" cost 403b. Could a lower costing portfolio do better? Maybe/Maybe not. There is no way to know. For myself, I'll take as much diversification as I can get at a reasonable cost (American Funds Growth, Amer. Funds International, Fidelity Contrafund, Vanguard Wellington)

 

 

Share this post


Link to post
Share on other sites

Chad and 403bagent,

Hey, I wish I WAS in any high priced American fund too. Even John Bogle likes American Funds because they act like, do I dare say, INDEX funds except the horrible sales load at 5.75%. But you can talk about the past all you want. What I want to hear is what is in store for the FUTURE. But nobody can predict the future. Every prospectus says the same thing: "Past performance is no guarentee for future earnings."

Steve

Share this post


Link to post
Share on other sites

 

Steve, how is this lack of guarantee any less true for an index fund? If you do a little reading on how an index fund is set up, you know that it isn't the index per se, but a fund of investments that frequently include options and forward contracts, all designed to perform almost exactly like the index. And yet, some index fund mimic the index much more accurately than others. How do we know which ones will replicate the index the most successfully in the future? Most of the passive investors on this board recommend index investments based on...gasp!...past performance. They have always come close to the index's actual performance in the past, so they are likely to do so in the future.

 

Well, guess what? Active investors make their decisions in the same way. And just as past performance serves as a guidepost, not a guarantee, for passive investors, so does it indicate what is likely, not guaranteed, for future performance. I'll grant you that the active investor has more to keep an eye on than the index investor, including most importantly whether the fund manager stays in place. But it's silly to wave off an entire class of investments merely because they, like ALL OTHERS, are not "guaranteed" to perform in a certain way in the future.

 

I've said before, and I'll say again: anyone looking for guarantees has no business in the equity market to begin with.

Share this post


Link to post
Share on other sites
FT, I wonder which funds you are invested in and at which fund company. They must be exceptional funds, and your asset allocation the best. Also can you mention the name and qualifications of the terrific sales advisor that you that you use so others can contact him.

 

 

Ira, I have mentioned in this space before that my account is with ING, and I have gone through which investments as well...I'd be happy to do so again next time I have my statement in front of me. I think you'll see when I do that my asset allocation is not rocket science, nor is it necessarily "better" or "worse" than anyone else's. It has simply worked out for me so far, and it's something that I never would have done on my own. The advice I have gotten has indeed been well worth everything I've paid. Will it continue to be worth every penny in the future? Good question. I've learned a lot in the past year or two, and may not feel the need to pay an advisor in the future, especially as my balance grows.

 

As for the name of the advisor, I have indeed shared his name with a couple of people on this board via PM, and with many others in "real life" in my district. You'll understand, I'm sure, if I don't post his name here, so that he can be haunted by phone calls for the rest of his life by the likes of Sierra. HIs qualifications, for the record, including being a certified financial planner, and a graduate of a four-year college, though I have no idea which one.

Share this post


Link to post
Share on other sites
Guest Sierra

As for the name of the advisor, I have indeed shared his name with a couple of people on this board via PM, and with many others in "real life" in my district. You'll understand, I'm sure, if I don't post his name here, so that he can be haunted by phone calls for the rest of his life by the likes of Sierra.

================================================

FT: IF I AGREED NOT TO HAUNT HIM BY PHONE CALLS FOR THE REST OF HIS LIFE WOULD YOU THEN SHARE HIS IDENTITY? I PROMISE NOT TO CONTACT HIM IN ANY WAY WHATSOEVER. WE NOW AWAIT YOUR POSTING OF HIS IDENTITY.

Share this post


Link to post
Share on other sites

 

Let's abandon this one early, folks, OK? I'm not posting the name of my rep here. He's read the board, and no doubt can post his own name if he so chooses. If he does, I'll happily vouch for him, but I'll not toss him to the wolves myself.

Share this post


Link to post
Share on other sites

Hi FT, I was thinking new "sheep" asl clients, not "wolves". 'Can you tell his first initial? Is it between the letters e and g. Anyway, what you say wolves. Gria, gria, bite, bite.........Ira

 

 

 

"Let's abandon this one early, folks, OK? I'm not posting the name of my rep here. He's read the board, and no doubt can post his own name if he so chooses. If he does, I'll happily vouch for him, but I'll not toss him to the wolves myself."

Share this post


Link to post
Share on other sites
Guest Sierra

FT: Boy oh Boy!! You lead us all to believe that if not for my participation on these boards you would gladly post his name (You'll understand, I'm sure, if I don't post his name here, so that he can be haunted by phone calls for the rest of his life by the likes of Sierra.)

 

So I promised not to contact him in any way shape or form and you design some OTHER feeble excuse not to divulge his identity.

Share this post


Link to post
Share on other sites
FT: Boy oh Boy!! You lead us all to believe that if not for my participation on these boards you would gladly post his name (You'll understand, I'm sure, if I don't post his name here, so that he can be haunted by phone calls for the rest of his life by the likes of Sierra.)

 

So I promised not to contact him in any way shape or form and you design some OTHER feeble excuse not to divulge his identity.

 

Call it whatever you'd like. "The LIKES OF Sierra" (don't take that too personally, pal) means the generally anti-agent people who roam this board, and who might well decide to take up their agenda with him. You are only one of them, much as you'd like to be considered synonymous with this board.

 

Besides which, even if you promise, cross your heart and hope to die, is there some reason I should trust you? I don't even know you.

Share this post


Link to post
Share on other sites

Steve, Eventhough, we and other posters are doing a service by sharing sound investment advise based on current academic research , some of these poster either choose to remain finacially ignorant or they in fact have a vested interest in keeping the status quo. It seem that the people who object the most strongly, to the financial education that is provided imo take the position of keeping the status quo of abuse to 403b purchasers by the insurance companies when they write other posts.

Ira

Share this post


Link to post
Share on other sites
Guest Sierra

So if I'm just one of a group of people please design a group name rather than using my name, OK PAL?

Share this post


Link to post
Share on other sites
Steve, Eventhough, we and other posters are doing a service by sharing sound investment advise based on current academic research , some of these poster either choose to remain finacially ignorant or they in fact have a vested interest in keeping the status quo. It seem that the people who object the most strongly, to the financial education that is provided imo take the position of keeping the status quo of abuse to 403b purchasers by the insurance companies when they write other posts.

Ira

 

Care to provide any specific examples?

Share this post


Link to post
Share on other sites

Hi FT,

I guess that it might have been better decision for me to have posted to answer specific comments made that I disagree with, rather than making the statement I made out of frustration, although it may be true.

 

I guess the first statement that I will address since you brought it up is yours,

 

(i'm having a problem accessing it..............tobe continued)

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

×
×
  • Create New...