Help
Ok, so my first trip here to these discussions boards have not been good. Informitive but, not good. I got a very interesting response to my first post. I plan on reading" Teach and Retire Rich" as soon as it comes in the mail.
However, after reading this: http://moneycentral.msn.com/content/P134940.asp and the answer to my first post I am nervous about the money in my American Funds and the rates I am paying on them.
Shoud I roll them over? Can I? Should I start another 403 with another company? which one? Vanguard and the TIAA-CREE seemed to be mentioned all the time. This is very confusing and a tad overwhelming. Maybe scary.
I have about 20 grand in after 7 years of teaching. I started small but, I am looking to really start banking more. I don't want put it into American Funds if there are better plans out there with lower fees.
Thoughts? I need something.
So, American Funds Are Not Good? just started studying 403's
#2
Posted 21 January 2008 - 02:15 PM
LINCOLN
You could do worse than American Funds. Having said that you may be able to do better/at a cheaper cost. Send us the list of choices you have at work and we will help you
Tony
#4
Posted 21 January 2008 - 08:37 PM
Hold on Lincoln,
You don't have to do a thing right now. Take a deep breath and relax. I am serious!
Tony is right about American Funds. Besides now that you have your money in American funds, you might as well keep it there because you already paid the commission, if one was charged.
As Tony suggested, march down to your human resources or benefits office and get a list of all of the 403b companies on your districts list. We can help you decide.
As soon as you get Dan Otter's book, read it. Financial knowledge is the cure for financial anxiety.
Please relax. You have $20,000 and thats great and it isn't going anywhere. We are here to help.
Best wishes,
Steve
You don't have to do a thing right now. Take a deep breath and relax. I am serious!
Tony is right about American Funds. Besides now that you have your money in American funds, you might as well keep it there because you already paid the commission, if one was charged.
As Tony suggested, march down to your human resources or benefits office and get a list of all of the 403b companies on your districts list. We can help you decide.
As soon as you get Dan Otter's book, read it. Financial knowledge is the cure for financial anxiety.
Please relax. You have $20,000 and thats great and it isn't going anywhere. We are here to help.
Best wishes,
Steve
#5
Posted 22 January 2008 - 12:01 PM
I went to the office and found that this is what we offer:
Legend, Great American, American (which I have), Fidelity, Nationwide, Janus, CIT, PUT, CAP. Guardian, MET, MFS, NEU, AIM, Conn. Mutual, Franklin Templation, Trans Am, Twentieth, Vanguard, Waddell
Again, I currently have American Funds: Washing Mutual B and Europacific. We would like to add the Capital World Bond Fund. Going to put 400/month away. No other investments
Thanks
Legend, Great American, American (which I have), Fidelity, Nationwide, Janus, CIT, PUT, CAP. Guardian, MET, MFS, NEU, AIM, Conn. Mutual, Franklin Templation, Trans Am, Twentieth, Vanguard, Waddell
Again, I currently have American Funds: Washing Mutual B and Europacific. We would like to add the Capital World Bond Fund. Going to put 400/month away. No other investments
Thanks
#6
Posted 22 January 2008 - 10:42 PM
I would recommend The Vanguard Group. They are the low cost leader in the industry because of their structure. Every one of their funds is under.50% for fees and most are under .35%. They have tremendous information on their website in their "Plaintalk" library, and they have an extremely broad selection of no-load index funds. There prospectuses are clear and easily understood, the antithesis of the insurance company annuity prospectuses (if you can get one). I know I sound like I work for Vanguard but I'm just an extremely satisfied customer. I've also taught personal finance for many years and have read many of the best financial ed books. Vanguard ALWAYS gets mentioned as an exemplary company. AIG-Valic, AXA, MetLife, and the other insurance companies not so much. Go to the Vanguard website and see for yourself. Read about the history of the company and how it is structured differently. They are structured similar to a cooperative (like credit unions) and they are owned by the funds themselves. This lets them focus on shareholder value since the profits go to the owners of the funds, you and I! When it comes to financial services Vanguard is the company to beat, much like USAA is the one to beat when it comes to insurance and credit unions beat most banks when it comes to day to day cash and credit card needs. Just to cover your bases look at Fidelity because on many investments they are going to be a close 2nd and occasionally even better than Vanguard. My wife and I have our kids 529 college plans with Fidelity.
#7
Posted 22 January 2008 - 11:48 PM
Lincoln,
You have VG!!! Most district personnel are not as lucky as you are. As mmc suggested go to their website. If you have an ipod, you can download great podcasts that explains investing in general and VG's unique philosophy with their index funds. Learn as much as you can about indexing. It’s a sure way to stay away from the sharks and put more money in your pocket.
The simplest portfolio would be the VG Total bond market, the VG total stock market and the VG FXUS (not USA) world index. This simple portfolio provides the broadest diversification with extremely low costs, know in the investment world. You are actually investing in the economy, not a risky sector or an individual company. Later on when you learn more about small, mid and large cap funds, with growth and value, you can further diversify your money. It’s about diversifying, controlling costs and reducing risk and volatility.
Good luck,
Steve
You have VG!!! Most district personnel are not as lucky as you are. As mmc suggested go to their website. If you have an ipod, you can download great podcasts that explains investing in general and VG's unique philosophy with their index funds. Learn as much as you can about indexing. It’s a sure way to stay away from the sharks and put more money in your pocket.
The simplest portfolio would be the VG Total bond market, the VG total stock market and the VG FXUS (not USA) world index. This simple portfolio provides the broadest diversification with extremely low costs, know in the investment world. You are actually investing in the economy, not a risky sector or an individual company. Later on when you learn more about small, mid and large cap funds, with growth and value, you can further diversify your money. It’s about diversifying, controlling costs and reducing risk and volatility.
Good luck,
Steve
#8
Posted 23 January 2008 - 12:17 PM
So, should I call VG and set this up with the money I was planning on adding to the American Funds?
Do I stop giving to the American Funds?
I have 400/month to invest and I want to get it right very soon.
Do I stop giving to the American Funds?
I have 400/month to invest and I want to get it right very soon.
#9 Guest_Skeptical_*
Posted 23 January 2008 - 01:10 PM
Lincoln,
You've received from great advice from among others, Dan & Steve.
First, don't rush. Patience at this stage will provide a huge reward down the road. It sounds like you want to increase that contribution today. Don't worry you can adjust your contribution amount in a few months, catch up on the amount you wish to defer this year, and then reduce it back down to $400 a month, your desired savings rate. Example: Say you wait 6 pay periods before you increase it. Just divide that $1200 increase (6 times the $200 increase) over the remaining periods in the year, let's say 18 periods are left before 12/31. So instead of increasing $200 you increase it to $200 plus $66. (the $1200 / 18 periods) for a total of $266. You still save about $5000 this year pre-tax and January 1, 2009 you can decrease it back down to $200 pp. Hope that makes sense. You MIGHT even wish to discontinue your current contribution until you decide what you think is in your best interest, be it American or Vanguard or some other option.
Next, take an evening to spend some time using the free portfolio allocation tools available through morningstar, vanguard, fidelity, TR Price, and others. Go through their risk tolerance and time horizon questionaires. These tools help you decide how much to place in each asset category (or class). Steve mentioned a simple portfolio of bonds, US stocks, and International stocks. These tools will help you determine HOW MUCH to earmark for each.
After you have a good idea of your desired allocation you can then choose the specific investments available from the providers offered to you by your employer. Once again the biggest determinant of performance is the expense consumed by the investment, so EXPENSES MATTER. The American funds you hold may have LOW management expenses, the cost for a professional to actually pick the stocks in the fund, but have HUGE marketing and distribution costs, paid to your sales rep. Just forget that title "financial advisor" or "retirement counselor", they're meaningless, those folks SELL, period. And don't assume that your employer or union has performed ANY due diligence to see if the products offered are any good. Remember it's not employer money it's YOURS!
Let me say again, don't rush, there is no need. Take your time to learn more. This is a great place to start and Steve and the others have pointed out other resources.
Hope that helps,
Jim
You've received from great advice from among others, Dan & Steve.
First, don't rush. Patience at this stage will provide a huge reward down the road. It sounds like you want to increase that contribution today. Don't worry you can adjust your contribution amount in a few months, catch up on the amount you wish to defer this year, and then reduce it back down to $400 a month, your desired savings rate. Example: Say you wait 6 pay periods before you increase it. Just divide that $1200 increase (6 times the $200 increase) over the remaining periods in the year, let's say 18 periods are left before 12/31. So instead of increasing $200 you increase it to $200 plus $66. (the $1200 / 18 periods) for a total of $266. You still save about $5000 this year pre-tax and January 1, 2009 you can decrease it back down to $200 pp. Hope that makes sense. You MIGHT even wish to discontinue your current contribution until you decide what you think is in your best interest, be it American or Vanguard or some other option.
Next, take an evening to spend some time using the free portfolio allocation tools available through morningstar, vanguard, fidelity, TR Price, and others. Go through their risk tolerance and time horizon questionaires. These tools help you decide how much to place in each asset category (or class). Steve mentioned a simple portfolio of bonds, US stocks, and International stocks. These tools will help you determine HOW MUCH to earmark for each.
After you have a good idea of your desired allocation you can then choose the specific investments available from the providers offered to you by your employer. Once again the biggest determinant of performance is the expense consumed by the investment, so EXPENSES MATTER. The American funds you hold may have LOW management expenses, the cost for a professional to actually pick the stocks in the fund, but have HUGE marketing and distribution costs, paid to your sales rep. Just forget that title "financial advisor" or "retirement counselor", they're meaningless, those folks SELL, period. And don't assume that your employer or union has performed ANY due diligence to see if the products offered are any good. Remember it's not employer money it's YOURS!
Let me say again, don't rush, there is no need. Take your time to learn more. This is a great place to start and Steve and the others have pointed out other resources.
Hope that helps,
Jim
#11
Posted 24 January 2008 - 02:49 PM
The best part of that excellent advice was to not put the cart before the horse. In other words, determine your asset allocation first, and THEN select the funds for the various asset categories.
Did your salesperson mention this to you? Did he explain asset allocation to you?
Did your salesperson mention this to you? Did he explain asset allocation to you?
#12
Posted 25 January 2008 - 09:22 PM
Asset allocation? No, he did not. Again, now that I think of it we met face to fact once in seven years. A couple of phone calls and a handful of notes with the updated info he sent me.
I was shocked to see that a new teacher on my floor sitting with a rep today. I went in after to investigate with all my new found knowledge. To my surprise, the new teacher had like 6 different funds all including the types Tony mentioned: small cap, mid cap, index etc.... They were all American Funds but, atleast she was "diversified". She was younger than me and she had so much better stuff. This was upsetting but, more eye opening.
I was shocked to see that a new teacher on my floor sitting with a rep today. I went in after to investigate with all my new found knowledge. To my surprise, the new teacher had like 6 different funds all including the types Tony mentioned: small cap, mid cap, index etc.... They were all American Funds but, atleast she was "diversified". She was younger than me and she had so much better stuff. This was upsetting but, more eye opening.
#13
Posted 25 January 2008 - 11:31 PM
It's good that your colleague apparently received better advice than you did. But now, armed with your knowledge, you can do even better by putting together a portfolio of no load index funds.
I would caution you to do this slowly, though, and to continue to learn -- Look before you leap. Here is a homework assignment to get you started: read The Coffeehouse Investor. You can do this in one evening, and I think it will really open up your eyes.
I would caution you to do this slowly, though, and to continue to learn -- Look before you leap. Here is a homework assignment to get you started: read The Coffeehouse Investor. You can do this in one evening, and I think it will really open up your eyes.
#14
Posted 26 January 2008 - 02:29 PM
Lincoln,
All of us are not good at fixing cars...For a simple fix, you can do it yourself like changing the tires...
But, some do not want to get their hands dirty and will gladly pay $40-50 to rotate the entire tires...
Same as investing..If you have a simple life...Just a buy and hold philosophy putting $50/100 month into your retirement, most likely you won't need an advisor...On the other hand, some do not know anyting about investing...Sure, you can go out and do all the research and figure out what's best for you but you come back and someone else tells you another approach and another.....by the time you try to figure out what you want to do - you just give up......Tha'ts why investors with $500K+ seek qualified planner to manage their money!
Lincoln, it's your hard earned money. As I've stated previously, only you know who you are with your money...
As you get older and life becomes more complex...do youself a favor and your family, seek a qualified planner....
Good luck!!!
All of us are not good at fixing cars...For a simple fix, you can do it yourself like changing the tires...
But, some do not want to get their hands dirty and will gladly pay $40-50 to rotate the entire tires...
Same as investing..If you have a simple life...Just a buy and hold philosophy putting $50/100 month into your retirement, most likely you won't need an advisor...On the other hand, some do not know anyting about investing...Sure, you can go out and do all the research and figure out what's best for you but you come back and someone else tells you another approach and another.....by the time you try to figure out what you want to do - you just give up......Tha'ts why investors with $500K+ seek qualified planner to manage their money!
Lincoln, it's your hard earned money. As I've stated previously, only you know who you are with your money...
As you get older and life becomes more complex...do youself a favor and your family, seek a qualified planner....
Good luck!!!
#15
Posted 26 January 2008 - 04:46 PM
Tha'ts why investors with $500K+ seek qualified planner to manage their money!
Wealthbuilder
I am not picking a fight here but that statement is not always the case. I know I have always advocated managing your own accounts no matter how large they get. I know for instance that my money has done better since I have rid myself of financial planners.
I do know that finances do get complicated and that its a good idea to seek a planner when needed but I still
believe its more than possible to do it yourself. Lincoln. All the advice you are getting has been on target. Its up to you which way you decide to go. Just don't do nothing. Continue to invest in your future and beware!!
Tony
Wealthbuilder
I am not picking a fight here but that statement is not always the case. I know I have always advocated managing your own accounts no matter how large they get. I know for instance that my money has done better since I have rid myself of financial planners.
I do know that finances do get complicated and that its a good idea to seek a planner when needed but I still
believe its more than possible to do it yourself. Lincoln. All the advice you are getting has been on target. Its up to you which way you decide to go. Just don't do nothing. Continue to invest in your future and beware!!
Tony
