Help
This is my first post. I have some questions about my personal situation, but would like to first make some general comments:
What a wonderful website and forum this is! It's full of informative responses made in Plain English by people who don't talk down and keep their sense of humor.
It's taken me several sittings, but I read through the 50+ pages of the 403(b) Forum. Sometimes the debates got a little heated, but so what? Responding to someone who is not agreeing with you is an excellent way of improving your own articulation, no?
The links are topical, too. The article on Elliott Spitzer, A.G. of New York, (4 pages in from this one) was my favorite. And every high school teacher in America should be provided a copy of the Improving Responsibility of Teenagers voice mail (about 25 pages in from this one). An instant classic! (Have you ever seen the collection of absent-note errors?)
Anyway, 26 years in inner-city high schools in North Jersey have worn me a little thin and I am blessed to be able to consider an imminent early retirement. Which leads me to this:
I have been contributing to a Variable Annuity from Valic since 1990, 15 years. As I am now trying to determine the best means of using it as part of an early-retirement income, I examine your site and come away with one inescapable conclusion: It has been a poor choice! A real dog!!
Why wasn't I told before? Why did I never notice??
Yes, yes, I know.....your forum goes into great detail explaining the why's and wherefore's of how these contracts came to be foisted on an unsuspecting teacher population (200,000 teachers in New Jersey alone).
Well, better late than never I guess.
Here's the thing (then I'll finish my rant): I do read the business section every day of the biggest daily paper in North Jersey, The Star Ledger. It features daily advice and Q&A forums by some excellent people. It has Liz Pulliam Weston's syndicated financial column, as well as stuff from the Motley Fool, Chuck Jaffe of Market Watch.com, and its own local advisors called The Biz Brain. All very good educators for those of us doing our own homework.
I am just very surprised that despite all that, I never came across anything before your website which at least gave a HEADS UP, a whistle, a "YO!" that so many of us were riding the wrong bus (the slow one) with these VA's and we should maybe consider getting off at one of the next stops.
Thanks, and I'll see you again.
James P.
Page 1 of 1
Greetings Why have I never heard of you?
#2
Posted 06 July 2005 - 11:03 PM
Hi James,
Welcome to this great website. As you well surmised this website has the very best 403b information for educators in the country. Nowhere, I repeat nowhere will you get the most transparent investment information of this kind devoted to 403b. If you are looking for more technical aspects of general investing, the Vanguard Diehards on M* has some very savvy investors posting 24/7. The legendary Taylor Livermore and Mel are absolute superstars of the investment world for us little guys and gals.
Your question about why you have not heard of this before rings volumes to the status quo system. Districts and unions do not provide objective information and its soooooooooooo easy really. But they are locked in decades old policies. Volumes have been posted about the horrors of this policy which insurance industry have taken advantage of this void for years and years. Nothing illegal, the practice is just not ethical.
We seek reform. Out here in California we have a website that you should visit called www.403bcompare.com. It does provide objective information about fees, performance and lots of good information about 403b investing.
Thanks for stopping by actually reading what is offered here. There are some individuals that will disagree with you and say that it’s perfectly fine with them to pay high fees and keep the status quo! Its makes for very entertaining reading for awhile, but as you found out, their information is totally empty. As long as they know they are paying high fees, I have no problem. Its their money. But you and I most of the posters on this site know better. Educators must watch every buck that comes our way. After a few years that money adds up.
Steve
PS, Ill take credit for posting the link to the Spitzer article. He is another hero of mine. What courage and raw guts that man has to take on an entire industry. I love those kinds of stories. In the end, reform of the entire investment world will benefit everybody.
Welcome to this great website. As you well surmised this website has the very best 403b information for educators in the country. Nowhere, I repeat nowhere will you get the most transparent investment information of this kind devoted to 403b. If you are looking for more technical aspects of general investing, the Vanguard Diehards on M* has some very savvy investors posting 24/7. The legendary Taylor Livermore and Mel are absolute superstars of the investment world for us little guys and gals.
Your question about why you have not heard of this before rings volumes to the status quo system. Districts and unions do not provide objective information and its soooooooooooo easy really. But they are locked in decades old policies. Volumes have been posted about the horrors of this policy which insurance industry have taken advantage of this void for years and years. Nothing illegal, the practice is just not ethical.
We seek reform. Out here in California we have a website that you should visit called www.403bcompare.com. It does provide objective information about fees, performance and lots of good information about 403b investing.
Thanks for stopping by actually reading what is offered here. There are some individuals that will disagree with you and say that it’s perfectly fine with them to pay high fees and keep the status quo! Its makes for very entertaining reading for awhile, but as you found out, their information is totally empty. As long as they know they are paying high fees, I have no problem. Its their money. But you and I most of the posters on this site know better. Educators must watch every buck that comes our way. After a few years that money adds up.
Steve
PS, Ill take credit for posting the link to the Spitzer article. He is another hero of mine. What courage and raw guts that man has to take on an entire industry. I love those kinds of stories. In the end, reform of the entire investment world will benefit everybody.
#3
Posted 08 July 2005 - 09:08 PM
JP...most of us find this stuff out late for the same reasons you did. There is a big industry interested in buying and selling (not "holding") because the money is in churning the pot...trying to identify trends and duds..using fear and greed..which even the most charming of us posters have flashes of...The magazines are generally loath to bad-mouth their advertisers because they are dependant..The biggest mistake is to chase "winners" from last year...there are costs that are rarely discussed: trading costs which are not included in "expenses", kickbacks, and lots of money made on the difference between the buy/sell costs by the "specialists" on the stock market floor...These manipulations suck some of the profit from investing..One way to minimize the deleterious effects of churning is to invest in indexes.
Yes the site is fun too. Some people just ask to be teased...like a taunting abused wife who complains after retribution for calling her husband and slob. It's part of a dance...neurotic and fun....The best to you..Dan
Yes the site is fun too. Some people just ask to be teased...like a taunting abused wife who complains after retribution for calling her husband and slob. It's part of a dance...neurotic and fun....The best to you..Dan
#4 Guest_Joes_*
Posted 08 July 2005 - 11:49 PM
JP
Your va with valic has some valuable provisions in it which were written into your contract back when u bought it.
Fidelity and Vanguard are 2 of the biggest Variable annuity sellers bescause annuities can provide a better payout stream of income than mutual funds.
Ask your rep to have them run a variable annuity payout quote. They will guarantee you an income for the rest of your life and a death benefit to a beneficary also your payment will go up as your underlying investments grow in the market.
also dont fret the decision u made to use Valic. If you signed up just 1 year earlier because a rep from vaalic met w/ you, You are thousands of dollars ahead of where you would have been even if u had been investing for all those years in a lower cost fund.
example 2400 per yr at 7% for 15 yrs=63392 (sales rep got u to start saving sooner)
2400 per yr at 8% for 14 yrs=61604(you got around to it on your own)
Unfortuately i have ssen plans w/ all no load providers and the participation rate is usually around 30% this means that 2/3 of all teachers are not saving. The number one concern listed by all eployees is lack of knowledge in retirement plans . benfits surveys say an overwhelming majority of employees lack the knowledge and the willingness to make any investment decisions without the help of an advisor.
The percent of teachers who say they would prefer to read up on the subject and in addition to thier normal lives moon lite as thier own investment advisors is very small.
Just remember there are no free lunches in life you get what you pay for.
good luck
Your va with valic has some valuable provisions in it which were written into your contract back when u bought it.
Fidelity and Vanguard are 2 of the biggest Variable annuity sellers bescause annuities can provide a better payout stream of income than mutual funds.
Ask your rep to have them run a variable annuity payout quote. They will guarantee you an income for the rest of your life and a death benefit to a beneficary also your payment will go up as your underlying investments grow in the market.
also dont fret the decision u made to use Valic. If you signed up just 1 year earlier because a rep from vaalic met w/ you, You are thousands of dollars ahead of where you would have been even if u had been investing for all those years in a lower cost fund.
example 2400 per yr at 7% for 15 yrs=63392 (sales rep got u to start saving sooner)
2400 per yr at 8% for 14 yrs=61604(you got around to it on your own)
Unfortuately i have ssen plans w/ all no load providers and the participation rate is usually around 30% this means that 2/3 of all teachers are not saving. The number one concern listed by all eployees is lack of knowledge in retirement plans . benfits surveys say an overwhelming majority of employees lack the knowledge and the willingness to make any investment decisions without the help of an advisor.
The percent of teachers who say they would prefer to read up on the subject and in addition to thier normal lives moon lite as thier own investment advisors is very small.
Just remember there are no free lunches in life you get what you pay for.
good luck
#5
Posted 09 July 2005 - 01:49 AM
Hi,
Joes states: "Fidelity and Vanguard are 2 of the biggest Variable annuity sellers bescause annuities can provide a better payout stream of income than mutual funds."
James, I don't anything about the VAs from Fidelity, but if Vanguard is a big seller of VAs, it is because of their low fees unlike Valic. So if you decide you want to use your 403b funds for income consider transferring the funds to Vanguard.
However, since you will be receiving a retirement check, you should consider keeping the funds invested in mutual funds of stocks and bonds. This is money that can be used as needed rather than giving it up to an insurance company for income. Best Wishes.
Joe
Joes states: "Fidelity and Vanguard are 2 of the biggest Variable annuity sellers bescause annuities can provide a better payout stream of income than mutual funds."
James, I don't anything about the VAs from Fidelity, but if Vanguard is a big seller of VAs, it is because of their low fees unlike Valic. So if you decide you want to use your 403b funds for income consider transferring the funds to Vanguard.
However, since you will be receiving a retirement check, you should consider keeping the funds invested in mutual funds of stocks and bonds. This is money that can be used as needed rather than giving it up to an insurance company for income. Best Wishes.
Joe
#6 Guest_Sierra_*
Posted 09 July 2005 - 07:39 AM
Fidelity and Vanguard are 2 of the biggest Variable annuity sellers bescause annuities can provide a better payout stream of income than mutual funds.
================================================
ALL annuities provide a better payout stream of income than mutual funds and the no-load annuities like the ones of T/C, Vanguard and Fidelity provide higher income streams than the commissioned based ones like Valic and ING.
There is a basic reason for this. It is because (unlike a direct investment in mutual funds) you have signed over the title to your money to the insurer (you have annuitized) and in return you are promised a lifetime income. Each monthly check consists of a partial return of your own money plus interest on the remaining principal. The interest rate approximates what you can earn on an investment grade long term bond. So if a 65 year old is quoted a fixed annuity of $9,000 per $100,000 of premium you can readily see that some of that $9,000 comes from a return of his own money if we assume the interest rate is guranteed at 6 percent.
Why give up the title to your own money in order to slowly recover your own money over your actuarial life? You can do substantially the same thing for yourself by investing in an 80/20 split of bonds/stocks and making withdrawals based on your life expectancy. Any remaining balance goes to your heirs upon your death. No need to take less income in order to provide an income for another person upon your death because you have not given up the title to your principal!!!
Peace and Hope,
Joel
================================================
ALL annuities provide a better payout stream of income than mutual funds and the no-load annuities like the ones of T/C, Vanguard and Fidelity provide higher income streams than the commissioned based ones like Valic and ING.
There is a basic reason for this. It is because (unlike a direct investment in mutual funds) you have signed over the title to your money to the insurer (you have annuitized) and in return you are promised a lifetime income. Each monthly check consists of a partial return of your own money plus interest on the remaining principal. The interest rate approximates what you can earn on an investment grade long term bond. So if a 65 year old is quoted a fixed annuity of $9,000 per $100,000 of premium you can readily see that some of that $9,000 comes from a return of his own money if we assume the interest rate is guranteed at 6 percent.
Why give up the title to your own money in order to slowly recover your own money over your actuarial life? You can do substantially the same thing for yourself by investing in an 80/20 split of bonds/stocks and making withdrawals based on your life expectancy. Any remaining balance goes to your heirs upon your death. No need to take less income in order to provide an income for another person upon your death because you have not given up the title to your principal!!!
Peace and Hope,
Joel
#7 Guest_TR1982_*
Posted 09 July 2005 - 08:32 AM
Sounds wonderful, Sierra. If this is the case, why are so many people decrying the loss of traditional pensions and opposing SS reform? Those issues go the heart of what you are saying.
#8
Posted 09 July 2005 - 09:01 AM
Hi again JP,
I agree with Joe. Stay the heck away from Valic and if you want an annuity go with Vanguard. I have VAs with Tiaa Cref, another low fee company. The pros around here absolutely hate any, I repeat, any low fee company. Posters such as yourself don't need financial advice from any pro anymore because you have taken the initiative to learn about investments. You may not know this yet because you are new but you will never again walk into an adviser's office and simply sign on the dotted line. You will be thinking as you are listening to the sales pitch "what would the people at 403bwise say about this". I kid you not.
The pros and some fellow educators (at least they claim they are) consistently talk about all of the other educators who don't have a clue and bring that experience to this website. Well, it doesn't work here because we DO have a clue, MANY clues and we don't need their advice. Their information is so preciously naive, sometimes I think that the pros comments on this site makes me think that they are the ones who don't have a clue, about diversification among asset classes, importance of low fee companies, rebalancing, reading investment books, efficient market theory hypothesis (EFT), living frugally and learning from mistakes.
Steve
I agree with Joe. Stay the heck away from Valic and if you want an annuity go with Vanguard. I have VAs with Tiaa Cref, another low fee company. The pros around here absolutely hate any, I repeat, any low fee company. Posters such as yourself don't need financial advice from any pro anymore because you have taken the initiative to learn about investments. You may not know this yet because you are new but you will never again walk into an adviser's office and simply sign on the dotted line. You will be thinking as you are listening to the sales pitch "what would the people at 403bwise say about this". I kid you not.
The pros and some fellow educators (at least they claim they are) consistently talk about all of the other educators who don't have a clue and bring that experience to this website. Well, it doesn't work here because we DO have a clue, MANY clues and we don't need their advice. Their information is so preciously naive, sometimes I think that the pros comments on this site makes me think that they are the ones who don't have a clue, about diversification among asset classes, importance of low fee companies, rebalancing, reading investment books, efficient market theory hypothesis (EFT), living frugally and learning from mistakes.
Steve
#9
Posted 09 July 2005 - 09:14 AM
TR
Did it every occur to you that there is a huge difference between traditional pensions and SS with annuities from large insurance carriers? It's a rhetorical question.
Steve
Did it every occur to you that there is a huge difference between traditional pensions and SS with annuities from large insurance carriers? It's a rhetorical question.
Steve
#10
Posted 09 July 2005 - 09:26 AM
JP
A variable annuity charges extra fees for I think some kind of insurance. Direct mutual funds are a better investment because you do do not pay as much annual expenses.
That said, I do have a va at vanguard. The only reason being, I had bought an annuity from a bank a long time a ago who promised me a guaranteed rate. Not being knowledgeabe I thought that it was a good deal. Later on I found that I could not get out va' until I think 59 and a half, but Iwas able to make a 1035 transfer to a Vanguard va which is the lowest priced one around. (Vanguard variable annuity also charges more for the funds in the va than the exact same funds in a non vanguard mutual fund
Ira
A variable annuity charges extra fees for I think some kind of insurance. Direct mutual funds are a better investment because you do do not pay as much annual expenses.
That said, I do have a va at vanguard. The only reason being, I had bought an annuity from a bank a long time a ago who promised me a guaranteed rate. Not being knowledgeabe I thought that it was a good deal. Later on I found that I could not get out va' until I think 59 and a half, but Iwas able to make a 1035 transfer to a Vanguard va which is the lowest priced one around. (Vanguard variable annuity also charges more for the funds in the va than the exact same funds in a non vanguard mutual fund
Ira
#11
Posted 09 July 2005 - 09:51 AM
jp
As I understand, you are a successful investor in other areas, so I think that you would have found better places to invest your money than with the insurance company Joes had mentioned. Since I know that you have read different threads where the below statement has been answered, I will not belabor the point.
"also dont fret the decision u made to use Valic. If you signed up just 1 year earlier because a rep from vaalic met w/ you, You are thousands of dollars ahead of where you would have been even if u had been investing for all those years in a lower cost fund.
example 2400 per yr at 7% for 15 yrs=63392 (sales rep got u to start saving sooner)
2400 per yr at 8% for 14 yrs=61604(you got around to it on your own)"
Joes,
As a fairly new poster welcome. I wonder if you can tell us a little of your financial background? It seems to me that you are work as a sales advisor for one of the insurance companies. The best...............Ira
As I understand, you are a successful investor in other areas, so I think that you would have found better places to invest your money than with the insurance company Joes had mentioned. Since I know that you have read different threads where the below statement has been answered, I will not belabor the point.
"also dont fret the decision u made to use Valic. If you signed up just 1 year earlier because a rep from vaalic met w/ you, You are thousands of dollars ahead of where you would have been even if u had been investing for all those years in a lower cost fund.
example 2400 per yr at 7% for 15 yrs=63392 (sales rep got u to start saving sooner)
2400 per yr at 8% for 14 yrs=61604(you got around to it on your own)"
Joes,
As a fairly new poster welcome. I wonder if you can tell us a little of your financial background? It seems to me that you are work as a sales advisor for one of the insurance companies. The best...............Ira
#12 Guest_Sierra_*
Posted 09 July 2005 - 07:59 PM
<!--QuoteBegin--TR1982+Jul 9 2005, 08:32 AM-->
<!--QuoteEEnd-->
TR: Please clarify your question.
| QUOTE (TR1982 @ Jul 9 2005, 08:32 AM) |
| <!--QuoteEBegin--> Sounds wonderful, Sierra. If this is the case, why are so many people decrying the loss of traditional pensions and opposing SS reform? Those issues go the heart of what you are saying. <!--QuoteEnd--> |
TR: Please clarify your question.
#13
Posted 13 July 2005 - 08:41 PM
Joes, I suppose that just because the Valic VA was an overpriced doubly tax- free "investment" it is somehow a blessing? You sound like you could work for the White House. A rip-off is a rip-off. Period. You supporters of the agents delight in dancing around without a sentilla of introspection or values. Your lack of respect for retirement income is remarkably transparent...indeed, supporting an industry that thrives on ignorence and gullibility...Someone has to tell you, Your Emperor Has No Clothes!
#14 Guest_TR1982_*
Posted 13 July 2005 - 10:17 PM
Dan,
If you are an educator.......please........ To call people in the investment industry by the names you did given the state of the education industry today..... a lot of us taxpayers sure feel that way about public education as well. It doesn't reflect well on educators to be throwing those kinds of epithets at anybody.
If you are an educator.......please........ To call people in the investment industry by the names you did given the state of the education industry today..... a lot of us taxpayers sure feel that way about public education as well. It doesn't reflect well on educators to be throwing those kinds of epithets at anybody.
Share this topic:
Page 1 of 1