Author Topic: Teacher seeking advice on 403b during this crazy time  (Read 1238 times)

lttlod

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Teacher seeking advice on 403b during this crazy time
« on: December 28, 2018, 05:41:55 PM »
I've had a 403b for several years. I don't pay a financial advisor, however I have met with the Voya rep that oversees my account through my school district. Over the years he's never given me advice at all and just says my investments are doing just ok but could be doing better. My guess is that because I don't pay him he's not going to suggest anything. About 8 years ago I chose the highest risk and am now about 17 years away from retirement. I have no clue what investments I chose but am thinking I should be putting it all into the vanguard total index funds like MMM says...if I'm reading things correctly. I know my portfolio is split up between bonds and stocks etc but should I just be putting 100% of my money into the vanguard total stock market funds? Are target dates better? I feel like there's so much out there I'm a bit confused about what to do.
Thank you!

Abe

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Re: Teacher seeking advice on 403b during this crazy time
« Reply #1 on: December 28, 2018, 05:58:01 PM »
Vanguard has a questionnaire about risk tolerance on their website - take that and it will give you some guidance regarding your theoretical tolerance. If your job is relatively secure and you’re 17 years from retirement, a high stock allocation is probably the way to go. Target date funds are a decent choice but more bond weighted than some like, mostly to keep people who are novice investors from getting queasy when markets tank, even if that occurs 10+ years from any anticipated retirement. Also, Do you have a pension plan? If so consider that as part of your fixed income asset allocation in lieu of bonds.

FIREball567

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Re: Teacher seeking advice on 403b during this crazy time
« Reply #2 on: December 28, 2018, 07:34:21 PM »
I've had a 403b for several years. I don't pay a financial advisor, however I have met with the Voya rep that oversees my account through my school district. Over the years he's never given me advice at all and just says my investments are doing just ok but could be doing better. My guess is that because I don't pay him he's not going to suggest anything. About 8 years ago I chose the highest risk and am now about 17 years away from retirement. I have no clue what investments I chose but am thinking I should be putting it all into the vanguard total index funds like MMM says...if I'm reading things correctly. I know my portfolio is split up between bonds and stocks etc but should I just be putting 100% of my money into the vanguard total stock market funds? Are target dates better? I feel like there's so much out there I'm a bit confused about what to do.
Thank you!

You should post all the funds available, their expense ratio, and what your allocation is and you'll get better advice.


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Abe

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Re: Teacher seeking advice on 403b during this crazy time
« Reply #3 on: December 28, 2018, 10:02:51 PM »
Generally go with index funds that follow the total stock market or SP500, etc. Vanguard and Fidelity have low-fee funds through their brokerages and through certain employer plans (<0.1% is ideal). The other thing that I didn't catch from your post title is "during this crazy time". This isn't really that crazy for stocks. If you're not comfortable with these drops, I'd recommend having more bond index funds (also through Vanguard or Fidelity). The exact percentage is up to you, honestly. Here's a website to help you compare different allocations' prior returns for guidance (just use the US total stock market and US total bond market as a first step):

https://www.portfoliovisualizer.com/backtest-asset-class-allocation

lttlod

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Re: Teacher seeking advice on 403b during this crazy time
« Reply #4 on: December 29, 2018, 08:55:57 AM »
Abe, thanks so much I really appreciate your advice and the link. Yes, I realized after I posted that I forgot to include that the volitility "crazy times" in my mind, is making me a bit panicked seeing my account go down by thousands. I know MMM says don't panick when this happens but I'm on my own and that can be difficult. I do indeed have a pension but see my 403b as a supplemental and I worry that I'm not picking the best funds for that money to grow properly. I don't really know anything about the stocks I picked I just know that I went very aggressive am thinking perhaps I should pull back. I thought picking vanguard index funds would be more stable although I guess they would just be cheaper not necessarily more stable. Sounds like a higher percentage of bonds might be more up my alley.  I'm not that well versed in all of this... ie I don't really know what I'm doing lol. I'm trying to read up. I've been contemplating getting someone to actively manage my money however everything I read on this site advises against that. I see a lot of teacher friends doing so because they are also panicking about their accounts. I'm glad people are saying that these dips are still normal!

lttlod

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Re: Teacher seeking advice on 403b during this crazy time
« Reply #5 on: December 29, 2018, 09:59:16 AM »
Yes FAHZSTV : ) Yes that link is quite helpful!! Thank you!

Abe

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Re: Teacher seeking advice on 403b during this crazy time
« Reply #6 on: December 29, 2018, 01:24:31 PM »
If you bought individual stocks, I'd avoid doing that going forward and go with the vanguard index funds using one of the 3 or 4-fund options FAHQSTV linked. Anything more than that and it gets too confusing for no real benefit (i.e. the Vanguard total stock index fund invests in large, medium and small companies, so there's no need to buy individual funds targeted to these). These funds are more stable than individual stocks on average.

Your situation is quite similar to mine (have a pension, plan to retire in ~20 years). There are two ways to think about your 403b in light of the pension (which I assume will cover your living expenses in retirement). How you may think is probably a mix of the two extremes, and should change as you get closer to retirement:

1. 100% stocks: I may not need this money at all or for a long time. Ignore the fluctuations and assume that stocks on average will go up for the next 20 years. If, when I'm about to retire, it's tanked for whatever reason, just rely on the pension until things recover.

2. 100% bonds: I'll be covered by the pension, this is mostly for an extra backup. Since it's a backup, I don't want to risk losing money when I may need it most (i.e. laid off before fully vested in the pension, etc). I'll take what I can get to stay above inflation, and not expect huge earnings. If in the end I get back out whatever I put in (plus inflation), I'll be happy.

The reason a savings account won't work for scenario 2 is inflation will eat it away slowly. Bonds generally keep up with inflation + a little extra (otherwise no one would bother to invest in them!) The ultra-safest ones are Treasury Inflation-Protected Securities, which are tied to inflation figures.

Based on what you said, you're probably going to want to go for more bonds than stocks.


Beyond all that nitty-gritty, things I've done to bolster against stuffing all my money under a mattress:

1. Ignore all the finance news, cooler talk about stocks, and social media. You will remember literally none of this in 15 years.
2. Don't use your colleagues as examples, since they probably haven't studied investing in any detail.
3. Check funds only once every 2-3 months, otherwise I get too obsessive about it. This also helps me conveniently forget my password in between, thus also decreasing my interest in re-checking. The only thing I do then is check what the balance between stock and bond funds is, and adjust future contributions to get it back in line.
4. Ignore ads for financial advisers. It's just too expensive a way of having someone else hold the purse strings so you don't dump all your savings on the floor and hide in a bunker with gold bullion!

lttlod

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Re: Teacher seeking advice on 403b during this crazy time
« Reply #7 on: December 29, 2018, 02:50:30 PM »
Abe, thank you so much for taking time to help me out! I'm glad you found my post, you've been super helpful!  Yes, it seems we are in similar situations with our pensions and retirement. This all makes a lot more sense and I feel like I've got a better handle on what I want to do.  I've got an appointment with my Voya rep on Monday and will make some moves to Vanguard stocks and bonds. I'm looking at that boglehead link as well.  I'm going to steer clear of hiring a financial advisor for sure...for reasons like you said haha! I feel a lot better about my situation and can feel as though I can gain some control over it all : )