Which Fund Would You Recommend for a 403b?

[badassprof]

Our HR department is currently soliciting our suggestions for new retirement vehicles (we're moving away from TIAA-CREF). If you could choose the vehicle that your 401k went to, what one would you choose.  I know many here like Vanguard. If you're one of those fans, which one would you suggest?

[jennyh]

Saw that no one had responded to this, so I wanted to chime in (though I know it's a little late).  I think Vanguard and Fidelity are considered to be two of the very best for employer plans.  I had a Vanguard 401k at my previous employer, and have had sterling experiences and very low fees with many options available as an account holder.  The index funds MMM has recommended in previous posts are available there, along with many, many other well-diversified and low cost ones.  My current employer uses Fidelity and though I don't have in-depth knowledge from the employer's perspective, it seems to be comparable to Vanguard.  My current employer used to offer up to 8 different providers for our plans (including TIAA-CREF and several small firms I'd never heard of).  I'm sure the intentions were to create lots of choice, but-whew!-what a mess administratively to manage this.  The benefits advisory committee is planning to cut it down to 1 or 2, and I'm positive Fidelity will be one of them.  Hope this helps!

[jennyh]

Also, should have mentioned, I had a 401k at previous employer and have 403b at current employer, a private university.

[Another Reader]

Well, I can tell you from experience to avoid Prudential.  I had a 457 plan from them packed with stinky fund choices and a monthly administrative fee passed on to the employees.  The only good thing was the stable value fund.  It's paying 3 percent in today's market. 

[badassprof]

Thanks for the feedback!  We currently have TIAA-CREF and Fidelity.  I have TIAA-CREF, in part because it was the only option when I started my career. Its performance has been lackluster, which is probably one of the reasons a lot of universities and colleges are getting rid of it. 

Jenny, you mentioned a link to MMM recommended funds; could you point me to where I might find that?

And yes, more choices do sometimes create confusion and discomfort. Some of our faculty are completely unhinged that we're getting rid of TIAA-CREF, even though the reason is, in part, because we want to go to a single monitor and TIAA-CREF won't allow monitoring from another company.  I suspect some of the angst is due to fears of being overwhelmed with choices.

At any rate, thanks again! We should actually be getting the list today, so this is perfect timing!

[maryofdoom]

I also work for a university, and we have a 403b with either Vanguard or TIAA-CREF (you can pick which one you want). I went with Vanguard and I've been happy with them.

However, I did also solicit advice from my investment guy on which funds to pick, so I can't take all the credit for my funds' awesome performance.

[jennyh]

badassprof - I know there are more, but here are a couple articles mentioning specific funds that I was able to find pretty quickly.  Vanguard has so many great index funds, it's hard to go wrong.  Typically, the less actively managed the fund is, the lower your fees.  Indexing provides lots of diversification at a low cost.  One option that is becoming very popular and which I am a fan of are the targeted retirement date funds.  You select a target year for retirement (e.g., 2035), and the fund will adjust its asset mix over your investing horizon to align with suggested risk levels for that point in your horizon.  I think these are great for young investors like myself who want to keep socking money away without having to constantly watch it and readjust. 

http://www.mrmoneymustache.com/2012/02/17/book-review-the-intelligent-asset-allocator/

http://www.mrmoneymustache.com/2011/06/07/where-should-i-invest-my-short-term-stash/

Good luck on making the switch at your school.  The folks that make these types of choices and provide information to the employees at large probably don't realize the impact (good or bad) the choices can have on workers who are faithfully saving.  Fees eat away at earnings, and poor offerings likewise can lead to missed opportunities.  Choose a sound provider with low costs, and make sure the staff and faculty have access to good advice for investing, and you will have done the world a solid.  :)

[twinge]

In various 401k, IRA and 403b accounts over the years my husband and I have had:

Vanguard
Fidelity
Ing
TIAA-CREF
TransAmerica

Vanguard wins on fees, ease, performance and range of options.  Fidelity comes second.  TIAA-CREF is last.  For Vanguard 403b I would suggest a balance of index funds (including some specialty ones that people can throw in for a few percentages to round things out) with maybe the default option being target-date retirement funds.  Their STAR fund is also a reasonable option.  And they have some reasonably priced actively managed funds--I would research those if you plan to include international, value, emerging markets or small company options.  IMO the active manager can potentially minimize some risks, and if the price is right, it should be an option for those who agree.