Newbie needs help with 403b

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Newbie needs help with 403b

Postby darkhorse » Mon Dec 17, 2012 11:46 pm

Hi all,

I am a new member but not new to Boglehead. I have been reading up on this forum for roughly 8 months now and have gone through wiki and few of rec reading materials. My wife recently got hired and that is going to change our financial situation in a sense that we can pay our debt somewhat aggressively and may be save some for retirement at the same time.

Emergency funds: 1- 2 months in Credit Union account

Debt:
Student loans:
Mine ( ~ 5600 at 5% private)
Hers:(~ 7000 at 8 % private, 16000 USD ~ at 11 % overseas student loan with early payment penalty)

Car loan - ~ 9800 Car @ 2% for 28 months remaining

Loan from a close relative ~ 65000 @ 0%, no need to pay it urgently but we are going to make some regular payment to return the favor.

Credit card - none

Currently renting, no plan to buy house in near future.

Tax filing status
Married filing jointly
Household income: 50k (until now) ---> mid70s (for both of us next year)
State tax: 5%
Age: 28 Mine /29 Hers

Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 30% of stocks


Current retirement assets

Taxable
none

His 401k no company match
none

His Roth IRA at Vanguard
100% VFIFX ER 0.19 (USD 3000 total invested roughly two years ago, has not gained or lost much overall).


Her 403b
Company match upto 5%



Available funds

Funds available in her 403(b)
Equities:
American Funds Capital World Growth and Income Fund RWIGX 0.45%/0.45%
American Funds Growth Fund of America RGAGX 0.33%/0.33%
Columbia Small Cap Value Fund CSCZX 1.10%/1.10%
Eaton Vance Large-Cap Value Fund 0.73%/0.73%
ING Global Real Estate Fund IGLIX 0.99%/0.99%-
Prudential Jennison Mid-Cap Growth Fund PEGZX 0.79%/0.79%
RidgeWorth Mid-Cap Value Equity Fund SMVTX 1.07%/1.07%
Sentinel Common Stock Fund SICWX 0.78%/0.78%
Sentinel Small Company Fund SAGWX 1.10%/1.10%
Thornburg International Value Fund TIVRX 1.04%/0.99%
TIAA-CREF Growth & Income Fund 0.62%/0.62%
TIAA-CREF International Equity Fund TREPX 0.68%/0.68%
TIAA-CREF International Equity Index Fund Premier TRIPX 0.24%/0.24%
TIAA-CREF Large-Cap Value Fund Premier TRCPX 0.62%/0.62%
TIAA-CREF Large-Cap Value Index Fund Institutional TILVX 0.08%/0.08%
TIAA-CREF Mid-Cap Growth Fund—Premier TRGPX 0.64%/0.64%
TIAA-CREF Mid-Cap Value Fund—Premier TRVPX 0.61%/0.61%
TIAA-CREF S&P 500 Index Fund—Institutional TISPX 0.07%/0.07%
TIAA-CREF Small-Cap Blend Index Fund—Institutional TISBX 0.15%/0.15%
TIAA-CREF Social Choice Equity Fund—Premier TRPSX 0.34%/0.34%

Real Estate
Variable annuity
TIAA Real Estate Account (no ticker number) 0.92%/0.92% --

Fixed Income
Variable annuity
1)CREF Bond Market Account 0.45%/0.45% --
2)CREF Inflation-Linked Bond Account 0.45%/0.45% --

Mutual fund
PIMCO Total Return Fund—Institutional PTTRX 0.46%/0.46%

Money market
Variable Annuities
CREF Money Market Account 0.42%/0.42%

Multiasset
JP Morgan Investor Balanced fund - Select OIBFX 1.42%/1.23%
TIAA CRED Life Cycle 2010 TCTPX 0.69%/0.54%
TIAA CRED Life Cycle 2015 TCFPX 0.71%/0.56%
TIAA CRED Life Cycle 2020 TCWPX 0.72%/0.57%
TIAA CRED Life Cycle 2025 TCQPX 0.73%/0.58%
TIAA CRED Life Cycle 2030 TCHPX 0.74%/0.59%
TIAA CRED Life Cycle 2035 TCYPX 0.75%/0.60%
TIAA CRED Life Cycle 2040 TCZPX 0.75%/0.60%
TIAA CRED Life Cycle 2045 TTFPX 0.80%/0.61%
TIAA CRED Life Cycle 2050 TCLPX 0.85%/0.61%
TIAA CRED Life Cycle 2055 TTRPX 1.39%/0.62%
TIAA CRED Life Cycle Retirement Income Fund TIRPX 0.77%/0.53%



Questions:
1. What funds you will advise us we should pick for her 403b. Because of 5% company match, we want to invest aleast that much towards 403b. Rather than picking up one of life cycle fund for example, 2040; I think it would be good learning experience to pick up fund and rebalance as needed to get some experience with small amounts.

I was thinking following allocation:

20% PIMCO Total Return Fund—Institutional PTTRX 0.46%/0.46%
20% International Equity Index Fund Premier TRIPX 0.24%/0.24%
60% TIAA-CREF S&P 500 Index Fund—Institutional TISPX 0.07%/0.07%

Greatly appreciate your comments on what am I missing, alternative approaches and anything else :-)
Let me know if I can provide with any additional information. Thank you.

Darkhorse
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Re: Newbie needs help with 403b

Postby House Blend » Tue Dec 18, 2012 12:43 pm

darkhorse wrote:20% PIMCO Total Return Fund—Institutional PTTRX 0.46%/0.46%
20% International Equity Index Fund Premier TRIPX 0.24%/0.24%
60% TIAA-CREF S&P 500 Index Fund—Institutional TISPX 0.07%/0.07%


Welcome to the forum.

Looks like you are in the 15% Federal bracket.

I think your choice of funds is decent. One flaw that stands out for me is that your International fund is developed markets only (no emerging markets).

Of course you want to capture as much of her company match as possible, but after that I would suggest continuing to make IRA contributions and use the IRA to get Vanguard Total International instead of TRIPX in the 403b.

You might also want to consider using a small amount of TIAA Real Estate, maybe 5% to 10%. It is not a mutual fund, not an REIT, has lots of special quirks and a 200 page prospectus. But it can provide real diversification beyond stocks+bonds.
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Re: Newbie needs help with 403b

Postby sschullo » Tue Dec 18, 2012 12:54 pm

I also think you allocation plan to start is fine.
Later on you want to add on mid cap and small cap in addition to your current S&P 500. Or petition the company to add the total stock market index instead. I didn't see it in your list.

Do you know that it's extremely rare to get a match in a 403b and to have a decent selection of low cost funds?
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Re: Newbie needs help with 403b

Postby darkhorse » Tue Dec 18, 2012 7:17 pm

House Blend wrote:
darkhorse wrote:20% PIMCO Total Return Fund—Institutional PTTRX 0.46%/0.46%
20% International Equity Index Fund Premier TRIPX 0.24%/0.24%
60% TIAA-CREF S&P 500 Index Fund—Institutional TISPX 0.07%/0.07%


Welcome to the forum.

Looks like you are in the 15% Federal bracket.

I think your choice of funds is decent. One flaw that stands out for me is that your International fund is developed markets only (no emerging markets).

Of course you want to capture as much of her company match as possible, but after that I would suggest continuing to make IRA contritbutions and use the IRA to get Vanguard Total International instead of TRIPX in the 403b.

You might also want to consider using a small amount of TIAA Real Estate, maybe 5% to 10%. It is not a mutual fund, not an REIT, has lots of special quirks and a 200 page prospectus. But it can provide real diversification beyond stocks+bonds.


Thank you for the input. I am currently in 15% bracket which I think with our combined income is going go go up even if tax bracket stays the same way.

Great tip on International fund restricted to developed markets only. Vanguard total International (VGTSX) has 3000$ minimum, is there a way around it or low initial minimum option fund with similar exposure?
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Re: Newbie needs help with 403b

Postby darkhorse » Tue Dec 18, 2012 7:25 pm

sschullo wrote:I also think you allocation plan to start is fine.
Later on you want to add on mid cap and small cap in addition to your current S&P 500. Or petition the company to add the total stock market index instead. I didn't see it in your list.

Do you know that it's extremely rare to get a match in a 403b and to have a decent selection of low cost funds?



Thank you, I overlooked it. Do you think it is a good idea to distribute 10% of stock allocation to TIAA-CREF Small-Cap Blend Index Fund—Institutional TISBX 0.15%/0.15% .
The job I am currently in does not match for 401k so we greatly appreciate this opportunity to capture her company match.
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Re: Newbie needs help with 403b

Postby House Blend » Tue Dec 18, 2012 11:41 pm

darkhorse wrote:Great tip on International fund restricted to developed markets only. Vanguard total International (VGTSX) has 3000$ minimum, is there a way around it or low initial minimum option fund with similar exposure?


With ETFs you can buy smaller amounts, but I prefer plain vanilla mutual funds. So if it were up to me, I would just stick with the T-C international fund until the total portfolio size got big enough (about $15K) to make my international target at least $3K. Then switch over to VG Total International.

Nothing wrong with using Small Cap Blend index to better approximate TSM (or overweight small if you want), but this is IMO a lesser priority compared to getting Stocks:Bonds right and US:Intl right.

If you do, I'd go with 85% S&P 500 to 15% TISBX.
(See http://www.bogleheads.org/wiki/Approxim ... ock_Market
In that list of approximations, TISBX most closely resembles IWM.)
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Re: Newbie needs help with 403b

Postby retiredjg » Wed Dec 19, 2012 12:13 pm

darkhorse wrote:Great tip on International fund restricted to developed markets only. Vanguard total International (VGTSX) has 3000$ minimum, is there a way around it or low initial minimum option fund with similar exposure?

You already have $3k in a Roth IRA. Just exchange that into the Vanguard Total International Index. You might want to wait for her 403b balance to build up a little though so that you won't be quite so overweighted in international.


Here's an idea to consider:

Her 403b
TIAA-CREF S&P 500 Index Fund—Institutional TISPX 0.07%/0.07%
TIAA-CREF Small-Cap Blend Index Fund—Institutional TISBX 0.15%/0.15%
PIMCO Total Return Fund—Institutional PTTRX 0.46%/0.46%
Contribute using these ratios: 64%, 16%, 20%. This means that this account won't have any international - it does not matter at this point. Adding the small cap fund gets you close to approximating total stock market.

His Roth IRA $3000
Change to Target Retirement 2030 because it is closer to your desired 80/20 ratio. Leave this as it is until the 403b balance builds up some (about $12k would be fine). Then exchange this to the Vanguard Total International Fund. Then you will have your basic 3 fund portfolio.

I think I just made the same suggestion as House Blend.... :D
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Re: Newbie needs help with 403b

Postby sometimesinvestor » Thu Dec 20, 2012 12:07 pm

I must be missing something because by the time there are this number of replies it has usually been suggested that high interest loans be paid off . While she should definitely contribute to the extent that she gets match I think most of the couple's investments should go to paying off the 11% loan.
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Re: Newbie needs help with 403b

Postby retiredjg » Thu Dec 20, 2012 1:21 pm

You're right. The loans should be discussed. But it does appear that the original poster only appears to invest for retirement up to the match - which seems appropriate. Don't want to leave any free money lying around unclaimed. :happy

I'm wondering, though, if paying off the 11% loan won't help any since there is a prepayment penalty. Does the prepayment penalty exactly equal the interest if the loan is paid on time? If so, the only benefit I can see to paying it off is purely psychological. It could be better to attack the 8% private loan first.

darkhorse, there is a lot of debt and not a lot of income. Your emergency fund is also somewhat small. However, I get the sense that you have all this well under control and probably doing the best you can by living within or under your means. There are a couple of things to consider.

1) Is your student loan debt interest deductible? I don't know the rules about this, but it is something worthy of research. In some situations, student loan debt interest is deductible for lower income earners. However, I don't know if the private loan or the foreign loan would qualify.

2) If you don't now about it already, learn about the "Saver's Credit". This is some kind of credit that a low wage earner can get on his/her taxes if money is saved for retirement. Now that you can save in the 403b, you might be eligible for the saver's credit. A lot of people eligible for this don't know it or don't apply.

3) If you had an emergency, whatever you contributed to the Roth IRA is available without penalty or tax. Don't take more than you have contributed or there will be both tax and penalty on that part.
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Re: Newbie needs help with 403b

Postby darkhorse » Thu Dec 20, 2012 9:53 pm

sometimesinvestor wrote:I must be missing something because by the time there are this number of replies it has usually been suggested that high interest loans be paid off . While she should definitely contribute to the extent that she gets match I think most of the couple's investments should go to paying off the 11% loan.


retiredjg wrote:You're right. The loans should be discussed. But it does appear that the original poster only appears to invest for retirement up to the match - which seems appropriate. Don't want to leave any free money lying around unclaimed. :happy

I'm wondering, though, if paying off the 11% loan won't help any since there is a prepayment penalty. Does the prepayment penalty exactly equal the interest if the loan is paid on time? If so, the only benefit I can see to paying it off is purely psychological. It could be better to attack the 8% private loan first.

darkhorse, there is a lot of debt and not a lot of income. Your emergency fund is also somewhat small. However, I get the sense that you have all this well under control and probably doing the best you can by living within or under your means. There are a couple of things to consider.

1) Is your student loan debt interest deductible? I don't know the rules about this, but it is something worthy of research. In some situations, student loan debt interest is deductible for lower income earners. However, I don't know if the private loan or the foreign loan would qualify.

2) If you don't now about it already, learn about the "Saver's Credit". This is some kind of credit that a low wage earner can get on his/her taxes if money is saved for retirement. Now that you can save in the 403b, you might be eligible for the saver's credit. A lot of people eligible for this don't know it or don't apply.

3) If you had an emergency, whatever you contributed to the Roth IRA is available without penalty or tax. Don't take more than you have contributed or there will be both tax and penalty on that part.


Thanks retiredjj and sometimesinvestor

Sure,
I do not exactly know how much is prepayment penalty, but it has been very hard to get those answers from the bank overseas.
Up until now I did not really have extra money to pay towards that loan, I will re-inquire or alternatively we will pay our 8% interest loan here.
Also, even though paying relative back would not back much sense financially, we would still like to start returning favor.

Those are great tips for tax, retiredjj.
- I did contact IRS helpline last year and they said foreign student loan interest is deductible and we were able to claim 2000 in interest (that is the max allowed) last year and should be able to do the same this year.
- 403b contribution is going to start from January paycheck, will keep saver's credit in mind for that.
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Re: Newbie needs help with 403b

Postby darkhorse » Thu Dec 20, 2012 10:50 pm

sometimesinvestor wrote:I must be missing something because by the time there are this number of replies it has usually been suggested that high interest loans be paid off . While she should definitely contribute to the extent that she gets match I think most of the couple's investments should go to paying off the 11% loan.


House Blend wrote:With ETFs you can buy smaller amounts, but I prefer plain vanilla mutual funds. So if it were up to me, I would just stick with the T-C international fund until the total portfolio size got big enough (about $15K) to make my international target at least $3K. Then switch over to VG Total International.

Nothing wrong with using Small Cap Blend index to better approximate TSM (or overweight small if you want), but this is IMO a lesser priority compared to getting Stocks:Bonds right and US:Intl right.

If you do, I'd go with 85% S&P 500 to 15% TISBX.
(See http://www.bogleheads.org/wiki/Approxim ... ock_Market
In that list of approximations, TISBX most closely resembles IWM.)




retiredjg wrote:Here's an idea to consider:

Her 403b
TIAA-CREF S&P 500 Index Fund—Institutional TISPX 0.07%/0.07%
TIAA-CREF Small-Cap Blend Index Fund—Institutional TISBX 0.15%/0.15%
PIMCO Total Return Fund—Institutional PTTRX 0.46%/0.46%
Contribute using these ratios: 64%, 16%, 20%. This means that this account won't have any international - it does not matter at this point. Adding the small cap fund gets you close to approximating total stock market.

His Roth IRA $3000
Change to Target Retirement 2030 because it is closer to your desired 80/20 ratio. Leave this as it is until the 403b balance builds up some (about $12k would be fine). Then exchange this to the Vanguard Total International Fund. Then you will have your basic 3 fund portfolio.

I think I just made the same suggestion as House Blend.... :D


Thanks Houseblend and Retiredjg, this discussion is very helpful and now I am feeling very close to final choice.

I think I am going to leave Roth IRA with Target retirement fund (with possibility of changing it to 2030)
Not investing in International fund for now until combined portfolio size is approx 15000
If I wanted to invest ~8% in TIAA Real Estate, how does this distribution sound

8% TIAA Real Estate Account (no ticker number) 0.92%/0.92% --
16% PIMCO Total Return Fund—Institutional PTTRX 0.46%/0.46%
65% TIAA-CREF S&P 500 Index Fund—Institutional TISPX 0.07%/0.07%
11% TIAA-CREF Small-Cap Blend Index Fund—Institutional TISBX 0.15%/0.15%

Essentially to accomodate 8% of Reit, I took 4% from each side (bond and equity)
Using http://www.bogleheads.org/wiki/Approxim ... ock_Market 15% of total equity allocation should be small cap
My total equity % 76 * 0.15 ~ 11 that's what I am using for small-cap fund % allocation

Does this plan sounds reasonable, any suggestions?

Thanks a lot in advance

darkhorse
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Re: Newbie needs help with 403b

Postby retiredjg » Fri Dec 21, 2012 11:17 am

The idea is ok except it does not have the 20% bonds you said you want. I'm also unsure about the real estate account. It does not make sense to me to take out the low cost international and put in a high cost real estate fund.
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Re: Newbie needs help with 403b

Postby retiredjg » Fri Dec 21, 2012 11:21 am

darkhorse wrote:I do not exactly know how much is prepayment penalty, but it has been very hard to get those answers from the bank overseas.
Up until now I did not really have extra money to pay towards that loan, I will re-inquire or alternatively we will pay our 8% interest loan here.

Even if the early repayment penalty is somewhat less than the total interest, it still seems to me that the 8% loan should be your target. If the prepayment penalty is A LOT less than the full interest, that would make it more attractive (to me) to pay off that loan first. But I doubt you will find that to be the case.
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Re: Newbie needs help with 403b

Postby sschullo » Fri Dec 21, 2012 11:57 am

darkhorse wrote:
sschullo wrote:I also think you allocation plan to start is fine.
Later on you want to add on mid cap and small cap in addition to your current S&P 500. Or petition the company to add the total stock market index instead. I didn't see it in your list.

Do you know that it's extremely rare to get a match in a 403b and to have a decent selection of low cost funds?



Thank you, I overlooked it. Do you think it is a good idea to distribute 10% of stock allocation to TIAA-CREF Small-Cap Blend Index Fund—Institutional TISBX 0.15%/0.15% .


Yes
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Re: Newbie needs help with 403b

Postby House Blend » Fri Dec 21, 2012 1:26 pm

retiredjg wrote:The idea is ok except it does not have the 20% bonds you said you want. I'm also unsure about the real estate account. It does not make sense to me to take out the low cost international and put in a high cost real estate fund.


rjg,

As he said, he counted TIAA Real Estate as half fixed income and half equity in terms of risk, which is why bonds dropped to 16% in his new proposal. (Also, remember that TIAA Real Estate is a bird of a different feather--there have been lots of threads here on BH about it. Many Bogleheads, myself included, regard it as worth having despite the high ER.)

darkhorse,

I do think that your half-half risk evaluation of TREA is reasonable. On the other hand, I would suggest a bit more moderation in setting your allocation targets. Many people don't know their true risk tolerance (or have inflated estimations of it) until they've been through a market crash with real money at stake.

I also think (and sorry for restating something I mentioned upthread) that international diversification is more important than not missing out on small caps. And I don't think this is a minority view here on BH.

So here's my recommendation (until you can use Total International in the Roth):

Your Roth: a VG TR fund

Her 403b:
20% PIMCO Total Return Fund
08% TIAA Real Estate
20% TRIPX International Equity Index
52% TISPX S&P 500

If you prefer not to miss out on small caps, you could reduce the S&P 500 to 44% and add 8% TISBX.

My $0.02.
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Re: Newbie needs help with 403b

Postby retiredjg » Fri Dec 21, 2012 8:42 pm

House Blend wrote:As he said, he counted TIAA Real Estate as half fixed income and half equity in terms of risk, which is why bonds dropped to 16% in his new proposal. (Also, remember that TIAA Real Estate is a bird of a different feather--there have been lots of threads here on BH about it. Many Bogleheads, myself included, regard it as worth having despite the high ER.)

So I gather this is the "good" TIAA Real Estate fund, as opposed to the ordinary one. Fair enough. Is there actually some difference about this fund that would make it logical to consider it half bond like though?

Your Roth: a VG TR fund

Her 403b:
20% PIMCO Total Return Fund
08% TIAA Real Estate
20% TRIPX International Equity Index
52% TISPX S&P 500

I think this is perfectly lovely as well. Possibly the best of the ideas if it will take much time before making the switch to international in the Roth IRA.
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Re: Newbie needs help with 403b

Postby Peter Foley » Fri Dec 21, 2012 9:24 pm

I personally would skip the REIT fund at this point. Keep it very simple and very cheap (low fee) for the first few years you invest. You don't have to worry much about diversification until you have a decent amount to diversify. Imagine the 403b contribution plus match totals $10,000 in the first year. Does it make any sense to put $800 into a REIT with an expense ratio of .92% when there is a fund with an expense ratio of .07%? My advice is to stick with the other three funds for a few years.
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Re: Newbie needs help with 403b

Postby House Blend » Sat Dec 22, 2012 12:51 pm

retiredjg wrote:So I gather this is the "good" TIAA Real Estate fund, as opposed to the ordinary one. Fair enough. Is there actually some difference about this fund that would make it logical to consider it half bond like though?


Yes. Roughly speaking, you are buying a slice of 100 real commercial properties. The returns are partly fixed income (rent) and partly equity (capital appreciation). Maybe the proportions aren't 50:50, but that's the logic.

Peter Foley wrote:I personally would skip the REIT fund at this point. Keep it very simple and very cheap (low fee) for the first few years you invest. You don't have to worry much about diversification until you have a decent amount to diversify. Imagine the 403b contribution plus match totals $10,000 in the first year. Does it make any sense to put $800 into a REIT with an expense ratio of .92% when there is a fund with an expense ratio of .07%? My advice is to stick with the other three funds for a few years.


Again, it's not an REIT fund. And doesn't behave like one. But I can agree it would be reasonable to skip it on the grounds of keeping things simple.

For more information, read the FAQ:
https://www.tiaa-cref.org/public/pdf/performance/rea_faq11.pdf

Morningstar chart:
http://quote.morningstar.com/fund/chart.aspx?t=FVUSA04B8Y
Try comparing it with VNQ
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Re: Newbie needs help with 403b

Postby retiredjg » Sat Dec 22, 2012 12:59 pm

House Blend wrote:[Yes. Roughly speaking, you are buying a slice of 100 real commercial properties. The returns are partly fixed income (rent) and partly equity (capital appreciation). Maybe the proportions aren't 50:50, but that's the logic.

Thanks. I have trouble remembering the details about the various T-C real estate offerings....
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Re: Newbie needs help with 403b

Postby darkhorse » Sat Dec 22, 2012 9:11 pm

House Blend wrote:
retiredjg wrote:The idea is ok except it does not have the 20% bonds you said you want. I'm also unsure about the real estate account. It does not make sense to me to take out the low cost international and put in a high cost real estate fund.


rjg,

As he said, he counted TIAA Real Estate as half fixed income and half equity in terms of risk, which is why bonds dropped to 16% in his new proposal. (Also, remember that TIAA Real Estate is a bird of a different feather--there have been lots of threads here on BH about it. Many Bogleheads, myself included, regard it as worth having despite the high ER.)

darkhorse,

I do think that your half-half risk evaluation of TREA is reasonable. On the other hand, I would suggest a bit more moderation in setting your allocation targets. Many people don't know their true risk tolerance (or have inflated estimations of it) until they've been through a market crash with real money at stake.

I also think (and sorry for restating something I mentioned upthread) that international diversification is more important than not missing out on small caps. And I don't think this is a minority view here on BH.

So here's my recommendation (until you can use Total International in the Roth):

Your Roth: a VG TR fund

Her 403b:
20% PIMCO Total Return Fund
08% TIAA Real Estate
20% TRIPX International Equity Index
52% TISPX S&P 500

If you prefer not to miss out on small caps, you could reduce the S&P 500 to 44% and add 8% TISBX.

My $0.02.


You have been very helpful, houseblend.

I am going to use following:

20% PIMCO Total Return Fund
08% TIAA Real Estate
20% TRIPX International Equity Index
44% TISPX S&P 500
8% TISBX

I have been wandering about asset allocation for quite sometime now. I would re-evaluate it one more time w/ my spouse, however I should be able stick to 80/20 allocation in good/bad times (atleast I hope so :happy )

Peter Foley wrote:I personally would skip the REIT fund at this point. Keep it very simple and very cheap (low fee) for the first few years you invest. You don't have to worry much about diversification until you have a decent amount to diversify. Imagine the 403b contribution plus match totals $10,000 in the first year. Does it make any sense to put $800 into a REIT with an expense ratio of .92% when there is a fund with an expense ratio of .07%? My advice is to stick with the other three funds for a few years.


Sure, I think it is going to be much smaller amount given her salary is ~ 27k however I will give it a shot to see if I can manage it, if it turns out to be too complicated I would switch at end of year to 3 or 4 fund portfolio. I appreciate your input.
darkhorse
 
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Joined: Mon Dec 17, 2012 5:13 pm


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