MN Finance wrote: ourbrooks wrote:
Do you have access to the TIAA Traditional investment? There's nothing you can get at Vanguard that's quite like it. It provides long term returns like an intermediate bond fund but with no volatility whatsoever; it's like a stable value fund.
The biggest mistake I made in my investments was taking money out of the TIAA Traditional fund to put it in some other hot investment; over the long haul, the TIAA Traditional did better than the other investments. If you have this fund available, just leave the $8k in it and forget about it until retirement time; in fact, ask whether you could more after tax money in.
Celebrity endorsements aren't worth anything in investing, but, for your amusement, one of the other holders of the TIAA Traditional is a professor on leave from Princeton university who has some kind of job with some kind of federal banking agency.
The account in question has access to TIAA, as they all do, but it will be locked in for 10 years, so it doesn't make much sense.
Again, just consolidate it with your other accounts. If you want real estate, as everyone is talking about, you can go buy that investment some other time.
To clarify, the TIAA Traditional Annuity (if not yet "annuitized") is not fully locked in for 10 years. One can take all or part and spin it out in a TPA (Transfer Payout Annuity), over 9 years: On each anniversary date of the first payout, another portion is paid.
TIAA calculates what they estimate will be the value, and approximately 1/10th of that is paid each time. To the extent that the actual interest rate varies (which depends upon the "extra" if there is any above the guaranteed amount), the annual payments can differ slightly.
Also, the TIAA Traditional Annuity now pays very different "guaranteed" returns depending upon when one invested the money, and if it is part of a 403b plan. I think the current guarantee for personal investing is 1%; for certain group policies it is still 3%. There are several different categories.
At the time we began our TPA (we are half-way through), the "guaranteed" return dropped to 2.5%. It was extraordinarily difficult to find this out, with answers varying among "it stays at 3%" to "it will be 1/2 %" to "it MIGHT be 1/2 % less than current" to "zero" (meaning, we'd get NO interest on a substantial amount for an average of 4.5 years). When we pressed for an answer, the "nicest" response was "It doesn't matter, because you can't do anything about it; it's whatever it is". Well... we DID have the choice NOT to take ZERO percent on a large sum for several years, and just leave the money "in", and then annuitize. By then, we were eager NOT to rely upon TIAA-CREF "for the rest of our lives". Our Employer (with the ERISA mandated Fiduciary Responsibility) actually ended up hiring an attorney/accountant to help us get the answers, because they couldn't get a clear answer either. The CPA/attorney couldn't understand many of the nonsense/contradictory answers.
However, it got to a point that we felt reasonably comfortable that it was EITHER 3% or 2.5% minimum, and we started the TPA.
Meanwhile, we have a substantial amount in the TIAA Real Estate Fund - the only place we envision "staying" with TIAA-CREF long term. There doesn't seem to be any other fund like it.
It took a hit in 2008/2009, and is chugging back now, but has not returned to it's 2008 peak.
I watch our balances frequently (yes, I know, I know...) and as long as we'd been holding it, it had only chugged away steadily (and not so slowly) that we called it "The Little Fund That Could".
So as things started looking/sounding bad in 2008/2009 I slowly sold, but sold all of the TIAA Real Estate fund as one of the earliest moves, since that type of volatility was VERY unusual. (Another Forum at the time had a discussion of why this was happening and would likely get worse. I wish I could remember where that was!!)
In late 2010, our 403b choices changed at TIAA-CREF, and one of those changes was that any money remaining in the TIAA Real Estate Fund could remain, but no more could ever be added
. By then, the fund had started chugging upward again, after a really bad downturn. Knowing we could remove the money but never add back, we moved a substantial amount back in near the deadline.
(I know, I know
... if only ALL such decisions were so positive...)
I understand that TIAA now has a cap on the total amount that any one investor can put into the TIAA Real Estate Fund. It's been chugging along at ~8%/year (vs. the 12-14% before the crash), and we DO consider it to be our "bond fund", at least for now. (We still have about half of the Traditional Annuity as a guaranteed bond-type buffer, and even that has *currently* been doing a lot better than the TIAA-CREF bond funds.)
Decisions will be trickier in the future, because IF we remove any of that, we won't be able to put more than the new maximum, ever
(unless they change the rules again, of course), if we remove much. (Well, Spouse still could put up to the new max into the fund. But Spouse doesn't have the significant retirement funds to do so, unfortunately.)
One other caveat: One can remove money from the TIAA Real Estate Fund ONLY ONCE PER QUARTER. So IF you decide to invest there, and want to remove any of the money, make sure that the timing is near the end of a quarter OR be sure that you feel comfortable knowing you can NOT remove any more until the start of the next quarter.
We keep fluctuating in our analyses/emotions: Do we have too much in the TIAA Real Estate Fund, or not enough? We figure as long as we are truly waffling AND as long as it keeps chugging AND given the current bond situation, we are probably holding about the right position for our purposes.