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Curlyq
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aristotelian
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by aristotelian »

I have a very similar employer TIAA plan with the index fund classes with high expense ratios. I would not hesitate to use TIAA traditional for 100% of your employer plan, then increasing the equity allocation in some of your other accounts. Currently TIAA Traditional is returning more than total bond market. Some years it may return less. At the very least, you will be getting rid of a significant drag on your equity allocation. Also, TIAA Tradtional gives you the annuitization option with a fixed 6% for a single individual. This is a great deal if you have no heirs.
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ResearchMed
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by ResearchMed »

aristotelian wrote: Sat Oct 07, 2017 12:54 pm I have a very similar employer TIAA plan with the index fund classes with high expense ratios. I would not hesitate to use TIAA traditional for 100% of your employer plan, then increasing the equity allocation in some of your other accounts. Currently TIAA Traditional is returning more than total bond market. Some years it may return less. At the very least, you will be getting rid of a significant drag on your equity allocation. Also, TIAA Tradtional gives you the annuitization option with a fixed 6% for a single individual. This is a great deal if you have no heirs.
Note that the percentage (e.g., "fixed 6% for a single individual") for the life annuity choice will depend upon several other *choices* by any annuitant, such as age starting the annuity, whether it is indeed fixed or one chooses the adjusted annuity, etc.
There are other choices to be made as well.

RM
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Curlyq
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student
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by student »

Almost the entire portion of my fixed income allocation is from TIAA Traditional.

Here are some threads about TIAA Traditional.

viewtopic.php?f=1&t=227884
viewtopic.php?f=1&t=225198
viewtopic.php?f=1&t=225475&p=3489647
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ResearchMed
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by ResearchMed »

Curlyq wrote: Sat Oct 07, 2017 1:36 pm Thanks aristotelian and RM. I could also roll funds over to variable annuity with Vanguard and annuitize it at some point there too. I kept 457 and 403 separate from Vanguard initially due to early withdrawal and loan properties a rollover would not have, but the need for these properties is quickly fading. I will see if I can figure out fee difference between TIAA and Vanguard for annuity payouts.
The TIAA Trad Annuity has some guarantees that are difficult (impossible?) to find elsewhere, so do read up carefully before you transfer money out.
The amount of that will depend upon which type of plan you have at TIAA. Some of the plans have more restrictions than others, and that's very important to understand.

It's a complicated critter, and one of two holdings we have where we (admit that) we really do not fully understand the product.
The other is TIAA Real Estate Account (TREA), which can be annuitized or not.
Both will be very important for a part of our retirement income.

RM
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Curlyq
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by ResearchMed »

Curlyq wrote: Sat Oct 07, 2017 1:44 pm Student and RM, thanks for the links. Interesting. I'm going to call TIAA on Monday to get more specifics about my particular contract. In regards to to the Real Estate fund, I have so much already in a REIT and three properties, that I'm not sure I would consider more RE. Thanks!
I understand the care about not having "too much" in real estate.
But do look into TREA, as it is very different from REITs, and both are quite different from holding actual properties.

If you have REITs and also properties, you probably have much less need/interest for TREA, to be sure. However, you might want to double check how it differs from REITs, at least prior to transferring money out of TIAA if you can't add more to TIAA later.

RM
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Curlyq
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ResearchMed
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by ResearchMed »

Curlyq wrote: Sat Oct 07, 2017 2:03 pm RM, You are correct! I've read a little about the TIAA RE fund and agree with you that I should think very carefully and explore all of my options before transferring this money out of TIAA-CREF. Right now, I'm leaning toward putting the funds into TIAA Traditional at a portion of my fixed and sit on that while I see what my real estate portfolio looks like as I move forward. Thanks! ~CurlyQ
You might also want to read (and perhaps ask questions) on the TIAA sub-forum of the Morningstar Discussion area.
(Sorry, I can't seem to paste a link in here that doesn't have my personal ID info.)

That was how I learned/realized about TREA lagging REITs (at least, that's what happened circa 2008). I had just taken over all of our investments, and that understanding ended up becoming *very* valuable to us.
There are now restrictions on the total that can generally be "put into" TREA, so I could not now easily do what we did then. Needless to say, one's balance in TREA can continue to "grow" without respect to any such limits.
You might also want to double check whether/how this might affect your future choices.

(Also, our particular 403b plan has a specific and peculiar new restriction such that we can no longer add *any* additional money to TREA, so we need to be very careful before removing any. But this is NOT generally the case.)

RM
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ResearchMed
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by ResearchMed »

Curlyq wrote: Sat Oct 07, 2017 2:22 pm RM, I'm glad that I asked on this forum, all of the responses have been very enlightening. I did look into the Morningstar forum at one point. I resisted creating yet another profile with yet another password with yet another security question, etc. Maybe when my "profile" fatigue wears off, I'll get on it and do some more reading. :|
You can still "read" on the TIAA section of Morningstar Discussions, and watch for topics that relate to "TREA" (or "Real Estate"), and you'll learn a great deal. That's what happened to me/us, long before I registered and posted there.

And you might find a lot of other topics there useful, too.
Yeah... "So much information; so little time" :wink:

RM
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ResearchMed
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Re: TIAA Traditional as part of bond in three-fund style portfolio?

Post by ResearchMed »

Curlyq wrote: Sat Oct 07, 2017 2:33 pm RM, by the way, what asset class you do consider your TREA portion to be? I've been keeping my real estate separate from my asset allocation, save for a REIT that I own in taxable. I consider that as a stock. Thanks! ~CurlyQ
That's a trick question :twisted:

We consider TREA to be "part of" the "TREA asset class".
Only partly kidding.
You'll find lots of discussion/disagreement about this.

For us, it's sort of a mix of equity/bond.

Until very recently, it was a rather stable and slow moving (except for quite small short term fluctuations) holding, one that chugged along very nicely (very nicely indeed, for quite some time!).

Note that we DID "time it" and get out at a key point in 2008 (3 separate "sell" orders that year), and we got back in during 2010.
(We got out at just about the perfect times, but we got back in a bit after the bottom, but NO complaints. We did much better than "staying", and for that we are eternally grateful to Morningstar forum members!)

Before that, and again for a while after, we referred to TREA as "the little engine fund that could". :D
But we watched it like a hawk, and still do.

Recently, it's been neck and neck with TIAA Trad Ann. We have the restricted type of Trad Ann, but it's got that guarantee of 3%, and currently is mostly returning 4% (differing vintages). We have not [yet] annuitized any of it (or anything), but we expect we will. We have no heirs, so some "lifetime income" will be great for us.
(Because we can *never* add more, not even through some of the "special methods", we need to be very careful deciding whether/when to sell any TREA, but if we need to, we will, of course. Again, this is peculiar to our specific 403b plan, apparently as decided between Employer and TIAA, but we aren't privy to the background. Someday I might ask, but I'm not expecting an answer...)

Search here on BH for "TREA", and you'll find some vigorous debates about what type of "asset class" TREA should/should not be considered.

RM
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