Investing in Vanguard through TIAA-CREF

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anglophile
Posts: 51
Joined: Tue Dec 12, 2017 5:57 pm

Investing in Vanguard through TIAA-CREF

Post by anglophile »

Hello, I'm a newbie in the world of investments. I've had either a 401(k) or a 403(b) (currently) for more than a decade, but never took the trouble to learn about finance. Now I'm learning, and I'm surprised and a bit shocked at some of the things I'm finding out!

Right now, I work in higher education, and we have our retirement funds through TIAA-CREF. I kept all my money in a Lifecycle Fund and a Social Choice fund. Last year, I opened an IRA and a Roth with Vanguard, so I'm somewhat familiar with it. I just made a change to the trad'l IRA so that it is a Target Retirement account.

As I am still learning, I'm reading a couple of different books, including Bogleheads' Guide to Investing.

I met with my TIAA representative for our yearly checkup in October. As I've been playing it very safe for years, he suggested I might want to go from a moderate risk level to moderate/aggressive. I've been looking over his proposed plan and was delighted to see it included some Vanguard funds.

However, his plan calls for investment not only in Vanguard, but in Harbor International Institutional, American Beacon, and of course, TIAA itself (including real estate and CREF Stock R2). The biggest surprise is the recommendation that I take a huge percentage of my money and put it in CREF equities, small, mid, & large cap growth, as well as international.


I've looked at some of these funds, esp. CREF's own, and I was really surprised at the expense ratios. I forgot which one, but one of them is .90%! That's what I mean when I say I am shocked.

So I'm wondering: If Vanguard's 500 Index Admiral includes international holdings, why recommend a different international fund? (Or am I wrong?) Is it me, or are they really pushing their own product (i'm guessing the answer to that is yes)?

One of the books I am reading suggests that if you've got the ability to invest in Vanguard through a 403(b), do it. As a newbie, I'm wondering if I ought to do that, and forget about Harbor, American Beacon, etc.

I guess I'm a little disappointed, because I kind of trusted that these guys were taking the best care of me. After all, they work for teachers, right? I know that sounds naive. I'm in my 50s and I've never made much money and I don't expect to. So that's why I've been so conservative. Probably TOO conservative.

What are your thoughts on this?

(Also I have a fair amount of money in regular savings accounts, but that's for another post).

EDIT: Here is more information about the TIAA rep's recommendations and about my account. I should point out that there are several "pieces" to my 403(b), partly because I worked at two separate colleges. Frankly, I find this splitting up confusing.

So here goes:

College A (my current employer): I currently have 100% of a Tax Deferred Annuity in Lifecycle 2030 Fund-Retirement Class (ER Gross .78%, Net .67%)
The "Retirement Plan" is in CREF Social Choice R2 (ER .38%).

The proposal:

TIAA Traditional (I can't find the ER for this)
CREF Stock R2 (.43%)
Vanguard 500 Index Admiral (.04%)
Harbor International Institutional (.79%)
Vanguard Extended Market Index Admiral (.08%)
Vanguard Total Int'l Stock Index Admiral (.11%)
American Beacon Large Cap Value Instl (.60%)
TIAA Real Estate (.86%)
Vanguard Total Bond Market Index Admiral (.05%)
Metropolitan West Total Return Bond I (.44%)
TIAA Stable Value (I can't find the ER)


College B (former employer): I currently have a TDA that has 37% in bonds, including foreign bonds; the remainder is spread out in asset class small, mid and large cap value , as well as small mid, large and international equities. The Retirement Plan at College B is basically the same allocation as the TDA, except there's 2% in "cash."

The representative recommended that I leave College B's money pretty much the same, except for increases here and there, decreases here and there.
Equities:
Small Cap Growth (can't find it, much less an ER)
Mid Cap Growth (.57%)
Large Cap Growth (.53%)
International (does not specify which international)
Large Cap (does not specify which)

Asset Class:
Small, mid and large cap value, but I can't find them on the site
Direct Real Estate (.85%)

Fixed Income:

TIPS (does not specify which class)
Bonds (does not specify which)
Foreign Bonds (does not specify which)

I am 53, and my approximate net worth is $109,000.


I hope this helps!
Last edited by anglophile on Wed Dec 13, 2017 1:07 pm, edited 2 times in total.
mhalley
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Joined: Tue Nov 20, 2007 5:02 am

Re: Investing in Vanguard through TIAA-CREF

Post by mhalley »

The 500 fund consist only of US companies, but since many of them are global, some (Jack Bogle) don’t think intl investing is needed.
People who work in financial services don't have one shred of concern about the well-being of the people they serve. They're only interested in themselves. Barry Schwartz
Making your AA more aggressive with markets at all time highs might not be wise. What is it now?
It is a crime that teachers are subject to the most expensive retirement plans out there. If you post your options in the preferred format, we can help you pick. But out of the terrible teacher plans, TIAA is usually one of the best.
viewtopic.php?t=6212
aristotelian
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Re: Investing in Vanguard through TIAA-CREF

Post by aristotelian »

Vanguard 500 does not cover international but it is an excellent basis for a moderate to aggressive portfolio. If you want international, it would be better to hold it in your IRA rather than the fund that the TIAA guy recommended. There was a NYT article about their sales tactics that you might want to read.
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ResearchMed
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

anglophile wrote: Tue Dec 12, 2017 6:12 pm Hello, I'm a newbie in the world of investments. I've had either a 401(k) or a 403(b) (currently) for more than a decade, but never took the trouble to learn about finance. Now I'm learning, and I'm surprised and a bit shocked at some of the things I'm finding out!

Right now, I work in higher education, and we have our retirement funds through TIAA-CREF. I kept all my money in a Lifecycle Fund and a Social Choice fund. Last year, I opened an IRA and a Roth with Vanguard, so I'm somewhat familiar with it. I just made a change to the trad'l IRA so that it is a Target Retirement account.

As I am still learning, I'm reading a couple of different books, including Bogleheads' Guide to Investing.

I met with my TIAA representative for our yearly checkup in October. As I've been playing it very safe for years, he suggested I might want to go from a moderate risk level to moderate/aggressive. I've been looking over his proposed plan and was delighted to see it included some Vanguard funds.

However, his plan calls for investment not only in Vanguard, but in Harbor International Institutional, American Beacon, and of course, TIAA itself (including real estate and CREF Stock R2). The biggest surprise is the recommendation that I take a huge percentage of my money and put it in CREF equities, small, mid, & large cap growth, as well as international.

I've looked at some of these funds, esp. CREF's own, and I was really surprised at the expense ratios. I forgot which one, but one of them is .90%! That's what I mean when I say I am shocked.

So I'm wondering: If Vanguard's 500 Index Admiral includes international holdings, why recommend a different international fund? (Or am I wrong?) Is it me, or are they really pushing their own product (i'm guessing the answer to that is yes)?

One of the books I am reading suggests that if you've got the ability to invest in Vanguard through a 403(b), do it. As a newbie, I'm wondering if I ought to do that, and forget about Harbor, American Beacon, etc.

I guess I'm a little disappointed, because I kind of trusted that these guys were taking the best care of me. After all, they work for teachers, right? I know that sounds naive. I'm in my 50s and I've never made much money and I don't expect to. So that's why I've been so conservative. Probably TOO conservative.

What are your thoughts on this?

(Also I have a fair amount of money in regular savings accounts, but that's for another post).
Welcome to Bogleheads!

As mhalley already wrote, if you can give us the information suggested in the link, we'll all have much better information about recommendations given your situation (e.g., age, approx net worth) and the funds available to you (including expense ratios).

Because you mentioned "R2", it sounds like you have the "medium" level plan in terms of the expense ratio of the TIAA funds available to you. You'll need to post the expense ratios of those, and also the non-TIAA funds available.
(That "medium" level probably means a mid-size plan that your employer has. At least it isn't the most expensive plan!)

You should also check if there would be a fee to purchase non-TIAA funds. That would especially matter if you end up considering non-TIAA funds and think about continually investing over time, as you have more money available.

Also let us know if you have access to TIAA's Traditional Annuity (probably, but give us the type of plan, and the current interest rates, as there are several) or TREA (TIAA's special Real Estate Account, which is unique). The expense ratio of TREA should not be directly compared with other funds.
You may/may not want to use TREA, but you should at least consider it if it is available.

Also, until we learn more about the specifics of your particular plan, I wouldn't quite be willing to agree with mhalley that TIAA is necessarily among the "terrible teacher plans" (even if it is "one of the best" of those). Some of the TIAA plans are not bad at all. It all depends upon what your Employer negotiated with TIAA (or any other plan) in terms of fees and also choice of funds.
The fact that you've got R2 does indicate that there are lower expense ratios, but your plan doesn't have them (probably due to size, not lack of concern by your Employer).

RM
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krow36
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Re: Investing in Vanguard through TIAA-CREF

Post by krow36 »

Gretchen Morgenson has a long article on TIAA in the NY Times published Oct 21:
https://www.nytimes.com/2017/10/21/busi ... .html?_r=0

Here's a followup NYTimes article on TIAA's problems, published to Nov 9. The NY State Attorney General is now getting involved, in addition to the feds. https://www.nytimes.com/2017/11/09/busi ... -news&_r=0

Another NY Times article on TIAA, published Nov 14: https://www.nytimes.com/2017/11/13/your ... front&_r=0
MathWizard
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Re: Investing in Vanguard through TIAA-CREF

Post by MathWizard »

We just finished moving our IRAs from TIAA-CREF. The ER's are high for individual retirement accounts.

My 403b is still there.
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CyclingDuo
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Re: Investing in Vanguard through TIAA-CREF

Post by CyclingDuo »

anglophile wrote: Tue Dec 12, 2017 6:12 pm Hello, I'm a newbie in the world of investments. I've had either a 401(k) or a 403(b) (currently) for more than a decade, but never took the trouble to learn about finance. Now I'm learning, and I'm surprised and a bit shocked at some of the things I'm finding out!

Right now, I work in higher education, and we have our retirement funds through TIAA-CREF. I kept all my money in a Lifecycle Fund and a Social Choice fund. Last year, I opened an IRA and a Roth with Vanguard, so I'm somewhat familiar with it. I just made a change to the trad'l IRA so that it is a Target Retirement account.

As I am still learning, I'm reading a couple of different books, including Bogleheads' Guide to Investing.

I met with my TIAA representative for our yearly checkup in October. As I've been playing it very safe for years, he suggested I might want to go from a moderate risk level to moderate/aggressive. I've been looking over his proposed plan and was delighted to see it included some Vanguard funds.

However, his plan calls for investment not only in Vanguard, but in Harbor International Institutional, American Beacon, and of course, TIAA itself (including real estate and CREF Stock R2). The biggest surprise is the recommendation that I take a huge percentage of my money and put it in CREF equities, small, mid, & large cap growth, as well as international.

I've looked at some of these funds, esp. CREF's own, and I was really surprised at the expense ratios. I forgot which one, but one of them is .90%! That's what I mean when I say I am shocked.

So I'm wondering: If Vanguard's 500 Index Admiral includes international holdings, why recommend a different international fund? (Or am I wrong?) Is it me, or are they really pushing their own product (i'm guessing the answer to that is yes)?

One of the books I am reading suggests that if you've got the ability to invest in Vanguard through a 403(b), do it. As a newbie, I'm wondering if I ought to do that, and forget about Harbor, American Beacon, etc.

I guess I'm a little disappointed, because I kind of trusted that these guys were taking the best care of me. After all, they work for teachers, right? I know that sounds naive. I'm in my 50s and I've never made much money and I don't expect to. So that's why I've been so conservative. Probably TOO conservative.

What are your thoughts on this?

(Also I have a fair amount of money in regular savings accounts, but that's for another post).
One of our 403(b) plans is with TIAA. Here's what the money goes into for me at a 70/30 asset allocation...

Vanguard 500 Index Fund Admiral 40% (ER .05)
Vanguard Extended Market Index Fund Admiral 15% (ER .09)
Vanguard Total International Stock Index Fund Admiral 15% (ER .12)
Vanguard Total Bond Market Index Fund Admiral 30% (ER .06)

Ignore the TIAA representatives recommendations, and pick the low cost Vanguard Total International Stock Index Fund Admiral if your plan has it. Ditto on the Bond Fund. The 500 Index won't cover the entire market in the US, so put a percentage into the Vanguard Extended Market. Then you've got the full fledged, low cost Boglehead Three Fund Portfolio.
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
ralph124cf
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Re: Investing in Vanguard through TIAA-CREF

Post by ralph124cf »

The TIAA Real Estate fund is unique in the investment world. It owns and operates real estate properties, so is not comparable to REIT funds. It has apparently high ERs, but that is because it actually operates the real estate. Many people on this board have significant positions in the TIAA Real Estate fund, and are happy with it.

Ralph
Topic Author
anglophile
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Thanks to all who responded so quickly to my post.

I do have access to TIAA's Traditional Annuity, but currently I do not have any money in it.

Should I start a new thread that sets forth the plan and its ERs, or is it OK/less confusing to continue in this thread? Thanks!
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ResearchMed
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

anglophile wrote: Wed Dec 13, 2017 11:30 am Thanks to all who responded so quickly to my post.

I do have access to TIAA's Traditional Annuity, but currently I do not have any money in it.

Should I start a new thread that sets forth the plan and its ERs, or is it OK/less confusing to continue in this thread? Thanks!
Why don't you edit your first post above, to include this info - then the context is also there.

Use the little pencil in the upper right hand corner when you've opened your own post, to "edit".

RM
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Topic Author
anglophile
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Done!
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CyclingDuo
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Re: Investing in Vanguard through TIAA-CREF

Post by CyclingDuo »

anglophile wrote: Wed Dec 13, 2017 12:46 pmDone!

College A (my current employer): I currently have 100% of a Tax Deferred Annuity in Lifecycle 2030 Fund-Retirement Class (ER Gross .78%, Net .67%)
The "Retirement Plan" is in CREF Social Choice R2 (ER .38%).

The proposal:

TIAA Traditional (I can't find the ER for this)
CREF Stock R2 (.43%)
Vanguard 500 Index Admiral (.04%)
Harbor International Institutional (.79%)
Vanguard Extended Market Index Admiral (.08%)
Vanguard Total Int'l Stock Index Admiral (.11%)
American Beacon Large Cap Value Instl (.60%)
TIAA Real Estate (.86%)
Vanguard Total Bond Market Index Admiral (.05%)
Metropolitan West Total Return Bond I (.44%)
TIAA Stable Value (I can't find the ER)
The Three Fund Portfolio at Admiral level is right there for you for the taking in the 4 funds bolded and colored! The low fees make it worth it, and you are diversified with those 4 (you have to include extended market to add to the S&P to cover the whole US market).

Great investments with low fees make it worthwhile over the long run. As nice as the lifecycle fund is, it is costing you year after year in fees that adds up over time. Not as much as 2% would, but somewhere between that and the low cost Vanguard Funds many college plans now offer through TIAA. Take 'em while you can get 'em!

Image

http://www.retireearlyhomepage.com/twopercentrule.html
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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anglophile
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Thank you very much! I appreciate your help.
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CyclingDuo
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Re: Investing in Vanguard through TIAA-CREF

Post by CyclingDuo »

anglophile wrote: Wed Dec 13, 2017 4:42 pm Thank you very much! I appreciate your help.
What state is your college located? We're here in Iowa and our college plan with TIAA only started offering the low cost Vanguard funds a few years ago. I had the Lifecycle Fund before that as well. When I asked here at BH about how to get the 70/30 (stocks/bonds) percentage I wanted for my 403(b), I went with the following percentages for the asset allocation to meet my criteria using the 4 funds to replicate the Three Fund Portfolio found here at the BH.org Wiki:

Vanguard 500 Index Fund Admiral 40% (ER .05)
Vanguard Extended Market Index Fund Admiral 15% (ER .09)
Vanguard Total International Stock Index Fund Admiral 15% (ER .12)
Vanguard Total Bond Market Index Fund Admiral 30% (ER .06)

The percentage of the Extended Market was suggested to me to closely mirror what the Vanguard Total Stock Market Index Fund is. TIAA has some good funds as well, but since you can get the cat's meow from Vanguard for the same cost as if you were investing directly at Vanguard - why not utilize them rather than some of the TIAA higher expense funds?
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
Topic Author
anglophile
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

I'm in Pennsylvania.
LookingtogetFIRE'd
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Re: Investing in Vanguard through TIAA-CREF

Post by LookingtogetFIRE'd »

ResearchMed wrote: Tue Dec 12, 2017 7:31 pm
anglophile wrote: Tue Dec 12, 2017 6:12 pm Hello, I'm a newbie in the world of investments. I've had either a 401(k) or a 403(b) (currently) for more than a decade, but never took the trouble to learn about finance. Now I'm learning, and I'm surprised and a bit shocked at some of the things I'm finding out!

Right now, I work in higher education, and we have our retirement funds through TIAA-CREF. I kept all my money in a Lifecycle Fund and a Social Choice fund. Last year, I opened an IRA and a Roth with Vanguard, so I'm somewhat familiar with it. I just made a change to the trad'l IRA so that it is a Target Retirement account.

As I am still learning, I'm reading a couple of different books, including Bogleheads' Guide to Investing.

I met with my TIAA representative for our yearly checkup in October. As I've been playing it very safe for years, he suggested I might want to go from a moderate risk level to moderate/aggressive. I've been looking over his proposed plan and was delighted to see it included some Vanguard funds.

However, his plan calls for investment not only in Vanguard, but in Harbor International Institutional, American Beacon, and of course, TIAA itself (including real estate and CREF Stock R2). The biggest surprise is the recommendation that I take a huge percentage of my money and put it in CREF equities, small, mid, & large cap growth, as well as international.

I've looked at some of these funds, esp. CREF's own, and I was really surprised at the expense ratios. I forgot which one, but one of them is .90%! That's what I mean when I say I am shocked.

So I'm wondering: If Vanguard's 500 Index Admiral includes international holdings, why recommend a different international fund? (Or am I wrong?) Is it me, or are they really pushing their own product (i'm guessing the answer to that is yes)?

One of the books I am reading suggests that if you've got the ability to invest in Vanguard through a 403(b), do it. As a newbie, I'm wondering if I ought to do that, and forget about Harbor, American Beacon, etc.

I guess I'm a little disappointed, because I kind of trusted that these guys were taking the best care of me. After all, they work for teachers, right? I know that sounds naive. I'm in my 50s and I've never made much money and I don't expect to. So that's why I've been so conservative. Probably TOO conservative.

What are your thoughts on this?

(Also I have a fair amount of money in regular savings accounts, but that's for another post).
Welcome to Bogleheads!

As mhalley already wrote, if you can give us the information suggested in the link, we'll all have much better information about recommendations given your situation (e.g., age, approx net worth) and the funds available to you (including expense ratios).

Because you mentioned "R2", it sounds like you have the "medium" level plan in terms of the expense ratio of the TIAA funds available to you. You'll need to post the expense ratios of those, and also the non-TIAA funds available.
(That "medium" level probably means a mid-size plan that your employer has. At least it isn't the most expensive plan!)

You should also check if there would be a fee to purchase non-TIAA funds. That would especially matter if you end up considering non-TIAA funds and think about continually investing over time, as you have more money available.

Also let us know if you have access to TIAA's Traditional Annuity (probably, but give us the type of plan, and the current interest rates, as there are several) or TREA (TIAA's special Real Estate Account, which is unique). The expense ratio of TREA should not be directly compared with other funds.
You may/may not want to use TREA, but you should at least consider it if it is available.

Also, until we learn more about the specifics of your particular plan, I wouldn't quite be willing to agree with mhalley that TIAA is necessarily among the "terrible teacher plans" (even if it is "one of the best" of those). Some of the TIAA plans are not bad at all. It all depends upon what your Employer negotiated with TIAA (or any other plan) in terms of fees and also choice of funds.
The fact that you've got R2 does indicate that there are lower expense ratios, but your plan doesn't have them (probably due to size, not lack of concern by your Employer).

RM
I'm curious what you have to say about the TIAA Traditional Annuity. My husband was recommended to enroll in one when he signed up with TIAA, and now that we are taking a closer look at his AA, we are not sure whether we should keep it. What are your thoughts on that annuity?
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ResearchMed
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

LookingtogetFIRE'd wrote: Thu Dec 14, 2017 3:47 pm
ResearchMed wrote: Tue Dec 12, 2017 7:31 pm
anglophile wrote: Tue Dec 12, 2017 6:12 pm Hello, I'm a newbie in the world of investments. I've had either a 401(k) or a 403(b) (currently) for more than a decade, but never took the trouble to learn about finance. Now I'm learning, and I'm surprised and a bit shocked at some of the things I'm finding out!

Right now, I work in higher education, and we have our retirement funds through TIAA-CREF. I kept all my money in a Lifecycle Fund and a Social Choice fund. Last year, I opened an IRA and a Roth with Vanguard, so I'm somewhat familiar with it. I just made a change to the trad'l IRA so that it is a Target Retirement account.

As I am still learning, I'm reading a couple of different books, including Bogleheads' Guide to Investing.

I met with my TIAA representative for our yearly checkup in October. As I've been playing it very safe for years, he suggested I might want to go from a moderate risk level to moderate/aggressive. I've been looking over his proposed plan and was delighted to see it included some Vanguard funds.

However, his plan calls for investment not only in Vanguard, but in Harbor International Institutional, American Beacon, and of course, TIAA itself (including real estate and CREF Stock R2). The biggest surprise is the recommendation that I take a huge percentage of my money and put it in CREF equities, small, mid, & large cap growth, as well as international.

I've looked at some of these funds, esp. CREF's own, and I was really surprised at the expense ratios. I forgot which one, but one of them is .90%! That's what I mean when I say I am shocked.

So I'm wondering: If Vanguard's 500 Index Admiral includes international holdings, why recommend a different international fund? (Or am I wrong?) Is it me, or are they really pushing their own product (i'm guessing the answer to that is yes)?

One of the books I am reading suggests that if you've got the ability to invest in Vanguard through a 403(b), do it. As a newbie, I'm wondering if I ought to do that, and forget about Harbor, American Beacon, etc.

I guess I'm a little disappointed, because I kind of trusted that these guys were taking the best care of me. After all, they work for teachers, right? I know that sounds naive. I'm in my 50s and I've never made much money and I don't expect to. So that's why I've been so conservative. Probably TOO conservative.

What are your thoughts on this?

(Also I have a fair amount of money in regular savings accounts, but that's for another post).
Welcome to Bogleheads!

As mhalley already wrote, if you can give us the information suggested in the link, we'll all have much better information about recommendations given your situation (e.g., age, approx net worth) and the funds available to you (including expense ratios).

Because you mentioned "R2", it sounds like you have the "medium" level plan in terms of the expense ratio of the TIAA funds available to you. You'll need to post the expense ratios of those, and also the non-TIAA funds available.
(That "medium" level probably means a mid-size plan that your employer has. At least it isn't the most expensive plan!)

You should also check if there would be a fee to purchase non-TIAA funds. That would especially matter if you end up considering non-TIAA funds and think about continually investing over time, as you have more money available.

Also let us know if you have access to TIAA's Traditional Annuity (probably, but give us the type of plan, and the current interest rates, as there are several) or TREA (TIAA's special Real Estate Account, which is unique). The expense ratio of TREA should not be directly compared with other funds.
You may/may not want to use TREA, but you should at least consider it if it is available.

Also, until we learn more about the specifics of your particular plan, I wouldn't quite be willing to agree with mhalley that TIAA is necessarily among the "terrible teacher plans" (even if it is "one of the best" of those). Some of the TIAA plans are not bad at all. It all depends upon what your Employer negotiated with TIAA (or any other plan) in terms of fees and also choice of funds.
The fact that you've got R2 does indicate that there are lower expense ratios, but your plan doesn't have them (probably due to size, not lack of concern by your Employer).

RM
I'm curious what you have to say about the TIAA Traditional Annuity. My husband was recommended to enroll in one when he signed up with TIAA, and now that we are taking a closer look at his AA, we are not sure whether we should keep it. What are your thoughts on that annuity?
There are several flavors of TIAA's Trad Ann, involving a combo of the guaranteed return (which is often supplemented, but that's not guaranteed) and whether one can remove money "as desired" (or on the 10 payments over 9 years/1 day for most of the higher guarantee plans).

The decision might depend upon which "type" of Trad Ann one has access to, as well as whether one is likely to be interested in what many view as a particularly good SPIA.

There are many discussions here on BH about SPIA's in general, and also about TIAA's Trad Ann (and we've posted a lot on many of those).
You might want to do a search on BH, so you can get the full range of opinions.

And find out what type of Trad Ann you actually have, as that might make a big difference.

RM
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Topic Author
anglophile
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

ResearchMed,

My head is sort of spinning from all the reading I've been doing. Can you (or someone else) help with the phrasing of the proper questions to ask TIAA re: the annuities?

I don't exactly know what or how to ask it. Thanks.
Topic Author
anglophile
Posts: 51
Joined: Tue Dec 12, 2017 5:57 pm

Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Well, I did send TIAA an email, worded the best way I could, regarding the Traditional Annuities. Have not heard back from them. Sent it on Sunday and now it's Tuesday. I'm wondering if they even got it--I didn't get any kind of confirmation, i.e. "we've received your email and will get back to you within ___ days." Hmmmm...
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

anglophile wrote: Thu Dec 14, 2017 5:08 pm ResearchMed,

My head is sort of spinning from all the reading I've been doing. Can you (or someone else) help with the phrasing of the proper questions to ask TIAA re: the annuities?

I don't exactly

Sorry - I missed your post last week somehow.

Do you have any materials or anything at all that gives any names or any initials/letters for the Trad Annuity part?
Or does it show anything about the return/rate? The Guaranteed part, in particular...?
Those would help us to narrow it down, even if it doesn't nail it exactly.

RM
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

One of them has these letters and numbers associated with it:

1. Plan Number:103455

Personal rate of return is 13.1% from 1/1/17 to 11/30/17 (not bad, methinks).

The other:

2. Plan Number:150399

Rate of return is 13.2% (same dates as above).

Does this help?
Last edited by anglophile on Tue Dec 19, 2017 4:24 pm, edited 1 time in total.
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

anglophile wrote: Tue Dec 19, 2017 1:58 pm One of them has these letters and numbers associated with it:

1. RA (TIAA xxxxxxx) (CREF xxxxxxxx)
Plan Number:1xxxxxxx

Personal rate of return is 13.1% from 1/1/17 to 11/30/17 (not bad, methinks).

The other:

2. GSRA (TIAA xxxxxxx) (CREF xxxxxxxx)
Plan Number:xxxxxx

Rate of return is 13.2% (same dates as above).

Does this help?
Thanks.

Those letters should help.

But that personal "rate of return" should be for something like all accounts/funds combined?

If you click on the Trad Ann, there might be a chart that shows the guaranteed rate (per vintage) and also the "extra", which there has been all/almost all of the time recently.

I'm guessing the RA will say 3%, and the GSRA would be something less. How much less is important.

The guaranteed 3% (plus often some extra) would be the one with some restrictions about withdrawing, probably the 10 payments over 9 years and 1 day, for any part of the balance put into a "withdrawal", called TPA (Transfer Payout Annuity), and that would have a very slightly lower rate usually.

RM
Last edited by ResearchMed on Tue Dec 19, 2017 6:10 pm, edited 1 time in total.
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Gosh, I'm having trouble finding this info. Maybe it's here?

Hoping you can access this link:

https://www.tiaa.org/public/pdf/ffs/194 ... 1513713380
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

anglophile wrote: Tue Dec 19, 2017 2:39 pm Gosh, I'm having trouble finding this info. Maybe it's here?

Hoping you can access this link:

https://www.tiaa.org/public/pdf/ffs/194 ... 1513713380
Yes, can access the link, but it appears to be specific to one fund, the Social Choice fund.

(When you "preview" the post, you can click on link there, to be sure what others would be able to see once it is posted.)

Are you able to do something similar for the Trad Ann in your plan?

You should also be able to phone TIAA and ask a customer service rep about the Trad Annuity in your specific plan.
And then ask them to email (or snail mail if necessary) the appropriate information that is definitely for *your* plan.
If they "can't", then ask for a supervisor.

We've got a great WMA (Wealth Management Advisor), but that's probably specific for our employer and also our account size (maybe?).

What you want to know specifically for YOUR PLAN's Trad Ann is "what is the GUARANTEED ANNUAL RETURN", and also, what is the "extra" for money contributed *now* (this "extra" can vary; the Guarantee shouldn't, not without significant changes involving you employer and TIAA general contracts, probably not something simple for them - but money already getting the 3% guarantee can't be switched to lower; that's already contractual).

RM
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Ah--I should have explained. My TAs are in the Social Choice R2 funds.

I guess I'll have to give them a call, if I don't hear from them soon. Thanks for your help with this! I'll let you know how I make out.
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Re: Investing in Vanguard through TIAA-CREF

Post by The Wizard »

To help out a bit, TIAA Traditional isn't really an "annuity" in the negative sense of the term at this point, during the accumulation phase.
It's a guaranteed income asset, most likely with a 4.0% growth rate for the RA version and 3.25% for the SRA version.
There are restrictions on the RA version but that's fine so long as you're not overweight in RA Trad.

When you get to retirement age, you have options with Trad. You can annuitize it for lifetime income (which I've done) or you can make withdrawals from it on a periodic basic.

More on this next time...
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

I finally did hear back from TIAA via email. It was a rather lengthy email. I'm copying & pasting what I think are the relevant parts to some of the questions I have here.

Minimum Distribution Option

Once you become subject to the Internal Revenue Service (IRS) Required Minimum Distribution (RMD) rules at age 70 1/2, you can elect to convert all of your accumulations in your contracts to Minimum Distribution Option (MDO) contracts. The MDO contract will automatically calculate and distribute the minimum amount required to meet the IRS rules each year. Once you begin receiving distributions under an MDO contract, you cannot stop receiving income. Payments can be suspended if you are hired back by the same employer.

Fixed-Period Annuity

You also have the option of receiving payments through a Fixed-Period Annuity, which creates a payment stream for a fixed period of time. A Fixed-Period Annuity does not guarantee you will receive lifetime income, but rather it guarantees income only for the time period that you elected. You can select a Fixed Period Annuity that ranges from two to 30 years or five to 30 years dependent upon your account type as long as the time period does not exceed your life expectancy.

We guarantee that payments will be made for the time period selected, whether to you or to your beneficiary in the event of your death. At the end of the designated period, no balance will remain in your contract, and all payments will cease. Fixed Period Annuities are not available from your TIAA Traditional investment in a Retirement Annuity (RA) contract.

Lifetime Annuity

You may also elect to receive income over your lifetime. You may choose an option designed to provide income for life to either you, or for you and an annuity partner.

Additionally, you can provide income to your beneficiaries by electing a guaranteed period of either 10, 15 or 20 years. The guaranteed period cannot exceed the life expectancy of you or your annuity partner. Beneficiary income is only provided when you, or you and your annuity partner die before the guaranteed period expires.

You may access your TIAA Traditional accumulations through a Transfer Payout Annuity (TPA). A TPA makes ten substantially equal distributions over a nine year period.

You can also just take out the interest generated monthly on the TIAA Traditional through our Interest Only (IO) option. This leaves the balance or principle untouched. This option must be continued for at least a year and then either continued or converted to one of the other available options. You must also be between ages 55 and 69½ when the IO contract is issued.
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

These are all generalities for all TIAA accounts, as far as I know.

One question... are you sure your Stock fund is IN your Annuity?

Or are they in the Stock Fund that is not yet in the annuity.

This can get very confusing, as TIAA can have an "annuity fund" that is NOT yet annuitized.

And likewise, even the plain vanilla Trad Ann doesn't have to be annuitized.

That can lead to the odd terminology of "an annuitized annuity" :happy

I'm just trying to figure out if you actually have anything in Trad Ann.

RM
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

In one of my plans, a Mandatory Tax Deferred Annuity, I do have some small, mid, large and international growth equities, as well as small, mid and large cap value equities.

The other TDA is all a Lifecycle 2030 Fund (Retirement Class).

I'll say it's confusing! :(
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Hello again,

I wrote once more to TIAA and asked the questions about guaranteed returns.
Here is their reply:
]
I see that you are invested in the CREF Social Choice and TIAA-CREF Lifecycle 2030 funds. The performance of these investment accounts are based on the performance of the underlying investments in the account. Therefore, when the stock market goes up or down on a particular day it does not necessarily mean that the performance of the CREF Social Choice and TIAA-CREF Lifecycle 2030 funds will see an increase or decrease on a particular day.

As such, since you are not invested in the TIAA Traditional Annuity, you do not have guaranteed annual return.

The TIAA Traditional Annuity is the most conservative investment that TIAA CREF offers for our retirement plans. We guarantee the balance that you have in this investment along with a minimum rate of return of 3%. This guarantee is backed by the claims paying ability of TIAA where we keep on hand several times the required reserves needed to cover all of our investment obligations.
OK, so now I know I don't have the Traditional Annuity. I did not get an answer re: the "extra."

Not sure where to go from here. Put everything into the Vanguard funds available through TIAA?
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Re: Investing in Vanguard through TIAA-CREF

Post by ResearchMed »

anglophile wrote: Tue Dec 26, 2017 6:46 pm Hello again,

I wrote once more to TIAA and asked the questions about guaranteed returns.
Here is their reply:
]
I see that you are invested in the CREF Social Choice and TIAA-CREF Lifecycle 2030 funds. The performance of these investment accounts are based on the performance of the underlying investments in the account. Therefore, when the stock market goes up or down on a particular day it does not necessarily mean that the performance of the CREF Social Choice and TIAA-CREF Lifecycle 2030 funds will see an increase or decrease on a particular day.

As such, since you are not invested in the TIAA Traditional Annuity, you do not have guaranteed annual return.

The TIAA Traditional Annuity is the most conservative investment that TIAA CREF offers for our retirement plans. We guarantee the balance that you have in this investment along with a minimum rate of return of 3%. This guarantee is backed by the claims paying ability of TIAA where we keep on hand several times the required reserves needed to cover all of our investment obligations.
OK, so now I know I don't have the Traditional Annuity. I did not get an answer re: the "extra."

Not sure where to go from here. Put everything into the Vanguard funds available through TIAA?
It's your choice which holdings to choose within TIAA.

Do you want it Trad Ann?
It sounds like it is available in your plan, but hasn't been selected.
And you still need to be certain of whether there is any liquidity restriction, although it sounds like you do have access to the higher guaranteed return/more restrictive type.

RM
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

Oy vey...I'm not quite sure what I am going to do. I think I need to do more research before making a decision.
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Re: Investing in Vanguard through TIAA-CREF

Post by CyclingDuo »

anglophile wrote: Tue Jan 02, 2018 10:31 am Oy vey...I'm not quite sure what I am going to do. I think I need to do more research before making a decision.
Study the typical portfolio compositions - be it one fund, two funds, three funds, four funds, or more:


BH forum member The White Coat Investor has a great blog post about asset allocation:
https://www.whitecoatinvestor.com/150-p ... han-yours/

Mike Piper's Oblivious Investor (Mike often appears at the annual Boglehead Conference and sits on the panel)
https://obliviousinvestor.com/8-sample- ... ortfolios/
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

thanks very much! I'll check out those links.
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Re: Investing in Vanguard through TIAA-CREF

Post by CZjc1330 »

I am a retired college prof and administrator. TIAA used to be a straight shooter, following Andrew Carnegie's desire to help professors have a decent retirement. But a few decades ago TIAA dropped being non-profit and became very aggressive salespersons. They are presently being sued by former employee/ whistle-blowers for unethical sale practices. (This has been covered in NY Times, etc.)
I would not buy Vanguard through them. Or frankly, be involved in any of their products. They push annuities Greedy, not at all customer-friendly.
Their equity side: CREF has a poor track record.
Your best bet is Vanguard. But Fidelity has improved services and fees as well in the last decade; great website as well. Check them out.
Good luck!
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Re: Investing in Vanguard through TIAA-CREF

Post by anglophile »

I am not thrilled that for more than 12 years, I've been under-investing because I trusted them wholeheartedly. Better late than never that I began to believe that I could learn about investments on my own.

Why would you not invest in Vanguard through them? Vanguard is still Vanguard, if I'm not mistaken.

If I do not use TIAA, I will lose out on the 10% that my employer puts into my 403(b) on my behalf. I can't afford to lose that 10%, as I got a late start on saving for retirement.

CZjc1330 wrote: Tue Jan 02, 2018 11:21 am I would not buy Vanguard through them. Or frankly, be involved in any of their products. They push annuities Greedy, not at all customer-friendly.
Their equity side: CREF has a poor track record.
Your best bet is Vanguard. But Fidelity has improved services and fees as well in the last decade; great website as well. Check them out.
Good luck!
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Re: Investing in Vanguard through TIAA-CREF

Post by bobinberea »

I'm reeling from having glanced at the three NYTimes articles on TIAA mentioned earlier in this thread. I was unaware of them. I'm in my 38th year of college teaching, and I have had a T-C retirement savings account almost from the beginning. I'm also a Boglehead, and I've tried to persuade faculty and staff at my university to take an interest in index investing. I am especially frustrated that T-C by now offers several index funds that are not on the menu of our T-C retirement savings options. However, I've never been able to persuade anyone on faculty or staff to take an interest in index funds.

Years ago I learned that I could roll over the money in my T-C Supplemental Retirement Annuity to Vanguard, which I have been doing for the better part of a decade. Given the three NYTimes news stories on TIAA, I am more inclined than ever to roll over the traditional Retirement Annuity as well to Vanguard when I retire. Not being retired yet, I'm stuck with T-C for now.

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Re: Investing in Vanguard through TIAA-CREF

Post by CZjc1330 »

When I said I would not buy Vanguard thru TIAA, I assumed TIAA was charging more than if you went directly to Vanguard. They have become sneaky, so I am leery of them. But if you are tied in with them
-- that's it.
Yes, don't give up your institution's healthy 10% contribution. Max out -- and even more so. For many a year, I would throw my annual raise into my retirement fund before I received it. Since I had lived on the old salary it was easy to continue at that level and invest the raise. An easy way to increase your retirement portfolio.Get rich slowly, time is your best friend.
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Re: Investing in Vanguard through TIAA-CREF

Post by talzara »

ralph124cf wrote: Tue Dec 12, 2017 8:27 pm The TIAA Real Estate fund is unique in the investment world. It owns and operates real estate properties, so is not comparable to REIT funds. It has apparently high ERs, but that is because it actually operates the real estate. Many people on this board have significant positions in the TIAA Real Estate fund, and are happy with it.
This is a common misconception among Bogleheads. It's repeated very often, and I used to believe it myself. Then I read the prospectus and discovered that it wasn't true.

The TIAA Real Estate Account (TREA) is not a REIT fund. However, the expense ratio does not include the operational costs of renting out the real estate. It's all investment expenses, so it is directly comparable to a REIT. TIAA is just inefficient.

The expense ratio breakdown is on page 7 of the prospectus: https://www.tiaa.org/public/pdf/realestate_prosp.pdf
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Re: Investing in Vanguard through TIAA-CREF

Post by camillus »

Hi all,

Just dropping in to ask more information about Vanguard funds being offered in a TIAA 403(b) menu. Is there a wrap fee? DW is at an R1 institution without such offerings and is left with horrifyingly bad investment fees across the board - generally ERs of .7%.

Just curious how easy it is to push TIAA into offering these funds, and if there is a wrap fee.

Thanks!

To the OP - stick exclusively with the Vanguard funds, especially if there is no wrap fee!
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Re: Investing in Vanguard through TIAA-CREF

Post by CyclingDuo »

camillus wrote: Mon Jan 15, 2018 10:06 pmJust dropping in to ask more information about Vanguard funds being offered in a TIAA 403(b) menu. Is there a wrap fee? DW is at an R1 institution without such offerings and is left with horrifyingly bad investment fees across the board - generally ERs of .7%.

Just curious how easy it is to push TIAA into offering these funds, and if there is a wrap fee.
Depends on your employer and if they have decided to pay for the fees or not. My employer covers the fees for TIAA, so we only pay the ER fee of the underlying Vanguard funds. My spouse has a wrap fee through her 403b and 457b plans for the Vanguard funds of .18% at VALIC.
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Re: Investing in Vanguard through TIAA-CREF

Post by jasg »

I am very happy with TIAA. No pressures at all from advisor.

Former employer's plan offers Vanguard Institutional index funds. I use those in a three-fund portfolio. In addition, I use GSRA (liquid) TIAA Traditional @3.25% as a big part of my fixed income allocation. I hold about 15% TIAA Real Estate for diversification.

I doubt I will ever annuitize TRAD or TREA but it is nice to have the option.
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