3 or 4-fund portfolio in TIAA-CREF 401(a) help

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tross78
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Joined: Sun Nov 12, 2017 8:14 pm

3 or 4-fund portfolio in TIAA-CREF 401(a) help

Post by tross78 » Thu Jan 04, 2018 4:40 pm

I know others have posted regarding TIAA-CREF (rc), but it seems like each employer offers different fund options. I'd very much appreciate allocation and fund choice help for a 3 (or 4) fund portfolio. I'm 30, so seeking aggressive growth. Currently have everything sitting in TIAA-CREF Lifecycle 2055 (+0.55%).

My plan is to put total international stock market in my vanguard taxable account to make room for US stock and fixed income. Speaking of fixed income, I'm confused about whether or not I should use TIAA Traditional in place of bonds, and if so what % of fixed income.

Interestingly, TIAA's online tool recommends 91% equities and 9% TIAA Real Estate. Not sure what's up with that.

Here are the options available to me with expense ratios:

Equities
- CREF Equity Index R3 (Variable Annuities) +0.23%
- CREF Global Equities R3 (Variable Annuities) +0.33%
- CREF Growth R3 (Variable Annuities) +0.27%
- CREF Stock R3 (Variable Annuities) +0.32%
- TIAA Access International Equity Index Fund T1 (Variable Annuities) +0.16%
- TIAA Access Large-Cap Growth Index Fund T1 (Variable Annuities) +0.16%
- TIAA Access Large-Cap Value Index Fund T1 (Variable Annuities) +0.16%
- TIAA Access S&P 500 Index Fund T1 (Variable Annuities) +0.15%
- TIAA Access Small-Cap Blend Index Fund T1 (Variable Annuities) +0.16%
- TIAA Access Vanguard Selected Value T1 (Variable Annuities) +0.45%
- TIAA Access-American Funds Euro Pacific Growth T1 (Variable Annuities) +0.6%
- TIAA Access-T. Rowe Price Institutional Large Cap Growth T1 (Variable Annuities) +0.66%

Fixed Income
- CREF Bond Market R3 (Variable Annuities) +0.29%
- CREF Inflation-Linked Bond R3 (Variable Annuities) +0.24%
- TIAA Access Bond Index T1 (Variable Annuities) +0.22%

Guaranteed
- TIAA Stable Value
- TIAA Traditional

Real Estate TIAA Real Estate +0.85%

Thanks so much!

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oldzey
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Location: Land of Lincoln

Re: 3 or 4-fund portfolio in TIAA-CREF 401(a) help

Post by oldzey » Thu Jan 04, 2018 6:21 pm

Welcome to the forum, tross78!

Here's my suggestion for a 3 fund portfolio at age 30:
45% TIAA Access S&P 500 Index Fund T1
45% TIAA Access International Equity Index Fund T1
10% TIAA Traditional (in place of bonds)

If you want Real Estate (4 fund portfolio), then maybe something like:
40% TIAA Access S&P 500 Index Fund T1
40% TIAA Access International Equity Index Fund T1
10% TIAA Traditional (in place of bonds)
10% TIAA Real Estate

I used to have a TIAA-CREF 4 fund portfolio.
Then I dropped the international index fund and had a 3 fund portfolio.
And then I dropped TIAA Real Estate and I'm now down to 2 funds (70% U.S. Equity Index Funds and 30% TIAA Traditional).
Very simple - I sleep well at night.
I'm 50 y/o, btw.

Cheers,
oldzey
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

tross78
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Joined: Sun Nov 12, 2017 8:14 pm

Re: 3 or 4-fund portfolio in TIAA-CREF 401(a) help

Post by tross78 » Thu Jan 04, 2018 8:44 pm

Thanks so much Oldzey! That makes a whole lot of sense.

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oldzey
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Re: 3 or 4-fund portfolio in TIAA-CREF 401(a) help

Post by oldzey » Thu Jan 04, 2018 9:38 pm

You're welcome!

Take a peek at the M* TIAA Funds Forum to help decipher some of the T-C acronyms & terms, such as MDO, TPA, TRAD, TREA, and vintages.

Cheers,
Oldzey
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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CyclingDuo
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Re: 3 or 4-fund portfolio in TIAA-CREF 401(a) help

Post by CyclingDuo » Thu Jan 04, 2018 10:19 pm

tross78 wrote:
Thu Jan 04, 2018 4:40 pm
I know others have posted regarding TIAA-CREF (rc), but it seems like each employer offers different fund options. I'd very much appreciate allocation and fund choice help for a 3 (or 4) fund portfolio. I'm 30, so seeking aggressive growth. Currently have everything sitting in TIAA-CREF Lifecycle 2055 (+0.55%).
No worries, you can assemble the Three Fund Portfolio in at last two ways with the choices you list in your TIAA plan.
tross78 wrote:
Thu Jan 04, 2018 4:40 pm
Here are the options available to me with expense ratios:

Equities
- CREF Stock R3 (Variable Annuities) +0.32%

Fixed Income
- CREF Bond Market R3 (Variable Annuities) +0.29%

Thanks so much!
Here is from the Boglehead Wiki on how to get the Three Fund Portfolio...

TIAA annuities plans participants can create a three-fund porfolio with only two funds:[note 7]

7. The Stock fund is comprised of 70% Total US Stock market, 30% total international (excluding US) market, which is 2/3 of a three-fund portfolio.

Stock (70% Russell 3000 / 30% MSCI Allworld ex-US)
Bond (Barclays U.S. Aggregate Bond)

TIAA mutual fund (retail) participants can use:

Equity Index (TINRX)
Emerging Markets Stock Index (TEQKX) [You don't have this, but you've got the TIAA International!]
Bond Index Fund (TBILX)

https://www.bogleheads.org/wiki/Three-fund_portfolio


That would give you the Three Fund Portfolio at TIAA for a lower ER fee than you are currently paying for the LifeCycle 2055 Fund. Pretty easy to switch online.

If you wanted to use as a template for AA, the LifeCycle 2055 currently is:

US Equity 65.28
International Equity 28.38
Fixed Income 3.77
Direct Real Estate 2.35
Short-Term Investments, Other
Assets & Liabilities, Net 0.22

So you could go...

90% - CREF Stock R3 (Variable Annuities) +0.32%
10% - CREF Bond Market R3 (Variable Annuities) +0.29%

...and have your Three Fund Portfolio that would be pretty similar to the Life Cycle Fund and pay a lower ER fee.

The next option would cost you even less and would be my choice:

49.2% TIAA Access S&P 500 Index Fund T1 (Variable Annuities) +0.15%
10.8% TIAA Access Small-Cap Blend Index Fund T1 (Variable Annuities) +0.16%
30% TIAA Access International Equity Index Fund T1 (Variable Annuities) +0.16%
10% TIAA Access Bond Index T1 (Variable Annuities) +0.22%

You want to approximate the Vanguard Total Stock Market Fund, so using the TIAA S&P 500 and the TIAA Small Cap Index fund would do it. 82% of US stocks in the S&P 500 and 18% of US stocks in the Small Cap combined for your combined US Equity portion would approximate the Total Stock Market.

Directions are here: https://www.bogleheads.org/wiki/Approxi ... ock_market

Either way, two excellent ways for you to get the Three Fund Portfolio with your choices at TIAA. And both ways have lower ER fees than you are currently paying for the LifeCycle 2055 Fund. I'm not sure you need the TIAA Real Estate fund, but you could use that at 5% of your AA and drop the Bond Fund down to 5%, so the two combined equal 10% and mirror your LifeCycle 2055 Fund. Just note the ER fee is getting close to 1% for the Real Estate Fund. :annoyed For that reason alone, I'd skip it.

Otherwise, with the two portfolio construction options = winner, winner.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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oldzey
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Re: 3 or 4-fund portfolio in TIAA-CREF 401(a) help

Post by oldzey » Fri Jan 05, 2018 10:25 am

There is more than one road to Dublin. Some excellent options provided by CyclingDuo - thank you!

I agree that TREA has a high ER (that's why I dropped it from my portfolio). However, it is unique in that it provides direct ownership of CRE.

Here's a little information about TIAA Traditional vs. Bond Funds, tross78: Is TIAA Traditional a Good Deal? - The Accumulation Phase

Image
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

tross78
Posts: 9
Joined: Sun Nov 12, 2017 8:14 pm

Re: 3 or 4-fund portfolio in TIAA-CREF 401(a) help

Post by tross78 » Fri Jan 05, 2018 9:57 pm

Thank you both so much for such detailed insight and research.

CyclingDuo, love the idea of using TIAA Access Small-Cap Blend Index Fund in order to approximate the Vanguard Total Stock Market Fund.

I now feel much more confident making my portfolio decisions.

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