3 fund portfolio with TIAA funds from specific plan

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need403bhelp
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3 fund portfolio with TIAA funds from specific plan

Post by need403bhelp » Thu Oct 25, 2018 5:06 pm

Dear All:

I recently gave a lecture to our residents about finance and had some questions about the TIAA plan that is accessible to them. I wanted to check my understanding of their plan before I make any recommendations.

Specifically, they have the following options:

Code: Select all

TIAA Traditional Annuity - Group Supplemental Retirement Annuity (?) (0.0%)
TIAA-CREF Equity Index Fund (Retirement) (TIQRX) (0.30%)
TIAA-CREF Large-Cap Value Index Fund (Retirement) (TRCVX) (0.30%)
TIAA-CREF International Equity Index Fund (Retirement) (TRIEX) (0.31%)
TIAA-CREF Large-Cap Growth Index Fund (Retirement) (TRIRX) (0.31%)
TIAA-CREF S&P 500 Index Fund (Retirement) (TRSPX) (0.31%)
TIAA-CREF Small-Cap Blend Index Fund (Retirement) (TRBIX) (0.31%)
TIAA-CREF Bond Index Fund (Retirement) (TBIRX) (0.37%)
TIAA-CREF Money Market Fund (Retirement) (TIEXX) (0.40%)
TIAA-CREF Social Choice Equity Fund (Retirement) (TRSCX) (0.43%)
TIAA-CREF Emerging Markets Equity Index Fund (Retirement) (TEQSX) (0.46%)
CREF Equity Index Account (R1) (QCEQRX) (0.51%)
CREF Money Market Account (R1) (QCMMRX) (0.51%)
TIAA-CREF Inflation-Linked Bond Fund (Retirement) (TIKRX) (0.51%)
CREF Inflation-Linked Bond Account (R1) (QCILRX) (0.52%)
TIAA-CREF Short-Term Bond Fund (Retirement) (TISRX) (0.52%)
CREF Growth Account (R1) (QCGRRX) (0.53%)
CREF Social Choice Account (R1) (QCSCRX) (0.54%)
TIAA-CREF Bond Fund (Retirement) (TIDRX) (0.55%)
TIAA-CREF Bond Plus Fund (Retirement) (TCBRX) (0.55%)
CREF Bond Market Account (R1) (QCBMRX) (0.58%)
CREF Stock Account (R1) (QCSTRX) (0.58%)
CREF Global Equities Account (R1) (QCGLRX) (0.61%)
TIAA-CREF High-Yield Fund (Retirement) (TIHRX) (0.61%)
TIAA-CREF Lifecycle 2010 Fund (Retirement) (TCLEX) (0.74%)
TIAA-CREF Lifecycle Retirement Income Fund (Retirement) (TLIRX) (0.77%)
TIAA-CREF Lifecycle 2015 Fund (Retirement) (TCLIX) (0.75%)
TIAA-CREF Lifecycle 2020 Fund (Retirement) (TCLTX) (0.75%)
TIAA-CREF Managed Allocation Fund (Retirement) (TITRX) (0.67%)
TIAA-CREF Social Choice Bond Fund (Retirement) (TSBBX) (0.64%)
TIAA-CREF Large-Cap Value Fund (Retirement) (TRLCX) (0.65%)
TIAA-CREF Growth & Income Fund (Retirement) (TRGIX) (0.66%)
TIAA-CREF Lifecycle 2025 Fund (Retirement) (TCLFX) (0.77%)
TIAA-CREF Mid-Cap Value Fund (Retirement) (TRVRX) (0.66%)
TIAA-CREF Quant Small-Cap Equity Fund (Retirement) (TRSEX) (0.66%)
TIAA-CREF Lifecycle 2030 Fund (Retirement) (TCLNX) (0.78%)
TIAA-CREF Lifestyle Income Fund (Retirement) (TLSRX) (0.93%)
TIAA-CREF Lifecycle 2035 Fund (Retirement) (TCLRX) (0.79%)
TIAA-CREF Lifecycle 2040 Fund (Retirement) (TCLOX) (0.80%)
TIAA-CREF Lifecycle 2045 Fund (Retirement) (TTFRX) (0.81%)
TIAA-CREF Lifecycle 2050 Fund (Retirement) (TLFRX) (0.82%)
TIAA-CREF Lifecycle 2055 Fund (Retirement) (TTRLX) (0.84%)
TIAA-CREF Lifestyle Conservative Fund (Retirement) (TSCTX) (0.81%)
TIAA-CREF Large-Cap Growth Fund (Retirement) (TILRX) (0.72%)
TIAA-CREF Mid-Cap Growth Fund (Retirement) (TRGMX) (0.72%)
TIAA-CREF International Equity Fund (Retirement) (TRERX) (0.74%)
TIAA-CREF Lifestyle Moderate Fund (Retirement) (TSMTX) (0.82%)
TIAA-CREF Real Estate Securities Fund (Retirement) (TRRSX) (0.76%)
TIAA-CREF Lifestyle Growth Fund (Retirement) (TSGRX) (0.91%)
TIAA Real Estate Account (QREARX) (0.79%)
TIAA-CREF Lifestyle Aggressive Growth Fund (Retirement) (TSARX) (1.00%)
TIAA-CREF International Opportunities Fund (Retirement) (TIOTX) (0.88%)
TIAA-CREF Emerging Markets Equity Fund (Retirement) (TEMSX) (1.17%)
My thoughts regarding the three fund portfolio would be:

Code: Select all

* US equities = 100% TIAA-CREF Equity Index Fund (Retirement) (TIQRX) (0.30%)
* International equities = 
   75% TIAA-CREF International Equity Index Fund (Retirement) (TRIEX) (0.31%) + 
   25% TIAA-CREF Emerging Markets Equity Index Fund (Retirement) (TEQSX) (0.46%)
* Fixed income = 100% TIAA Traditional Annuity - Group Supplemental Retirement Annuity (?) (0.0%) 
   OR 
   100% TIAA-CREF Bond Index Fund (Retirement) (TBIRX) (0.37%)
Does this look correct?

Thank you!

TropikThunder
Posts: 2047
Joined: Sun Apr 03, 2016 5:41 pm

Re: 3 fund portfolio with TIAA funds from specific plan

Post by TropikThunder » Thu Oct 25, 2018 5:38 pm

need403bhelp wrote:
Thu Oct 25, 2018 5:06 pm
Dear All:

I recently gave a lecture to our residents about finance and had some questions about the TIAA plan that is accessible to them. I wanted to check my understanding of their plan before I make any recommendations.

(snip)

My thoughts regarding the three fund portfolio would be:

Code: Select all

* US equities = 100% TIAA-CREF Equity Index Fund (Retirement) (TIQRX) (0.30%)
* International equities = 
   75% TIAA-CREF International Equity Index Fund (Retirement) (TRIEX) (0.31%) + 
   25% TIAA-CREF Emerging Markets Equity Index Fund (Retirement) (TEQSX) (0.46%)
* Fixed income = 100% TIAA Traditional Annuity - Group Supplemental Retirement Annuity (?) (0.0%) 
   OR 
   100% TIAA-CREF Bond Index Fund (Retirement) (TBIRX) (0.37%)
Does this look correct?

Thank you!
I also have TIAA for my 403b, so I've done the comparisons for myself to see how close they come to the Vanguard equivalents. I agree with these selections.

- US Total Stock: TIQRX (TIAA's Total US Stock) tracks the Russell 3000, which holds slightly fewer stocks than the index Vanguard's TSM fund tracks (CRSP Total Market) but TIQRX is only missing the smallest of the small, so I can't see it making much of a difference in performance. CAGR from Apr 2006 - present (starting when TIQRX opened) is 8.94% for VTSMX vs 8.65% vs TQIRX, which is basically the ER difference.

- Int'l Total Stock: The TIAA funds track MSCI indexes, while the Vanguard ones track FTSE indexes, but the only significant difference between them is how they classify South Korea (MSCI calls it Emerging, FTSE calls it Developed). In TIAA's case, then, South Korea will be in the EM fund. I would take a look again at the ratio you will want for DM vs EM, though, since Vanguard's Total Int'l has ~20% EM, not the 25% you are targeting. Performance may not make that much difference though. CAGR since Sep 2010 (when TEQSX opened) is 6.19% for Vanguard Total Int'l vs 6.04% for TRIEX/TEQSX at 75/25 vs 6.23% for TRIEX/TEQSX at 75/25. Interestingly, the 5th largest holding in TEQSX is VWO, Vanguard's EM ETF. :P

- Fixed income: all of mine is in Traditional, since it has been paying more than Total Bond for the last several years, and I have not looked into the other TIAA bond funds. Most of my fixed income is in my employer's matching SRA, which pays 4.00% right now. I may reconsider if bond yields start to outpace Traditional.

Topic Author
need403bhelp
Posts: 860
Joined: Thu May 28, 2015 6:25 pm

Re: 3 fund portfolio with TIAA funds from specific plan

Post by need403bhelp » Thu Oct 25, 2018 8:03 pm

TropikThunder wrote:
Thu Oct 25, 2018 5:38 pm
need403bhelp wrote:
Thu Oct 25, 2018 5:06 pm
Dear All:

I recently gave a lecture to our residents about finance and had some questions about the TIAA plan that is accessible to them. I wanted to check my understanding of their plan before I make any recommendations.

(snip)

My thoughts regarding the three fund portfolio would be:

Code: Select all

* US equities = 100% TIAA-CREF Equity Index Fund (Retirement) (TIQRX) (0.30%)
* International equities = 
   75% TIAA-CREF International Equity Index Fund (Retirement) (TRIEX) (0.31%) + 
   25% TIAA-CREF Emerging Markets Equity Index Fund (Retirement) (TEQSX) (0.46%)
* Fixed income = 100% TIAA Traditional Annuity - Group Supplemental Retirement Annuity (?) (0.0%) 
   OR 
   100% TIAA-CREF Bond Index Fund (Retirement) (TBIRX) (0.37%)
Does this look correct?

Thank you!
I also have TIAA for my 403b, so I've done the comparisons for myself to see how close they come to the Vanguard equivalents. I agree with these selections.

- US Total Stock: TIQRX (TIAA's Total US Stock) tracks the Russell 3000, which holds slightly fewer stocks than the index Vanguard's TSM fund tracks (CRSP Total Market) but TIQRX is only missing the smallest of the small, so I can't see it making much of a difference in performance. CAGR from Apr 2006 - present (starting when TIQRX opened) is 8.94% for VTSMX vs 8.65% vs TQIRX, which is basically the ER difference.

- Int'l Total Stock: The TIAA funds track MSCI indexes, while the Vanguard ones track FTSE indexes, but the only significant difference between them is how they classify South Korea (MSCI calls it Emerging, FTSE calls it Developed). In TIAA's case, then, South Korea will be in the EM fund. I would take a look again at the ratio you will want for DM vs EM, though, since Vanguard's Total Int'l has ~20% EM, not the 25% you are targeting. Performance may not make that much difference though. CAGR since Sep 2010 (when TEQSX opened) is 6.19% for Vanguard Total Int'l vs 6.04% for TRIEX/TEQSX at 75/25 vs 6.23% for TRIEX/TEQSX at 75/25. Interestingly, the 5th largest holding in TEQSX is VWO, Vanguard's EM ETF. :P

- Fixed income: all of mine is in Traditional, since it has been paying more than Total Bond for the last several years, and I have not looked into the other TIAA bond funds. Most of my fixed income is in my employer's matching SRA, which pays 4.00% right now. I may reconsider if bond yields start to outpace Traditional.
Thanks so much for your helpful comments!

Re the mixture of TRIEX & TEQSX, I made the percentages based on a simulation of which percentages of the two lead to the closest mixture to VGTSX based on Morningstar Instant X-Ray. I uploaded my spreadsheet to Google Docs for your reference:

https://drive.google.com/file/d/1Vz1tAs ... sp=sharing

The optimal combination was actually 74% TRIEX and 26% TEQSX, but I thought 75% / 25% was close enough.

Thank you again!

Northern Flicker
Posts: 5191
Joined: Fri Apr 10, 2015 12:29 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by Northern Flicker » Thu Oct 25, 2018 8:55 pm

Yes, that would be the implementation of a traditional diversified index fund portfolio.

Another effective portfolio would be:
CREF Stock
TIAA-CREF Bond Index Fund or TIAA Traditional

CREF stock is an all-in-one stock portfolio which will alleviate the need for participants to rebalance across stock funds for only a small increase in ER. This makes for a very simple 2-fund portfolio.

Last time I checked, CREF Stock was 1/3 market index, 1/3 quantitatively enhanced index, 1/3 fundamental active management, US, DM non-US, and EM, large, mid, and small-cap.

The Russell 3000 is a total market index. It just uses a more stringent investability screen than some other total market indices.

TIAA-CREF Lifecycle Funds would also be fine. They are a little pricey but for someone with zero interest in investing they are still a good option.
Index fund investor since 1987.

Topic Author
need403bhelp
Posts: 860
Joined: Thu May 28, 2015 6:25 pm

Re: 3 fund portfolio with TIAA funds from specific plan

Post by need403bhelp » Fri Oct 26, 2018 12:05 pm

jalbert wrote:
Thu Oct 25, 2018 8:55 pm
Yes, that would be the implementation of a traditional diversified index fund portfolio.

Another effective portfolio would be:
CREF Stock
TIAA-CREF Bond Index Fund or TIAA Traditional

CREF stock is an all-in-one stock portfolio which will alleviate the need for participants to rebalance across stock funds for only a small increase in ER. This makes for a very simple 2-fund portfolio.

Last time I checked, CREF Stock was 1/3 market index, 1/3 quantitatively enhanced index, 1/3 fundamental active management, US, DM non-US, and EM, large, mid, and small-cap.

The Russell 3000 is a total market index. It just uses a more stringent investability screen than some other total market indices.

TIAA-CREF Lifecycle Funds would also be fine. They are a little pricey but for someone with zero interest in investing they are still a good option.
Thanks so much for providing a simpler two-fund portfolio as well as for highlighting the utility of the lifecycle funds for someone with zero interest in investing.

mgrimace
Posts: 10
Joined: Thu Feb 13, 2020 10:54 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Thu Feb 13, 2020 11:03 am

Hello, and thank you for this post!. Even though it's a few years later it's helpful for me as someone who is setting up a new TIAA-CREF 403(b) with similar options. However, my options are not entirely the same, hence my question: I'm wondering if anyone would be willing to take a quick look to approximate a similar 3-fund portfolio to above. The main limitation appears to be the lack of international, though there is one equity fund (TRERX).

Relevant details: I'm 37, starting late, and looking for aggressive growth/high risk. I receive matching +2% (max 7% total) from my employer. I've removed the Lifecycles that don't apply given my age and target retirement, but kept the 2045 for reference.

Code: Select all

CREF Bond Market R2 (0.32%)	
CREF Equity Index R2 (0.27%) (QCEQPX) - US
CREF Global Equities R2 (0.32%) (QCGLPX) - 55/45 US/Int.
CREF Growth R2 (0.29%) (QCGRPX) - 90/10 US/Int.
CREF Inflation-Linked Bond R2 (0.27%)	
CREF Money Market R2 (0.28%)
CREF Social Choice R2 (0.29%) (QCSCPX) - *42 US equity / 31 US fixed, 18 int. equity / 9 int. fixed*
CREF Stock R2 (0.35%) (QCSTPX) - 70/30 US/Int.
TIAA Real Estate (0.83%)
TIAA Traditional (--%)
TIAA-CREF Bond Plus Fund - Retirement Class (0.55%)	(TCBRX)
TIAA-CREF Equity Index Fund - Retirement Class	(0.30%) (TIQRX)
TIAA-CREF Growth & Income Fund - Retirement Class	(0.65%) (TRGIX)
TIAA-CREF International Equity Fund - Retirement Class (0.73%) (TRERX)
TIAA-CREF Large-Cap Growth Fund - Retirement Class (0.67%) (TILRX)
TIAA-CREF Large-Cap Value Fund - Retirement Class (0.65%) (TRCVX)
TIAA-CREF Lifecycle 2045 Fund - Retirement Class (0.81%) (TTFRX)
TIAA-CREF Mid-Cap Growth Fund - Retirement Class (0.72%) (TRGMX)
TIAA-CREF Mid-Cap Value Fund - Retirement Class (0.67%) (TRVRX)
TIAA-CREF Real Estate Securities Fund - Retirement Class (0.76%) (TRRSX)
TIAA-CREF Small-Cap Blend Index Fund - Retirement Class	(0.31%) (TRBIX)
TIAA-CREF Social Choice Equity Fund - Retirement Class (0.42%)	(TRSCX)
Thank you all, it's new to me but I'm learning a lot quickly and appreciate all the information and discussion posted!
~M
Last edited by mgrimace on Fri Feb 14, 2020 1:21 pm, edited 2 times in total.

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jjustice
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by jjustice » Thu Feb 13, 2020 12:48 pm

As someone who started with TIAA in 1978 and has been happily retired with CREF and TIAA annuities for over six years, I would suggest the following three-fund plan--which actually has a fourth component in it.
1) CREF stock annuity account. This is a well-diversified global fund with 70% domestic stocks and 30% foreign stocks. You have domestic and foreign in one fund with no worries about rebalancing.
2) TIAA Traditional annuity account. This is a reliable fixed income fund that will return as much as a good bond fund without the volatility of a bond fund.
3) TIAA Real Estate annuity account. Here is the fourth component--directly owned commercial real estate. This fund returns a safe 4%, a probable 5%, and a possible 6% with very little volatility.

You can adjust allocations to your own taste and needs. I have used 50% CREF Stock, 35% Traditional, and 15% Real Estate. The extra benefit of this plan is that you have access to three excellent annuities when you retire. You can annuitize all, some, or none as you choose at that time. I annuitized half of my TIAA funds (with annuities in of each of the three accounts) and am taking RMDs on the other half.

John

student
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Joined: Fri Apr 03, 2015 6:58 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Thu Feb 13, 2020 12:56 pm

jjustice wrote:
Thu Feb 13, 2020 12:48 pm
As someone who started with TIAA in 1978 and has been happily retired with CREF and TIAA annuities for over six years, I would suggest the following three-fund plan--which actually has a fourth component in it.
1) CREF stock annuity account. This is a well-diversified global fund with 70% domestic stocks and 30% foreign stocks. You have domestic and foreign in one fund with no worries about rebalancing.
2) TIAA Traditional annuity account. This is a reliable fixed income fund that will return as much as a good bond fund without the volatility of a bond fund.
3) TIAA Real Estate annuity account. Here is the fourth component--directly owned commercial real estate. This fund returns a safe 4%, a probable 5%, and a possible 6% with very little volatility.

You can adjust allocations to your own taste and needs. I have used 50% CREF Stock, 35% Traditional, and 15% Real Estate. The extra benefit of this plan is that you have access to three excellent annuities when you retire. You can annuitize all, some, or none as you choose at that time. I annuitized half of my TIAA funds (with annuities in of each of the three accounts) and am taking RMDs on the other half.

John
Good post. I also like TIAA Traditional. I would add that for those who have institutional class equity mutual funds available in their plan during accumulation, it is cheaper to use them (such as equity index and bond index). If one wants to annuitize in retirement, one can switch to the corresponding CREF annuity versions at a time of one's choosing.

mgrimace
Posts: 10
Joined: Thu Feb 13, 2020 10:54 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Thu Feb 13, 2020 2:40 pm

student wrote:
Thu Feb 13, 2020 12:56 pm
jjustice wrote:
Thu Feb 13, 2020 12:48 pm
As someone who started with TIAA in 1978 and has been happily retired with CREF and TIAA annuities for over six years, I would suggest the following three-fund plan--which actually has a fourth component in it.
1) CREF stock annuity account. This is a well-diversified global fund with 70% domestic stocks and 30% foreign stocks. You have domestic and foreign in one fund with no worries about rebalancing.
2) TIAA Traditional annuity account. This is a reliable fixed income fund that will return as much as a good bond fund without the volatility of a bond fund.
3) TIAA Real Estate annuity account. Here is the fourth component--directly owned commercial real estate. This fund returns a safe 4%, a probable 5%, and a possible 6% with very little volatility.

You can adjust allocations to your own taste and needs. I have used 50% CREF Stock, 35% Traditional, and 15% Real Estate. The extra benefit of this plan is that you have access to three excellent annuities when you retire. You can annuitize all, some, or none as you choose at that time. I annuitized half of my TIAA funds (with annuities in of each of the three accounts) and am taking RMDs on the other half.

John
Good post. I also like TIAA Traditional. I would add that for those who have institutional class equity mutual funds available in their plan during accumulation, it is cheaper to use them (such as equity index and bond index). If one wants to annuitize in retirement, one can switch to the corresponding CREF annuity versions at a time of one's choosing.
Happy retirement John and thank you for your insight! Thank you also to Student for your thoughts on an equity index which was also my first thought for accumulation.

So it looks like for accumulation I have two solid options:
1) CREF Stock R2 (0.35%) annuity which would cover 70%/30% Domestic/International
2) TIAA-CREF Equity Index Fund - Retirement Class (0.30%) (TIQRX) which is slightly cheaper.This is actually the same as in the original post by need403bhelp and it is 98% US; however, I don't have the same international choices to balance it out

For international, it looks like I have either:
  • In annuities, CREF Global Equities Account Class R2 (0.32%) (QCGLPX) approx. 55/45 US/International which I could add to balance out the TIAA-CREF equity index
  • Alternatively, I could stick with annuities and blend the CREF Global Equities Account Class R2 (0.32%) (QCGLPX) with CREF Growth R2 (0.29%) (QCGRPX) which is 90/10 US/int. This averages to a marginally lower MER than CREF Stock R2, but I have no idea if these are "good" annuities so to speak and would probably just go with CREF Stock R2 as John suggested (unless anyone has an alternate opinion)
  • In mutual funds, the one that I can tell is the TIAA-CREF International Equity Fund - Retirement Class (0.73%) (TRERX). Though it has a much higher MER.
Do you or anyone else have any thoughts/advice on these options, or is there something I'm missing here that could also work?

After sorting those out, then I'd add the following:
TIAA Traditional
TIAA Real Estate (0.83%)

Thank you all so much for helping me work through this!

student
Posts: 4486
Joined: Fri Apr 03, 2015 6:58 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Thu Feb 13, 2020 3:21 pm

mgrimace wrote:
Thu Feb 13, 2020 2:40 pm
student wrote:
Thu Feb 13, 2020 12:56 pm
jjustice wrote:
Thu Feb 13, 2020 12:48 pm
As someone who started with TIAA in 1978 and has been happily retired with CREF and TIAA annuities for over six years, I would suggest the following three-fund plan--which actually has a fourth component in it.
1) CREF stock annuity account. This is a well-diversified global fund with 70% domestic stocks and 30% foreign stocks. You have domestic and foreign in one fund with no worries about rebalancing.
2) TIAA Traditional annuity account. This is a reliable fixed income fund that will return as much as a good bond fund without the volatility of a bond fund.
3) TIAA Real Estate annuity account. Here is the fourth component--directly owned commercial real estate. This fund returns a safe 4%, a probable 5%, and a possible 6% with very little volatility.

You can adjust allocations to your own taste and needs. I have used 50% CREF Stock, 35% Traditional, and 15% Real Estate. The extra benefit of this plan is that you have access to three excellent annuities when you retire. You can annuitize all, some, or none as you choose at that time. I annuitized half of my TIAA funds (with annuities in of each of the three accounts) and am taking RMDs on the other half.

John
Good post. I also like TIAA Traditional. I would add that for those who have institutional class equity mutual funds available in their plan during accumulation, it is cheaper to use them (such as equity index and bond index). If one wants to annuitize in retirement, one can switch to the corresponding CREF annuity versions at a time of one's choosing.
Happy retirement John and thank you for your insight! Thank you also to Student for your thoughts on an equity index which was also my first thought for accumulation.

So it looks like for accumulation I have two solid options:
1) CREF Stock R2 (0.35%) annuity which would cover 70%/30% Domestic/International
2) TIAA-CREF Equity Index Fund - Retirement Class (0.30%) (TIQRX) which is slightly cheaper.This is actually the same as in the original post by need403bhelp and it is 98% US; however, I don't have the same international choices to balance it out

For international, it looks like I have either:
  • In annuities, CREF Global Equities Account Class R2 (0.32%) (QCGLPX) approx. 55/45 US/International which I could add to balance out the TIAA-CREF equity index
  • Alternatively, I could stick with annuities and blend the CREF Global Equities Account Class R2 (0.32%) (QCGLPX) with CREF Growth R2 (0.29%) (QCGRPX) which is 90/10 US/int. This averages to a marginally lower MER than CREF Stock R2, but I have no idea if these are "good" annuities so to speak and would probably just go with CREF Stock R2 as John suggested (unless anyone has an alternate opinion)
  • In mutual funds, the one that I can tell is the TIAA-CREF International Equity Fund - Retirement Class (0.73%) (TRERX). Though it has a much higher MER.
Do you or anyone else have any thoughts/advice on these options, or is there something I'm missing here that could also work?

After sorting those out, then I'd add the following:
TIAA Traditional
TIAA Real Estate (0.83%)

Thank you all so much for helping me work through this!
Since you only have retirement class mutual funds, I would just go with CREF Stock R2 or (TIAA-CREF Equity Index Fund Retirement Class + CREF Global Equities Account Class R2). The second choice is slightly cheaper. You have to decide whether it is worth having an extra fund. I would not use CREF Growth R2 as it only has the growth portion and not the value portion of the market.

aristotelian
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Joined: Wed Jan 11, 2017 8:05 pm

Re: 3 fund portfolio with TIAA funds from specific plan

Post by aristotelian » Thu Feb 13, 2020 4:10 pm

Interesting that CREF Social Choice has the lowest ER of the stock funds, albeit by only 1 basis point. This is a rare case where you would not be paying more to screen out certain companies, if that appeals to you. Otherwise your choices look good.

I have most of my fixed income allocation in TIAA Traditional but it might be a good idea to use one of the bond funds for ease of rebalancing.

mgrimace
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Joined: Thu Feb 13, 2020 10:54 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Thu Feb 13, 2020 4:32 pm

student wrote:
Thu Feb 13, 2020 3:21 pm

Since you only have retirement class mutual funds, I would just go with CREF Stock R2 or (TIAA-CREF Equity Index Fund Retirement Class + CREF Global Equities Account Class R2). The second choice is slightly cheaper. You have to decide whether it is worth having an extra fund. I would not use CREF Growth R2 as it only has the growth portion and not the value portion of the market.
Thank you for your advice and also for your rationale, that helps me learn too because I had no idea how to decide in this case!

mgrimace
Posts: 10
Joined: Thu Feb 13, 2020 10:54 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Thu Feb 13, 2020 4:44 pm

aristotelian wrote:
Thu Feb 13, 2020 4:10 pm
Interesting that CREF Social Choice has the lowest ER of the stock funds, albeit by only 1 basis point. This is a rare case where you would not be paying more to screen out certain companies, if that appeals to you. Otherwise your choices look good.

I have most of my fixed income allocation in TIAA Traditional but it might be a good idea to use one of the bond funds for ease of rebalancing.
Great catch on the CREF Social Choice, I hadn't paid any attention to that but it is interesting! So in this case, I would replace the TIAA-CREF Equity Index Fund Retirement Class with the CREF Social Choice, then add the CREF Global Equities Account Class R2 to add the international component (as Student suggested above)?

Re. For my own learning why would bond funds ease rebalancing vs. TIAA Traditional? I'm personally thinking of allocating 80/20 equity/fixed at this stage.

student
Posts: 4486
Joined: Fri Apr 03, 2015 6:58 am

Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Thu Feb 13, 2020 5:10 pm

mgrimace wrote:
Thu Feb 13, 2020 4:44 pm
aristotelian wrote:
Thu Feb 13, 2020 4:10 pm
Interesting that CREF Social Choice has the lowest ER of the stock funds, albeit by only 1 basis point. This is a rare case where you would not be paying more to screen out certain companies, if that appeals to you. Otherwise your choices look good.

I have most of my fixed income allocation in TIAA Traditional but it might be a good idea to use one of the bond funds for ease of rebalancing.
Great catch on the CREF Social Choice, I hadn't paid any attention to that but it is interesting! So in this case, I would replace the TIAA-CREF Equity Index Fund Retirement Class with the CREF Social Choice, then add the CREF Global Equities Account Class R2 to add the international component (as Student suggested above)?

Re. For my own learning why would bond funds ease rebalancing vs. TIAA Traditional? I'm personally thinking of allocating 80/20 equity/fixed at this stage.
TIAA Traditional has two flavors, the one with the higher rate, is illiquid. It can only be taken out over a long period of time (I think it is 9 years a 1 month) unless you annuitize. So it may be difficult to move from TIAA Traditional to Stock. Usually if it is called Retirement Annuity, then it is illiquid. If it is called Supplemental Retirement Annunity, then it is liquid. Although both versions have the same 3% minimum, RA usually gets more.

22twain
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by 22twain » Thu Feb 13, 2020 5:57 pm

If it's not clear from whatever documention you have, check with your institution's HR office to find out which version(s) of TIAA Traditional you can contribute to. At both of the colleges where I worked, employer contributions went into an illiquid version (RA or GRA) and employee contributions went into a liquid version (SRA or GSRA). After 32 years of contributions, I ended up with about 2/3 of my Trad in the liquid version.

When I started with TIAA in the early 1980s, my only two choices were TIAA Traditional and CREF Stock. I allocated my contributions 50/50, and never changed them. I never included any of the "newfangled" accounts that were added to my plan around 1990 (CREF Equity Index, CREF Bond Market, TIAA Real Estate, etc.) Never rebalanced, either. :shock: I simply increased my contribution rate as time went on. The ultimate "lazy portfolio." My accumulation is now about 64% CREF Stock.
My investing princiPLEs do not include absolutely preserving princiPAL.

student
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Thu Feb 13, 2020 7:34 pm

22twain wrote:
Thu Feb 13, 2020 5:57 pm
If it's not clear from whatever documention you have, check with your institution's HR office to find out which version(s) of TIAA Traditional you can contribute to. At both of the colleges where I worked, employer contributions went into an illiquid version (RA or GRA) and employee contributions went into a liquid version (SRA or GSRA). After 32 years of contributions, I ended up with about 2/3 of my Trad in the liquid version.

When I started with TIAA in the early 1980s, my only two choices were TIAA Traditional and CREF Stock. I allocated my contributions 50/50, and never changed them. I never included any of the "newfangled" accounts that were added to my plan around 1990 (CREF Equity Index, CREF Bond Market, TIAA Real Estate, etc.) Never rebalanced, either. :shock: I simply increased my contribution rate as time went on. The ultimate "lazy portfolio." My accumulation is now about 64% CREF Stock.
This is probably how Bernanke invested in TIAA. https://www.csmonitor.com/Business/Savi ... everything "So, it's no surprise he kept his investments simple. His two largest assets are two annuities, TIAA Traditional and CREF Stock Large Cap Blend, each valued at between $500,001 to $1,000,000 as of 2007."

mgrimace
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Fri Feb 14, 2020 1:32 pm

Thank you all again for your advice!

I took a closer look at the CREF Social Choice R2 (QCSCPX) (0.29%). This one is certainly interesting, it's an annuity made up of:
  • 42% US equity
  • 31% US fixed income
  • 18% int. equity
  • 9% int. fixed
Is this meant to be more of a catch-all/all-in-one solution here? In simpler math it's about 60/40 equity/fixed, and 60/40 US/International. It seems like a weird split but intriguing to throw in the mix or as an alternative to what we've already discussed with CREF Stock + Traditional (+real estate). As aristotelian pointed out it has the lowest ER (vs., paying a premium for the social aspect). What would you pair with something like this?

My intention is to get towards approx. 80/20 equity/fixed, and roughly 70/30 US/International.

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Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Fri Feb 14, 2020 2:35 pm

My previous question still stands, but in summary, hypothetically it looks I have two model portfolios:
  1. The JJustice-Student Model:
    80% - CREF Stock R2 (QCSTPX) (0.35)
    15% - TIAA Traditional
    5% - TIAA Real Estate (QREARX) (0.83)
    Average ER = 0.3215; 80/20 equity/fixed; 70/30 US/Int.
  2. The aristotelian model:
    50% - CREF Social Choice R2 (QCSCPX) (0.29)
    50% - TIAA-CREF Equity Index Fund (or alternative?) (QCGLPX) (0.3)
    Average ER = 0.295; 80/20 equity/fixed (from Social choice which is 60/40 equity/fixed); 80/20 US/Int.
    If I add in TIAA Traditional here I would skew down the Social Choice, but at the moment I can't figure out the math!

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Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Sat Feb 15, 2020 9:49 am

22twain wrote:
Thu Feb 13, 2020 5:57 pm
If it's not clear from whatever documention you have, check with your institution's HR office to find out which version(s) of TIAA Traditional you can contribute to. At both of the colleges where I worked, employer contributions went into an illiquid version (RA or GRA) and employee contributions went into a liquid version (SRA or GSRA). After 32 years of contributions, I ended up with about 2/3 of my Trad in the liquid version.

When I started with TIAA in the early 1980s, my only two choices were TIAA Traditional and CREF Stock. I allocated my contributions 50/50, and never changed them. I never included any of the "newfangled" accounts that were added to my plan around 1990 (CREF Equity Index, CREF Bond Market, TIAA Real Estate, etc.) Never rebalanced, either. :shock: I simply increased my contribution rate as time went on. The ultimate "lazy portfolio." My accumulation is now about 64% CREF Stock.
Thank you for that info too, that's interesting re. employer/employee split. I'm thinking generally along the same lines in terms of strategy here with CREF Stock and TIAA Traditional (+ a small piece of real estate from out discussions above), and more or less leaving it alone. Though I do plan to follow the Lifecycle allocation starting with 80/20, then every few years moving to more weight in Trad as I approach retirement age (e.g., toward 50/50). Not entirely Lazy Portfolio but pretty darn close!

Rebalancing as a whole is a concept I generally grasp theoretically, but have never actually been in a position where I've had to do it myself. Am I understanding your experience correctly, you left it alone and it generally drifted towards 60/40 over that time? So for me, theoretically, I'd be adding/upping Trad (vs., converting it to stock), unless of course it outperforms the stock over time which I'm hoping/assuming won't be the case?

I appreciate your input and advice thanks!

student
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Sat Feb 15, 2020 10:03 am

mgrimace wrote:
Fri Feb 14, 2020 2:35 pm
My previous question still stands, but in summary, hypothetically it looks I have two model portfolios:
  1. The JJustice-Student Model:
    80% - CREF Stock R2 (QCSTPX) (0.35)
    15% - TIAA Traditional
    5% - TIAA Real Estate (QREARX) (0.83)
    Average ER = 0.3215; 80/20 equity/fixed; 70/30 US/Int.
  2. The aristotelian model:
    50% - CREF Social Choice R2 (QCSCPX) (0.29)
    50% - TIAA-CREF Equity Index Fund (or alternative?) (QCGLPX) (0.3)
    Average ER = 0.295; 80/20 equity/fixed (from Social choice which is 60/40 equity/fixed); 80/20 US/Int.
    If I add in TIAA Traditional here I would skew down the Social Choice, but at the moment I can't figure out the math!
I assume you want 60/40 equity/fixed and do not care too much about international.
For the second model, if you want 10% traditional, then you need the other 10% from SC; so you have
10% - TIAA Traditional
25% - CREF Social Choice R2
65% - TIAA-CREF Equity Index Fund

Note that out of the 25% in CREF Social Choice R2, 4/10 portion is in fixed income. 25%*4/10 is 10%. In general if you want x% fixed income of your portfolio from CREF Social Choice R2, you need to solve for y in y*4/10=x. So y=10x/4. In the above example, x=10; so y=100/4=25. In your own example, x=20; so y=50.

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Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Sat Feb 15, 2020 2:59 pm

student wrote:
Sat Feb 15, 2020 10:03 am

I assume you want 60/40 equity/fixed and do not care too much about international.
For the second model, if you want 10% traditional, then you need the other 10% from SC; so you have
10% - TIAA Traditional
25% - CREF Social Choice R2
65% - TIAA-CREF Equity Index Fund

Note that out of the 25% in CREF Social Choice R2, 4/10 portion is in fixed income. 25%*4/10 is 10%. In general if you want x% fixed income of your portfolio from CREF Social Choice R2, you need to solve for y in y*4/10=x. So y=10x/4. In the above example, x=10; so y=100/4=25. In your own example, x=20; so y=50.
Thank you for clarifying the math! So allocation-wise, that allows us to compare the two choices apples-to-apples so to speak. Reading this and some other threads, it seems conventional wisdom for a lazy TIAA-CREF portfolio is the CREF Stock, TIAA Traditional, TIAA Real-Estate mix. (most of what I'm reading suggests a split of 60, 25, 15 allocated respectively). But there doesn't seem to be a lot of discussion around the Social Choice as an alternative.

My idea here was to create something that would be an alternative to what I'll now short-hand as TCLazy, using the Social Choice. Broadly speaking, it doesn't seem like it's overly financially advantageous or disadvantageous at this stage to have a Social Choice. The decision seems to be more ethical. Here, both are three-fund, comparable ERs. But again, zero experience with these in a practical sense, any other considerations anyone can see?

Additionally, I added the T-C Equity Index fund on the assumption it would be the best choice to balance out the allocation in Social Choice. Would there be a better option to incorporate this Social fund into a portfolio?

Thanks again for the discussion and ideas here!

student
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Sat Feb 15, 2020 3:11 pm

mgrimace wrote:
Sat Feb 15, 2020 2:59 pm
student wrote:
Sat Feb 15, 2020 10:03 am

I assume you want 60/40 equity/fixed and do not care too much about international.
For the second model, if you want 10% traditional, then you need the other 10% from SC; so you have
10% - TIAA Traditional
25% - CREF Social Choice R2
65% - TIAA-CREF Equity Index Fund

Note that out of the 25% in CREF Social Choice R2, 4/10 portion is in fixed income. 25%*4/10 is 10%. In general if you want x% fixed income of your portfolio from CREF Social Choice R2, you need to solve for y in y*4/10=x. So y=10x/4. In the above example, x=10; so y=100/4=25. In your own example, x=20; so y=50.
Thank you for clarifying the math! So allocation-wise, that allows us to compare the two choices apples-to-apples so to speak. Reading this and some other threads, it seems conventional wisdom for a lazy TIAA-CREF portfolio is the CREF Stock, TIAA Traditional, TIAA Real-Estate mix. (most of what I'm reading suggests a split of 60, 25, 15 allocated respectively). But there doesn't seem to be a lot of discussion around the Social Choice as an alternative.

My idea here was to create something that would be an alternative to what I'll now short-hand as TCLazy, using the Social Choice. Broadly speaking, it doesn't seem like it's overly financially advantageous or disadvantageous at this stage to have a Social Choice. The decision seems to be more ethical. Here, both are three-fund, comparable ERs. But again, zero experience with these in a practical sense, any other considerations anyone can see?

Additionally, I added the T-C Equity Index fund on the assumption it would be the best choice to balance out the allocation in Social Choice. Would there be a better option to incorporate this Social fund into a portfolio?

Thanks again for the discussion and ideas here!
Personally, I would not bother with social choice. I will keep it simple with TIAA Traditional as fixed income (assuming you are comfortable with it) and use equity index and global for equity since you do not have a "cheap" international fund.

22twain
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by 22twain » Sat Feb 15, 2020 11:45 pm

mgrimace wrote:
Sat Feb 15, 2020 9:49 am
22twain wrote:
Thu Feb 13, 2020 5:57 pm
When I started with TIAA in the early 1980s, my only two choices were TIAA Traditional and CREF Stock. I allocated my contributions 50/50, and never changed them. [...] Never rebalanced, either. :shock: I simply increased my contribution rate as time went on. The ultimate "lazy portfolio." My accumulation is now about 64% CREF Stock.
Am I understanding your experience correctly, you left it alone and it generally drifted towards 60/40 over that time?
Basically yes, although the stock % also went down sometimes.

September 2000: 64%
March 2003: 47%
September 2007: 59%
March 2009: 41%
February 2020: 64%

I'm ignoring short-term variations of a few % in between.

If I had checked at the end of each year, and rebalanced if the stock % was less than about 45% or more than about 55%, I would now have about 5% more in those accounts than I now actually have. A noticeable amount, but not a deal-breaking amount for me. About 1.8 years of expenses, out of about 36. And that's without taking Social Security into account.
My investing princiPLEs do not include absolutely preserving princiPAL.

mgrimace
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Sun Feb 16, 2020 10:44 am

student wrote:
Sat Feb 15, 2020 3:11 pm

Personally, I would not bother with social choice. I will keep it simple with TIAA Traditional as fixed income (assuming you are comfortable with it) and use equity index and global for equity since you do not have a "cheap" international fund.
Thanks, I totally agree, it seems like it's more trouble than it's worth in this case.

So, if I'm reading your allocation correctly it would look something like:
  • Fixed: TIAA traditional @ 15%
  • Equity(1): CREF Equity Index R2 (0.27%) (QCEQPX) @ 30% [annuity]
  • Equity(2): CREF Global Equities Account Class R2 (QCGLPX)(0.32% ER) @ 50% [annuity]
  • Bonus: TIAA real estate @ 5%
This puts me at 80/20 equity/fixed, and roughly 70/30 US/Int in my equity (thanks for the previous math, that helped!) with an ER around 0.29%

So really, it comes down to a matter of where I would put my equity portion, with everything being the same distribution (i.e., equity/fixed and US/int.):
CREF Stock, total portfolio ER of 0.32 vs. CREF EI+Global, total portfolio ER of 0.28


It looks like they are both essentially the same in composition, is there any factor other than ER I should consider?

*EDIT: updated with info from student below*
Last edited by mgrimace on Sun Feb 16, 2020 11:23 am, edited 2 times in total.

student
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Sun Feb 16, 2020 11:03 am

mgrimace wrote:
Sun Feb 16, 2020 10:44 am
student wrote:
Sat Feb 15, 2020 3:11 pm

Personally, I would not bother with social choice. I will keep it simple with TIAA Traditional as fixed income (assuming you are comfortable with it) and use equity index and global for equity since you do not have a "cheap" international fund.
Thanks, I totally agree, it seems like it's more trouble than it's worth in this case.

So, if I'm reading your allocation correctly it would look something like:
  • Fixed: TIAA traditional @ 15%
  • Equity(1): TIAA-CREF Equity Index Fund Retirement Class (TIQRX) (0.30% ER) @ 30% [mutual fund] [or did you mean the annuity version?]
  • Equity(2): CREF Global Equities Account Class R2 (QCGLPX)(0.32% ER) @ 50% [annuity]
  • Bonus: TIAA real estate @ 5%
This puts me at 80/20 equity/fixed, and roughly 70/30 US/Int in my equity (thanks for the previous math, that helped!) with an ER around 0.29%

So really, it comes down to a matter of where I would put my equity portion, with everything being the same distribution (i.e., equity/fixed and US/int.):
CREF Stock [annuity] combined portfolio ER of 0.32 vs. TIAA-CREF Equity Index Fund [mutual fund] +Global combined portfolio ER of 0.29


Differences:
  • Annuity has the benefit of annuitizing @ retirement and 3-funds
  • Equity has the benefit of a slightly lower ER (but also has an annuity component) and 4-funds
  • ??
Equity Index uses Russell 3000 in both CREF version and the mutual fund version. Since the CREF annuity version is actually cheaper, just use that.

mgrimace
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by mgrimace » Sun Feb 16, 2020 11:23 am

student wrote:
Sun Feb 16, 2020 11:03 am

Equity Index uses Russell 3000 in both CREF version and the mutual fund version. Since the CREF annuity version is actually cheaper, just use that.
Great thanks! I updated my post above and the total ER drops about a point. So really, both options are mainly annuities with the same overall composition. I took a look again at Equity Index and Global vs., Stock and really they do seem very similar in their breakdown (e.g., both have similar splits of tech, healthcare, etc., both have about 5% EM in Asia, etc.). So in terms of rationale is there anything other than lowest ER that I should be considering here? I'm assuming that with the 4 funds (Equity Index + Global) vs., 3 funds (Stock) that there will be more diversification with the 4? But Stock would require less rebalancing since it's kind of all-in-one?

student
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Re: 3 fund portfolio with TIAA funds from specific plan

Post by student » Sun Feb 16, 2020 11:28 am

mgrimace wrote:
Sun Feb 16, 2020 11:23 am
student wrote:
Sun Feb 16, 2020 11:03 am

Equity Index uses Russell 3000 in both CREF version and the mutual fund version. Since the CREF annuity version is actually cheaper, just use that.
Great thanks! I updated my post above and the total ER drops about a point. So really, both options are mainly annuities with the same overall composition. I took a look again at Equity Index and Global vs., Stock and really they do seem very similar in their breakdown (e.g., both have similar splits of tech, healthcare, etc., both have about 5% EM in Asia, etc.). So in terms of rationale is there anything other than lowest ER that I should be considering here? I'm assuming that with the 4 funds (Equity Index + Global) vs., 3 funds (Stock) that there will be more diversification with the 4? But Stock would require less rebalancing since it's kind of all-in-one?
I think it is close to six of one, half a dozen of the other.

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