403b Mutual of America vs T Rowe Price

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mav12
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403b Mutual of America vs T Rowe Price

Post by mav12 » Thu Nov 21, 2019 10:22 pm

Hello,

I'm working for a non-profit company and we have access to these two plans for your retirement accounts, Mutual of America vs T Rowe Price.

From the literature prospectus, it seems Mutual of America charges 2% expense fees, plus the fund fees from Fidelity, Vanguard and others around 0.50%. On the other hand, T Rowe Price may not have as famous funds as Fidelity or Vanguard, but they don't charge the expense fees. Only the fund fees, which varies, but around 0.50%.

Unless I am misreading the fee structure, does Mutual of America charge a lot of fees compared to T Rowe Price ?

Updated
The link to the complete fee structure for my plan tier for Mutual of America http://bit.ly/mutualofamerica VS
T Rowe Price https://www.troweprice.com/personal-inv ... index.html
https://www.troweprice.com/personal-inv ... ports.html

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Updated
The link to the complete fee structure for my plan tier http://bit.ly/mutualofamerica VS
T Rowe Price https://www.troweprice.com/personal-inv ... index.html
https://www.troweprice.com/personal-inv ... ports.html

Here is a link of T Rowe Price funds that have high Alpha, basically done better then an index.

https://www.troweprice.com/personal-inv ... volatility
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Last edited by mav12 on Sat Nov 23, 2019 3:00 am, edited 7 times in total.

krow36
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Re: 403b Mutual of America vs T Rowe Price

Post by krow36 » Fri Nov 22, 2019 12:42 am

The untitled pages that you've supplied look like they are from Mutual of America? They are referring to an annuity-based 403b plan and it looks too expensive. TR Price provides mutual fund-based 403b(7) custodial plans and they are almost certainly lower cost than any annuity 403b.

If you want feedback on these 2 vendors, you should supply links for each that provide the funds offered, the funds' expense ratio and any other fees. TR Price is not known for low-cost index funds, but rather for actively-managed funds.

lakpr
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Re: 403b Mutual of America vs T Rowe Price

Post by lakpr » Fri Nov 22, 2019 8:05 am

T Rowe Price does have good index funds (POMIX, its total stock market index fund, for example) with 0.2% to 0.4% ER. Higher than Vanguard or Fidelity, yes. But not so egregious as various other 403b providers.

bei22000
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Re: 403b Mutual of America vs T Rowe Price

Post by bei22000 » Fri Nov 22, 2019 9:11 am

Without much of the details, I would always go with the lower fee given TRP is one of the good companies.

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Fri Nov 22, 2019 5:25 pm

I was able to get in touch with a rep and he stated that for our Org the fees fall under the Tier 3, which is .45%, plus the fund costs. I asked him to send me the info on the funds' costs, but there are common names, such as Fidelity and Vanguard, but are structured under the annuity.

I haven't come across this structure. Does this structure provide any advantage over a regular mutual fund through T Rowe ?

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ruralavalon
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Re: 403b Mutual of America vs T Rowe Price

Post by ruralavalon » Fri Nov 22, 2019 5:45 pm

krow36 wrote:
Fri Nov 22, 2019 12:42 am
The untitled pages that you've supplied look like they are from Mutual of America? They are referring to an annuity-based 403b plan and it looks too expensive. TR Price provides mutual fund-based 403b(7) custodial plans and they are almost certainly lower cost than any annuity 403b.

If you want feedback on these 2 vendors, you should supply links for each that provide the funds offered, the funds' expense ratio and any other fees. TR Price is not known for low-cost index funds, but rather for actively-managed funds.
I agree.

For feedback on which 403b vendor to use, you need to provide a list of funds offered by each vendor, giving fund names, tickers and expense ratios.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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fortfun
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Re: 403b Mutual of America vs T Rowe Price

Post by fortfun » Fri Nov 22, 2019 6:07 pm

Careful, the T Rowe Price plan may also have an annuity wrapper that hasn't been disclosed. Do your due diligence--these people can be sneaky.

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Fri Nov 22, 2019 7:28 pm

fortfun wrote:
Fri Nov 22, 2019 6:07 pm
Careful, the T Rowe Price plan may also have an annuity wrapper that hasn't been disclosed. Do your due diligence--these people can be sneaky.
Thank you for the pointer. Confirmed with T Rowe, our org has a straight 403b plan with them, no umbrella/wrappers, not an annuity or other special structures. We have access to their Mutual Funds. It seems the difference boils down to whether "Variable annuity" structure provides any benefits during retirement. It sounds glamourous, continuous stream of income, but is it worth it? Does anyone have an experience/knowledge on this topic or experience during retirement when dealing with Mutual of America ?

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Re: 403b Mutual of America vs T Rowe Price

Post by ruralavalon » Fri Nov 22, 2019 8:36 pm

mav12 wrote:
Thu Nov 21, 2019 10:22 pm
. . . T Rowe Price may not have as famous funds as Fidelity or Vanguard, but they don't charge the expense fees. Only the fund fees, which varies, but around 0.50%.
. . . . .
mav12 wrote:
Fri Nov 22, 2019 7:28 pm
fortfun wrote:
Fri Nov 22, 2019 6:07 pm
Careful, the T Rowe Price plan may also have an annuity wrapper that hasn't been disclosed. Do your due diligence--these people can be sneaky.
Thank you for the pointer. Confirmed with T Rowe, our org has a straight 403b plan with them, no umbrella/wrappers, not an annuity or other special structures. We have access to their Mutual Funds. It seems the difference boils down to whether "Variable annuity" structure provides any benefits during retirement. It sounds glamourous, continuous stream of income, but is it worth it? Does anyone have an experience/knowledge on this topic or experience during retirement when dealing with Mutual of America ?
If you will have access to T. Rowe Price index funds at their regular expense ratios, then choose T. Rowe Price as the 403b vendor.

For T. Rowe Price funds to use see the wiki article: T.Rowe Price, "Index Funds". The index funds are very diversified and their expense ratios are fairly low.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

dru808
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Re: 403b Mutual of America vs T Rowe Price

Post by dru808 » Fri Nov 22, 2019 10:16 pm

T Rowe price without the annuity, without a doubt. Heck ,if they don’t have their index funds in the plan they have outstanding active funds in performance and price. :sharebeer

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Re: 403b Mutual of America vs T Rowe Price

Post by krow36 » Fri Nov 22, 2019 11:46 pm

mav12 wrote:
Fri Nov 22, 2019 5:25 pm
I was able to get in touch with a rep and he stated that for our Org the fees fall under the Tier 3, which is .45%, plus the fund costs. I asked him to send me the info on the funds' costs, but there are common names, such as Fidelity and Vanguard, but are structured under the annuity.
You should be aware that the funds' expense ratios in an annuity 403b plan frequently (usually?) have higher ERs than those of the fund company itself. Have you checked the ERs of the annuity's funds?

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Sat Nov 23, 2019 2:03 am

krow36 wrote:
Fri Nov 22, 2019 11:46 pm
mav12 wrote:
Fri Nov 22, 2019 5:25 pm
I was able to get in touch with a rep and he stated that for our Org the fees fall under the Tier 3, which is .45%, plus the fund costs. I asked him to send me the info on the funds' costs, but there are common names, such as Fidelity and Vanguard, but are structured under the annuity.
You should be aware that the funds' expense ratios in an annuity 403b plan frequently (usually?) have higher ERs than those of the fund company itself. Have you checked the ERs of the annuity's funds?
I'll check.

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Sat Nov 23, 2019 2:24 am

I'd updated the post, now with the fee structure for Mutual of America and T Rowe Price links.

dru808
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Re: 403b Mutual of America vs T Rowe Price

Post by dru808 » Sat Nov 23, 2019 2:23 pm

mav12 wrote:
Sat Nov 23, 2019 2:24 am
I'd updated the post, now with the fee structure for Mutual of America and T Rowe Price links.
Your t.rowe link isn’t showing anything in question. Either way, t Rowe all the way. The other company is charging extra fees e wn on the equity index funds. At t Rowe there is only an er, no hidden management/administration fees. T rowes index funds while expensive compared to vanguard or fidelity aren’t horrid and you have the opportunity if you wish to use some of their low cost, high performance active funds.

Edit: I see the link now to the funds available at trowe. I wouldn’t solely base your fund selection on alpha and what has done great recently. I know I’m kind of contradicting myself by suggesting active funds from t Rowe. But, don’t just select the high flying Nigerian bond appreciation fund, solely because it’s up 30% for the year. Know what I’m sayin?

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Sat Nov 23, 2019 2:51 pm

dru808 wrote:
Sat Nov 23, 2019 2:23 pm
mav12 wrote:
Sat Nov 23, 2019 2:24 am
I'd updated the post, now with the fee structure for Mutual of America and T Rowe Price links.
Your t.rowe link isn’t showing anything in question. Either way, t Rowe all the way. The other company is charging extra fees e wn on the equity index funds. At t Rowe there is only an er, no hidden management/administration fees. T rowes index funds while expensive compared to vanguard or fidelity aren’t horrid and you have the opportunity if you wish to use some of their low cost, high performance active funds.

Edit: I see the link now to the funds available at trowe. I wouldn’t solely base your fund selection on alpha and what has done great recently. I know I’m kind of contradicting myself by suggesting active funds from t Rowe. But, don’t just select the high flying Nigerian bond appreciation fund, solely because it’s up 30% for the year. Know what I’m sayin?
Thank you. Yes, past performance is not guarantee of future results. I also looked at the tenure of the manager. A good example is their New Horizons fund https://www.troweprice.com/personal-inv ... arch/PRNHX. It had very good performance, but the manager just left. The new manager only worked there from March of 2019. On the other hand, their Capital Appreciation fund also good and the manager had been the longest. https://www.troweprice.com/personal-inv ... arch/PRWCX It it closed, but is available under my 403b.

dru808
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Re: 403b Mutual of America vs T Rowe Price

Post by dru808 » Sat Nov 23, 2019 2:59 pm

mav12 wrote:
Sat Nov 23, 2019 2:51 pm
dru808 wrote:
Sat Nov 23, 2019 2:23 pm
mav12 wrote:
Sat Nov 23, 2019 2:24 am
I'd updated the post, now with the fee structure for Mutual of America and T Rowe Price links.
Your t.rowe link isn’t showing anything in question. Either way, t Rowe all the way. The other company is charging extra fees e wn on the equity index funds. At t Rowe there is only an er, no hidden management/administration fees. T rowes index funds while expensive compared to vanguard or fidelity aren’t horrid and you have the opportunity if you wish to use some of their low cost, high performance active funds.

Edit: I see the link now to the funds available at trowe. I wouldn’t solely base your fund selection on alpha and what has done great recently. I know I’m kind of contradicting myself by suggesting active funds from t Rowe. But, don’t just select the high flying Nigerian bond appreciation fund, solely because it’s up 30% for the year. Know what I’m sayin?
Thank you. Yes, past performance is not guarantee of future results. I also looked at the tenure of the manager. A good example is their New Horizons fund https://www.troweprice.com/personal-inv ... arch/PRNHX. It had very good performance, but the manager just left. The new manager only worked there from March of 2019. On the other hand, their Capital Appreciation fund also good and the manager had been the longest. https://www.troweprice.com/personal-inv ... arch/PRWCX It it closed, but is available under my 403b.
Jump on the Capital appreciation fund if its available and it fits into your aa. I would in a heartbeat.

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Sat Nov 23, 2019 3:01 pm

dru808 wrote:
Sat Nov 23, 2019 2:59 pm
mav12 wrote:
Sat Nov 23, 2019 2:51 pm
dru808 wrote:
Sat Nov 23, 2019 2:23 pm
mav12 wrote:
Sat Nov 23, 2019 2:24 am
I'd updated the post, now with the fee structure for Mutual of America and T Rowe Price links.
Your t.rowe link isn’t showing anything in question. Either way, t Rowe all the way. The other company is charging extra fees e wn on the equity index funds. At t Rowe there is only an er, no hidden management/administration fees. T rowes index funds while expensive compared to vanguard or fidelity aren’t horrid and you have the opportunity if you wish to use some of their low cost, high performance active funds.

Edit: I see the link now to the funds available at trowe. I wouldn’t solely base your fund selection on alpha and what has done great recently. I know I’m kind of contradicting myself by suggesting active funds from t Rowe. But, don’t just select the high flying Nigerian bond appreciation fund, solely because it’s up 30% for the year. Know what I’m sayin?
Thank you. Yes, past performance is not guarantee of future results. I also looked at the tenure of the manager. A good example is their New Horizons fund https://www.troweprice.com/personal-inv ... arch/PRNHX. It had very good performance, but the manager just left. The new manager only worked there from March of 2019. On the other hand, their Capital Appreciation fund also good and the manager had been the longest. https://www.troweprice.com/personal-inv ... arch/PRWCX It it closed, but is available under my 403b.
Jump on the Capital appreciation fund if its available and it fits into your aa. I would in a heartbeat.
Really good? Thank you.

dru808
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Re: 403b Mutual of America vs T Rowe Price

Post by dru808 » Sat Nov 23, 2019 3:09 pm

mav12 wrote:
Sat Nov 23, 2019 3:01 pm
dru808 wrote:
Sat Nov 23, 2019 2:59 pm
mav12 wrote:
Sat Nov 23, 2019 2:51 pm
dru808 wrote:
Sat Nov 23, 2019 2:23 pm
mav12 wrote:
Sat Nov 23, 2019 2:24 am
I'd updated the post, now with the fee structure for Mutual of America and T Rowe Price links.
Your t.rowe link isn’t showing anything in question. Either way, t Rowe all the way. The other company is charging extra fees e wn on the equity index funds. At t Rowe there is only an er, no hidden management/administration fees. T rowes index funds while expensive compared to vanguard or fidelity aren’t horrid and you have the opportunity if you wish to use some of their low cost, high performance active funds.

Edit: I see the link now to the funds available at trowe. I wouldn’t solely base your fund selection on alpha and what has done great recently. I know I’m kind of contradicting myself by suggesting active funds from t Rowe. But, don’t just select the high flying Nigerian bond appreciation fund, solely because it’s up 30% for the year. Know what I’m sayin?
Thank you. Yes, past performance is not guarantee of future results. I also looked at the tenure of the manager. A good example is their New Horizons fund https://www.troweprice.com/personal-inv ... arch/PRNHX. It had very good performance, but the manager just left. The new manager only worked there from March of 2019. On the other hand, their Capital Appreciation fund also good and the manager had been the longest. https://www.troweprice.com/personal-inv ... arch/PRWCX It it closed, but is available under my 403b.
Jump on the Capital appreciation fund if its available and it fits into your aa. I would in a heartbeat.
Really good? Thank you.
You won’t get much support here for the fund. Past performance is not a guarantee yada yada yada... we all use past performance to base our investment decisions. Why do we pick 90/10 for a 25 year old and invest in index funds? Because they have performed well in the past. If index funds stunk since the 70’s, had negative returns, would this forum be around?

dru808
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Re: 403b Mutual of America vs T Rowe Price

Post by dru808 » Sat Nov 23, 2019 3:12 pm

By the way, I’m not a anti index guy. I started as a fully index passive investor, I’m now 50/50 index/active and plan to stay that way. In fact, when I give advice to new investors or coworkers I recommend to start the boglehead way, especially if they don’t want to learn anything about investing and are just set it and forget it. :moneybag

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Sun Nov 24, 2019 1:28 pm

Yes, good point.

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ruralavalon
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Re: 403b Mutual of America vs T Rowe Price

Post by ruralavalon » Sun Nov 24, 2019 1:32 pm

mav12 wrote:
Sun Nov 24, 2019 1:28 pm
Yes, good point.
I also suggest sticking with the T. Rowe Price index funds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Mon Nov 25, 2019 1:17 am

ruralavalon wrote:
Sun Nov 24, 2019 1:32 pm
mav12 wrote:
Sun Nov 24, 2019 1:28 pm
Yes, good point.
I also suggest sticking with the T. Rowe Price index funds.
Thank you. It seems like a unanimous opinion to go with T Rowe Price 403b, to get my employer match. I will allocate a portion to the Capital Appreciation Fund PRWCX for sure. Just to get my foot in the door, and probably the rest as time goes on.

I have already allocated Roth IRA funds over a year to Vanguard's...Vanguard Wellington Fund VWELX, Vanguard Global Wellington VGWLX and PRIME CAP ODYSSEY GROWTH POGRX.

As a side note, I know this topic had been discussed all over, but should an investor emphasize pre or post tax retirement funds contributions? I'm in my late 30s, $38k.

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Wiggums
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Re: 403b Mutual of America vs T Rowe Price

Post by Wiggums » Mon Nov 25, 2019 1:42 am

T Rowe price is the way to go. Given the choice of pretax/after tax, I’d do pretax

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ruralavalon
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Re: 403b Mutual of America vs T Rowe Price

Post by ruralavalon » Mon Nov 25, 2019 12:17 pm

mav12 wrote:
Mon Nov 25, 2019 1:17 am
ruralavalon wrote:
Sun Nov 24, 2019 1:32 pm
mav12 wrote:
Sun Nov 24, 2019 1:28 pm
Yes, good point.
I also suggest sticking with the T. Rowe Price index funds.
Thank you. It seems like a unanimous opinion to go with T Rowe Price 403b, to get my employer match.

Don't limit yourself to contributing just enough to get the employer match.

Here is a general account funding priority that usually works well for many people (when there is no high interest debt or HSA use):
1) Contribute to the work-based plans (401k, 403b, 457, SIMPLE IRA, TSP, etc.) enough to get the full employer match (the match is like free money, your best possible investment);
2) Contribute the maximum to an IRA, traditional or Roth (or backdoor Roth technique), depending on eligibility and personal circumstances;
3) Contribute the remainder of the maximum employee contribution to the work-based accounts; and
4) Contribute to a taxable investing account.

"If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA." Please see the wiki article "Prioritizing investments".


mav12 wrote:
Mon Nov 25, 2019 1:17 am
I will allocate a portion to the Capital Appreciation Fund PRWCX for sure. Just to get my foot in the door, and probably the rest as time goes on.

I have already allocated Roth IRA funds over a year to Vanguard's...Vanguard Wellington Fund VWELX, Vanguard Global Wellington VGWLX and PRIME CAP ODYSSEY GROWTH POGRX.
Is there a reason you will use actively managed funds rather than index funds?

In general index funds offer broader diversification (which reduces risk) and lower expense ratios (which give better net returns).

In general index funds outperform comparable actively managed funds. Wiki article, "SPIVA scorecards". For domestic stocks "Over the time periods measured, active funds have lagged index returns in almost all style categories." "The SPIVA reports also show index dominance over active funds during bear markets in 2000 - 2002 and 2008 ".

Pdf, SPIVA U.S. 2018 year-end report. "For the ninth consecutive year the majority (64.49%) of large-cap funds underperformed the S&P 500 index."


mav12 wrote:
Mon Nov 25, 2019 1:17 am
As a side note, I know this topic had been discussed all over, but should an investor emphasize pre or post tax retirement funds contributions? I'm in my late 30s, $38k.
What is your tax bracket, both federal and state?

Will you be eligible for a significant pension?

What is your profession or occupation?

How much do you currently have in traditional tax-deferred accounts?

For most people traditional 401k contributions will likely be better.

The income tax code is progressive, with a lower tax rate for lower income. Retirement usually means that employment income has ended. Therefore, most people are in a lower tax bracket in retirement and for most people traditional 401k contributions will probably be better.

In addition when you withdraw from your 401k in retirement, the income is not all taxed at the marginal tax rate specified for your tax bracket. TFB blog post, "The case against Roth 401k". "I think for most people the majority, if not 100%, of the contribution should go to a Traditional 401(k)." "Until you know you can generate from your Traditional 401(k) enough income to fill the lower brackets, it doesn’t make sense to contribute to a Roth 401(k). For people without a traditional defined benefit pension plan, it means the majority of the retirement savings should go to a Traditional 401(k), not Roth."

Will you be eligible for a substantial pension? A pension changes that analysis, so that Roth contributions are likely better if you have a significant pension coming in addition to Social Security. TFB blog post, "Most TSP participants should switch to the Roth TSP". That post discussed the effect of a federal pension, but the analysis should hold for other pensions.

Wiki article, "Traditional vs Roth".
"Tax considerations:
* If your current marginal tax rate is 15% or less, prefer a Roth.
* If you expect to have higher marginal rates than your current marginal rate for most of your career, prefer a Roth.
* If you will have a traditional account or a pension large enough to meet your expected retirement expenses (and you expect to take that pension shortly after retiring), prefer a Roth.
* Otherwise, prefer a traditional account."
Last edited by ruralavalon on Mon Nov 25, 2019 4:27 pm, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Tony-S
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Re: 403b Mutual of America vs T Rowe Price

Post by Tony-S » Mon Nov 25, 2019 12:53 pm

mav12 wrote:
Sat Nov 23, 2019 2:51 pm
Yes, past performance is not guarantee of future results. I also looked at the tenure of the manager. A good example is their New Horizons fund https://www.troweprice.com/personal-inv ... arch/PRNHX. It had very good performance, but the manager just left. The new manager only worked there from March of 2019.
To be clear, the current New Horizons Fund manager, Joshua Spencer, previously ran their Global Tech Fund (PRGTX) and did a fantastic job. I've had New Horizons in my IRA for 25 years and am on my third fund manager. No intent on giving it up any time soon - it has treated me extremely well.

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Tue Nov 26, 2019 12:18 am

Tony-S wrote:
Mon Nov 25, 2019 12:53 pm
mav12 wrote:
Sat Nov 23, 2019 2:51 pm
Yes, past performance is not guarantee of future results. I also looked at the tenure of the manager. A good example is their New Horizons fund https://www.troweprice.com/personal-inv ... arch/PRNHX. It had very good performance, but the manager just left. The new manager only worked there from March of 2019.
To be clear, the current New Horizons Fund manager, Joshua Spencer, previously ran their Global Tech Fund (PRGTX) and did a fantastic job. I've had New Horizons in my IRA for 25 years and am on my third fund manager. No intent on giving it up any time soon - it has treated me extremely well.
Thank you for sharing. M* (thanks to my local library) has a neutral rating, but I would buy into if it were still open. Lucky me on Cap Appreciation Fund. Someone at our org who is still working got into it some time ago, that's how I got in.

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mav12
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Re: 403b Mutual of America vs T Rowe Price

Post by mav12 » Tue Nov 26, 2019 12:19 am

ruralavalon wrote:
Mon Nov 25, 2019 12:17 pm
mav12 wrote:
Mon Nov 25, 2019 1:17 am
ruralavalon wrote:
Sun Nov 24, 2019 1:32 pm
mav12 wrote:
Sun Nov 24, 2019 1:28 pm
Yes, good point.
I also suggest sticking with the T. Rowe Price index funds.
Thank you. It seems like a unanimous opinion to go with T Rowe Price 403b, to get my employer match.

Don't limit yourself to contributing just enough to get the employer match.

Here is a general account funding priority that usually works well for many people (when there is no high interest debt or HSA use):
1) Contribute to the work-based plans (401k, 403b, 457, SIMPLE IRA, TSP, etc.) enough to get the full employer match (the match is like free money, your best possible investment);
2) Contribute the maximum to an IRA, traditional or Roth (or backdoor Roth technique), depending on eligibility and personal circumstances;
3) Contribute the remainder of the maximum employee contribution to the work-based accounts; and
4) Contribute to a taxable investing account.

"If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA." Please see the wiki article "Prioritizing investments".


Your response is pretty detailed. That is the general outline I was looking for (after I settled on my 403b pick). I'll look over the sources. Thank you for sharing.

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