Which fund to choose - Wife's 457 Plan

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Topic Author
aadwen
Posts: 165
Joined: Sat Dec 05, 2009 12:42 am

Which fund to choose - Wife's 457 Plan

Post by aadwen » Mon Jan 06, 2020 9:51 pm

Wife new school district uses TCGServices as the administrator.

She is currently in the RAMS Agressive Growth, a fund of DFA Index Funds. The expense ratios are higher than the TIAA-CREF Lifecyle Funds.

QUESTION: We are 35, so the question is should stay stay as is, or move to the 2050 fund, which has an ER of 0.1%, or simply go 100% Vanguard Total Stock Mkt Idx Adm VTSAX @ 0.04%?

Fund, Symbol, Expense Ratio, Allocation within Fund

DFA Large Cap International DFALX 0.23% 15%
DFA Emerging Markets Core Equity DFCEX 0.52% 13%
DFA US Large Value DFLVX 0.27% 30%
DFA US Micro Cap DFSCX 0.52% 5%
DFA US Small Company DFSTX 0.37% 5%
DFA US Small Value DFSVX 0.52% 5%
DFA US Large Company Portfolio DFUSX 0.08% 15%
DFA Intl Small Cap Value DISVX 0.68% 12%


Fund Options include:
TIAA-CREF Lifecycle 2020 0.1%
TIAA-CREF Lifecycle 2025 0.1%
TIAA-CREF Lifecycle 2030 0.1%
TIAA-CREF Lifecycle 2035 0.1%
TIAA-CREF Lifecycle 2040 0.1%
TIAA-CREF Lifecycle 2045 0.1%
TIAA-CREF Lifecycle 2050 0.1%
Blackrock Total Return Instl .45%
DFA Commodity Strategy Portfolio Institutional
DFA Continental Small
DFA Emerging Markets Core Equity I
DFA Intl Small Cap Value
DFA Large Cap International
DFA US Large Company Portfolio
DFA US Large Value
DFA US Micro Cap
DFA US Small Company
DFA US Small Value
Vanguard Long Term Investment Grade Fund .22%
Vanguard Short Term Bond Index Admiral .07%
Vanguard Total Stock Market Index Admiral .04%
Vanguard Wellesley Income Fund .23%
Vanguard Wellington .25%
Victory Fund For Income .64%
Met Life Stable Value Fund
Last edited by aadwen on Mon Jan 06, 2020 11:40 pm, edited 1 time in total.

ExitStageLeft
Posts: 1895
Joined: Sat Jan 20, 2018 4:02 pm

Re: Which fund to choose - Wife's 457 Plan

Post by ExitStageLeft » Mon Jan 06, 2020 10:42 pm

Absent any other information, I would advise her to go 100% in the Vanguard target date fund.

If you want more helpful advice, add the expense ratios for all the other funds.

It may be possible to build a portfolio with lower fees, especially if there are IRA accounts and you have a 401k plan. Then you can look at all the accounts lumped together and place the assets where they are most effective tax-wise.

Topic Author
aadwen
Posts: 165
Joined: Sat Dec 05, 2009 12:42 am

Re: Which fund to choose - Wife's 457 Plan

Post by aadwen » Mon Jan 06, 2020 11:37 pm

ExitStageLeft wrote:
Mon Jan 06, 2020 10:42 pm
Absent any other information, I would advise her to go 100% in the Vanguard target date fund.

If you want more helpful advice, add the expense ratios for all the other funds.

It may be possible to build a portfolio with lower fees, especially if there are IRA accounts and you have a 401k plan. Then you can look at all the accounts lumped together and place the assets where they are most effective tax-wise.
Target vanguard doesnt exist, do you mean the TIAA?

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Googliebear
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Location: Williamsburg, VA

Re: Which fund to choose - Wife's 457 Plan

Post by Googliebear » Mon Jan 06, 2020 11:38 pm

My two cents is it depends on your risk tolerance and understanding of how the stock market works.

Personally, I have a very high tolerance for risk and would put all of my assets into to VTSAX at thirty five.

However, at 44, I've seen alot more market turbulence over my time such as the tech bubble bust, great recession and so forth. My biggest problem during those type of events is not having enough cash to buy more VTSAX when everything is on sale.

If it was me, I'd just keep buying VTSAX until your five to ten years out from retirement and then figure out your asset allocation to ease into retirement with the correct stock/bond (cash) balance. I'm currently 90/10 at the moment while dollar cost averaging my 401K contributions to the S&P500. When the market corrects (and it will) I'll start buying stock with my 10% cash horde until I'm nearly 100% equities again.

But everyone is different.

EdLaFave
Posts: 430
Joined: Fri Dec 26, 2014 2:31 am

Re: Which fund to choose - Wife's 457 Plan

Post by EdLaFave » Tue Jan 07, 2020 9:26 am

aadwen wrote:
Mon Jan 06, 2020 9:51 pm
Wife new school district uses TCGServices as the administrator.
You haven't told us what vendor she is using. The vendor matters quite a bit because they charge fees in addition to the expense ratio.

You haven't told us what vendors are available to her, both in the 457b as well as the 403b. Again, that matters because you might have a much better alternative to whatever vendor is currently being used.
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
She is currently in the RAMS Agressive Growth, a fund of DFA Index Funds. The expense ratios are higher than the TIAA-CREF Lifecyle Funds.
You haven't told us what this RAMS Aggressive Growth fund costs. It would also be helpful if you provided more detail about the fund or a symbol (if it has one) so we can more easily look it up.

Similarly, you didn't include the expense ratio of other funds that you've listed.
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
should stay stay as is, or move to the 2050 fund, which has an ER of 0.1%, or simply go 100% Vanguard Total Stock Mkt Idx Adm VTSAX @ 0.04%?
I can't comment on what you currently hold. I can say that I wouldn't pay somebody 6 basis points to keep my asset allocation in line (which is what a target date fund is bringing to the table), but many people find that small convenience to be worth it. I guess you have to decide for yourself.

I just want to reiterate how important it is to invest through a low cost vendor in 403b and 457b plans. You've glossed over that topic in this post, so hopefully you've already crossed that bridge.

ExitStageLeft
Posts: 1895
Joined: Sat Jan 20, 2018 4:02 pm

Re: Which fund to choose - Wife's 457 Plan

Post by ExitStageLeft » Tue Jan 07, 2020 5:56 pm

aadwen wrote:
Mon Jan 06, 2020 11:37 pm
Target vanguard doesnt exist, do you mean the TIAA?
I did mean TIAA Target 2050 fund. Sloppy commenting on my part, sorry.

Topic Author
aadwen
Posts: 165
Joined: Sat Dec 05, 2009 12:42 am

Re: Which fund to choose - Wife's 457 Plan

Post by aadwen » Tue Jan 07, 2020 8:36 pm

EdLaFave wrote:
Tue Jan 07, 2020 9:26 am
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
Wife new school district uses TCGServices as the administrator.
You haven't told us what vendor she is using. The vendor matters quite a bit because they charge fees in addition to the expense ratio.

You haven't told us what vendors are available to her, both in the 457b as well as the 403b. Again, that matters because you might have a much better alternative to whatever vendor is currently being used.
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
She is currently in the RAMS Agressive Growth, a fund of DFA Index Funds. The expense ratios are higher than the TIAA-CREF Lifecyle Funds.
You haven't told us what this RAMS Aggressive Growth fund costs. It would also be helpful if you provided more detail about the fund or a symbol (if it has one) so we can more easily look it up.

Similarly, you didn't include the expense ratio of other funds that you've listed.
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
should stay stay as is, or move to the 2050 fund, which has an ER of 0.1%, or simply go 100% Vanguard Total Stock Mkt Idx Adm VTSAX @ 0.04%?
I can't comment on what you currently hold. I can say that I wouldn't pay somebody 6 basis points to keep my asset allocation in line (which is what a target date fund is bringing to the table), but many people find that small convenience to be worth it. I guess you have to decide for yourself.

I just want to reiterate how important it is to invest through a low cost vendor in 403b and 457b plans. You've glossed over that topic in this post, so hopefully you've already crossed that bridge.
Thank you!

TCG is the only option for 457, we are opening a 403b through Vanguard.

I’m thinking we go the target or vanguard total stock market for the lowest expense ratio.

There is no fund symbol but I did show the asset allocation of the fund and the various expense ratios.

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ruralavalon
Posts: 18538
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Which fund to choose - Wife's 457 Plan

Post by ruralavalon » Tue Jan 07, 2020 8:53 pm

What is the desired asset allocation?

What other accounts are there, and what funds are available in each account?

Please see this for information needed and format: "Asking Portfolio Questions". Please simply add to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

It's often better to coordinate investments among all accounts of a married couple, treating all accounts together as a single unified portfolio, in order to get a combination of funds that give both the best diversification (to decrease risk) and the lowest expenses (to increase your net returns).

In other words, it's not often best to consider any single account in isolation.

In my opinion in her 457 plan the better funds to consider using are:
1) Vanguard Total Stock Market Index Admiral (VTSAX) ER 0.04%;
2) DFA Large Cap International (developed markets only) (DFALX) ER 0.23%; and
3) Vanguard Short Term Bond Index Admiral (VBIRX) ER 0.07%.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
aadwen
Posts: 165
Joined: Sat Dec 05, 2009 12:42 am

Re: Which fund to choose - Wife's 457 Plan

Post by aadwen » Tue Jan 07, 2020 10:39 pm

ruralavalon wrote:
Tue Jan 07, 2020 8:53 pm
What is the desired asset allocation?

What other accounts are there, and what funds are available in each account?

Please see this for information needed and format: "Asking Portfolio Questions". Please simply add to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

It's often better to coordinate investments among all accounts of a married couple, treating all accounts together as a single unified portfolio, in order to get a combination of funds that give both the best diversification (to decrease risk) and the lowest expenses (to increase your net returns).

In other words, it's not often best to consider any single account in isolation.

In my opinion in her 457 plan the better funds to consider using are:
1) Vanguard Total Stock Market Index Admiral (VTSAX) ER 0.04%;
2) DFA Large Cap International (developed markets only) (DFALX) ER 0.23%; and
3) Vanguard Short Term Bond Index Admiral (VBIRX) ER 0.07%.
Overall AA across all accounts - 401k, 403b, 457(1), 457(2), HSA, Taxable, Roth, Roth = nearing 7 Figures

https://ibb.co/Rcdb2r7

carmonkie
Posts: 260
Joined: Fri Jun 29, 2018 4:31 pm

Re: Which fund to choose - Wife's 457 Plan

Post by carmonkie » Wed Jan 08, 2020 1:23 am

aadwen wrote:
Tue Jan 07, 2020 8:36 pm
EdLaFave wrote:
Tue Jan 07, 2020 9:26 am
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
Wife new school district uses TCGServices as the administrator.
You haven't told us what vendor she is using. The vendor matters quite a bit because they charge fees in addition to the expense ratio.

You haven't told us what vendors are available to her, both in the 457b as well as the 403b. Again, that matters because you might have a much better alternative to whatever vendor is currently being used.
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
She is currently in the RAMS Agressive Growth, a fund of DFA Index Funds. The expense ratios are higher than the TIAA-CREF Lifecyle Funds.
You haven't told us what this RAMS Aggressive Growth fund costs. It would also be helpful if you provided more detail about the fund or a symbol (if it has one) so we can more easily look it up.

Similarly, you didn't include the expense ratio of other funds that you've listed.
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
should stay stay as is, or move to the 2050 fund, which has an ER of 0.1%, or simply go 100% Vanguard Total Stock Mkt Idx Adm VTSAX @ 0.04%?
I can't comment on what you currently hold. I can say that I wouldn't pay somebody 6 basis points to keep my asset allocation in line (which is what a target date fund is bringing to the table), but many people find that small convenience to be worth it. I guess you have to decide for yourself.

I just want to reiterate how important it is to invest through a low cost vendor in 403b and 457b plans. You've glossed over that topic in this post, so hopefully you've already crossed that bridge.
Thank you!

TCG is the only option for 457, we are opening a 403b through Vanguard.

I’m thinking we go the target or vanguard total stock market for the lowest expense ratio.

There is no fund symbol but I did show the asset allocation of the fund and the various expense ratios.
I think you need to read the fees fine print. The vendor did a presentation at my wife's school disctrict and their management fees were like 2% plus funds fees for the 457 plan. The funs offering was limited and expensive. At 35 and assuming your wife stays at the ISD for a long time, those high fees will start to hurt.

Topic Author
aadwen
Posts: 165
Joined: Sat Dec 05, 2009 12:42 am

Re: Which fund to choose - Wife's 457 Plan

Post by aadwen » Wed Jan 08, 2020 7:35 am

I think you need to read the fees fine print. The vendor did a presentation at my wife's school disctrict and their management fees were like 2% plus funds fees for the 457 plan. The funs offering was limited and expensive. At 35 and assuming your wife stays at the ISD for a long time, those high fees will start to hurt.

It’s 0.6% total for management fees, previous-threads have stated that it’s still worth it at that level.

EdLaFave
Posts: 430
Joined: Fri Dec 26, 2014 2:31 am

Re: Which fund to choose - Wife's 457 Plan

Post by EdLaFave » Wed Jan 08, 2020 8:30 am

aadwen wrote:
Mon Jan 06, 2020 9:51 pm
school district uses TCGServices as the administrator.
aadwen wrote:
Tue Jan 07, 2020 8:36 pm
TCG is the only option for 457, we are opening a 403b through Vanguard.

It’s 0.6% total for management fees, previous-threads have stated that it’s still worth it at that level.
I'm not familiar with TCG, but I thought you said they were the Third Party Administrator, which of course is different than a vendor.

Sure it is very likely still "worth it," but it is still exploitative.

If you've got a Vanguard 403b that's great. However, if you only have a single 457b available and they charge 0.60% plus expense ratios and they don't offer an international fund for the fair market value (say 11 basis points), then I would personally push the school district to add Fidelity and possibly your state run 457b (if one exists in your state and is of high quality).

I got OCPS (FL) to add Vanguard and Fidelity to their 403b/457b line up and wrote a few posts about it in my blog, particularly when I finally succeeded.

Even if you've got your house in order, I encourage you to go through this exercise to help the other employees. I'd be happy to help you through that process.
aadwen wrote:
Tue Jan 07, 2020 8:36 pm
I’m thinking we go the target or vanguard total stock market for the lowest expense ratio.

There is no fund symbol but I did show the asset allocation of the fund and the various expense ratios.
If you go with Vanguard's Total Stock Market Index, then I'm assuming you'd use your other accounts to meet your overall asset allocation.

Those seem to be the lowest cost funds available, but I still don't think you listed expense ratios for every fund (even if you did, I don't expect the final conclusion to change):
aadwen wrote:
Mon Jan 06, 2020 9:51 pm
DFA Commodity Strategy Portfolio Institutional
DFA Continental Small
DFA Emerging Markets Core Equity I
DFA Intl Small Cap Value
DFA Large Cap International
DFA US Large Company Portfolio
DFA US Large Value
DFA US Micro Cap
DFA US Small Company
DFA US Small Value

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