403(b) Stable Value vs Bond Funds

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HawkeyePharmD
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Joined: Tue Jan 22, 2019 11:20 pm

403(b) Stable Value vs Bond Funds

Post by HawkeyePharmD » Sat Jun 08, 2019 5:17 pm

Hi, I am 31 years old, and I am reviewing my retirement account and I am having trouble comparing my Stable Value Fund to my Bond Fund options. I am trying to decide if I should go with all of my fixed allocation to one or the other or maybe half in stable value and half in bonds. There is not much information out there to help with which would be better. ie comparing SEC yields to current stable value offering, do the YTD, 1 year, 3 year, etc. matter? How and what am I supposed to be comparing between these funds for the fixed allocation in my 403(b) account?

Stable value selection
- New York Life Guaranteed Interest Account 10 - ER 0.1%

Is this the correct website for finding the current rate of my stable value fund?
https://www.nylinvestments.com/investme ... ble-value/

Bond selections
- Metropolitan West Total Return Bd Plan - MWTSX - ER 0.37%
- Loomis Sayles Core Plus Bond N - NERNX - ER 0.39%
- Inflation Protected Bond Fund - PRIPX - ER 0.41% (Net - contractual rate) ER 0.58% (Gross)
Last edited by HawkeyePharmD on Sat Jun 08, 2019 6:22 pm, edited 1 time in total.

retiredjg
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Re: 403(b) Stable Value vs Bond Funds

Post by retiredjg » Sat Jun 08, 2019 5:31 pm

In order to evaluate a stable value fund, you need to know what it is paying this year. It changes from year to year. You might have to get that information through your current plan. Is that link provided by your employer plan? if yes, I would guess that is the fund you have.

A stable value fund is unlikely to pay as high a return as a bond fund, but they have less risk. As you should know, the greater the risk, the greater expected return. Not that return and expected return may be different.

Either of the top two bond funds should be fine as well. The costs are reasonable. The third fund is an inflation protected bond which you may not need while working.

Sometimes people combine some of each to lower the cost while still getting a decent return. The cost of the stable value fund does not matter as whit it pays you is AFTER the cost.

TBillT
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Re: 403(b) Stable Value vs Bond Funds

Post by TBillT » Mon Jun 10, 2019 5:36 pm

One historically good SVF is T Rowe Price SVF. Looks like it is about 2.1% annual at the moment.
So not too exciting right now. A few lucky folks have had access to 3% SV funds so that would be great.
The stable value funds are cash, and they were more interesting when interest rates were going down back in 2008, because for a while there it was hard to beat SVF's, but they eventually came down to 2% range. Although I am not opposed to cash. I had a lot in SVF until money market fiunds came back a few years ago, at which point I rolled over our 401k's.

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Earl Lemongrab
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Re: 403(b) Stable Value vs Bond Funds

Post by Earl Lemongrab » Tue Jun 11, 2019 3:46 pm

From the time I set up my "real" portfolio, I have been 50/50 stable value and bond index. Over that time, the performance has been substantially close, with the bonds more volatile of course. If it's a decent fund (the info sheet is not a good place for information) then I'd use it for some part of fixed. But you're young, so any choice on the spectrum should be outweighed by your stocks.
Play Gloria!

TropikThunder
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Re: 403(b) Stable Value vs Bond Funds

Post by TropikThunder » Wed Jun 12, 2019 11:24 am

HawkeyePharmD wrote:
Sat Jun 08, 2019 5:17 pm
There is not much information out there to help with which would be better. ie comparing SEC yields to current stable value offering, do the YTD, 1 year, 3 year, etc. matter? How and what am I supposed to be comparing between these funds for the fixed allocation in my 403(b) account?
It’s easy to look up a bond fund’s returns, but to compare to the SVF you need to know the crediting rates year by year as retiredjg said. The link you gave has PDFs for each of the guaranteed funds (named by their expense ratio, i.e. Guaranteed Interest Account 10) but they all say “See Administrator” for crediting rate. So you’ll have to check your 403b plan website.

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