Fund choices for newly-hired college prof

hawkmountain

Hi all! I don't post much, but lurk lots. It feels good to get back on the discussion board. Can some of you weigh in on these 2 questions?

Our newly-minted DIL with her newly-minted doctorate has investment choices at the college that just hired her. They are: MetLife, Valic, and TIAA-CREF. I'm just checking, although it kinda looks like a no-brainer at this point. In addition, the college has a contribution matching plan up to 9%. She is 27.

Which company would you pick? And then what sector or funds within the company would you go for?

Thanks in advance. What a great site this is with the tremendous work by David, Chip, Accipiter and many others.

best, hawk

jlev

TIAA-CREF has allowed me to invest in a fairly wide variety of funds through a brokerage window opened in my Roth IRA, but I doubt that is standard through what I'm guessing would be a 403b. Not super impressed with their proprietary funds, not necessarily unimpressed either, but their index funds have ridiculous ER's imho (at least compared to fidelity, vanguard or schwab).

Edited to add: All of the service I've gotten through TIAA-CREF has been superb.

bee

TIAA-CREF.
A quick screening produced these choices...notice that TIAA-CREF has multiple offerig of the same investment (lots of duplication). Good Luck and con"grad"ulations!



Also, aren't there student loan forgiveness programs out there for those that choose education as a profession?

Crash

Hawk: This is presumably for a 403b? I figured, but you didn't say so--- though you mention "matching" funds up to 9%. ....Has TIAA CREF improved its game? There have been issues in the not-too-distant-past. I think performance was an issue. The funds just did not do a good job of investing. Were there legal matters, besides?

From the days of the depths of the Financial Crisis, for which no one has yet gone to jail:
http://chronicle.com/article/Is-TIAA-CREF-Safe-/44807

...But Oregon is using TIAA-CREF for its 529 Plan.
http://www.savingforcollege.com/529_news/?page=plan_news&plan_news_id=1004

This might only be marginally helpful, but take a look.

davidrmoran

tiaa-cref without question compared with the others

9%, wow. good for her.

Old_Joe

Hey there Hawk- great to hear from you again!

Don't know anything about Valic, but no contest between Met & TIAA-CREF. Go with TIAA-CREF.

Regards- OJ

Anna

Back in my youth, I was in a similar position and ended up with 403b's at both TIAA-CREF and Valic. Looking back years later, IMO you have only one choice and that is TIAA-CREF.

mrdarcey

bee said:

Also, arn't there student loan forgiveness program out there for those that choose education as a profession?

Without debating whether it is the "education" field, not generally for people who become professors. Though the restructuring of federal student loans now essentially means forgiveness after 20 years.

I'm guessing, but at 27 her chances are her student debt may be minimally limited to undergrad. Let me second the 9% is amazing comment, though. Especially given how tight money can be at universities and colleges. Great deal.

MrRuffles

bee said:

I quick screening produced these choices...notice that TIAA-CREF has multiple offerig of the same investment (lots of duplication). Good Luck and congradulations!

Depending on the contract, a TIAA-CREF 403b will also have unique investment choices beyond its publicly available mutual funds. These include fixed-income TIAA Traditional, TIAA Real Estate (which is a portfolio of actual real estate properties, not of REITS or ROC's), and CREF variable annuities (which are similar to mutual funds).

Ted

@hawkmountain: Don't dismiss VALIC out of hand. They have a wide range of both active and passive stock and bond funds. They offer TRP Health Science, Technology Fund Blue Chip Growth Funds, Vanguard's Wellington Fund, Long-Term Treasury and Corporate Bond Funds, Nasdaq-100
Regards,
Ted
http://quicktake.morningstar.com/fundfamily/valic/0C00001VXP/fund-list.aspx

[Deleted User]

The user and all related content has been deleted.

VintageFreak

PhDs should invest in index funds. PhDs are smart people. I N D E X.

David_Snowball

TIAA-CREF would be my recommendation. Their programs come in many flavors, not all of which offer the same combination of retirement class funds and annuities. As a general matter, they have a nice series of target-date funds that are built purely around index funds. And their Real Estate account is, literally, in a class by itself. It invests directly in real estate rather than just in real estate securities. It utterly crashed in the 2008 market crisis; that was one disastrous 24 months period sandwiched by 18 years of remarkably steady returns.

David

jlev

@David_Snowball

Is that only available as the variable annuity or in some sort of mutual fund format as well?

David_Snowball

It's only a variable annuity. There are real liquidity problems with a portfolio like this (can't easily sell 3% of an apartment building to meet today's redemptions, for example), so I doubt that it would ever work as an open-end fund.

David

jlev

makes sense

BWG

+1 ...I don't know much about the other two vendors, but the the Real Estate account is unique and makes TIAA_CREF a worthy option.

David_Snowball said:

TIAA-CREF would be my recommendation. Their programs come in many flavors, not all of which offer the same combination of retirement class funds and annuities. As a general matter, they have a nice series of target-date funds that are built purely around index funds. And their Real Estate account is, literally, in a class by itself. It invests directly in real estate rather than just in real estate securities. It utterly crashed in the 2008 market crisis; that was one disastrous 24 months period sandwiched by 18 years of remarkably steady returns.

David

davidrmoran

uh and omg ... ! Click the 10y tab and see if you could've possibly hung in.

DS is being, well, generous, or something; from this graph, it looks rather more like ~6y to get back to zero. So it depends on what his 'disastrous' means.

https://www.tiaa-cref.org/public/tcfpi/Investment/Profile?symbol=41091375

Talk about investor returns and behaviors. Who would not have bailed, not knowing what the future held, only imaging the worst?

You would have had to keep in mind that this downward dive was putting you back only to where you were 05/6/7.

JohnChisum

In hindsight if someone was dollar cost averaging and paid no attention to the collapse in NAV, they picked up a bunch of shares at fire sale prices.

But for most, this looks like a classic whiplash and I suspect a lot of investors got caught.

David_Snowball

For what interest it holds, I held my position throughout and added monthly. Chip reports similar behavior. I'll try to check historic AUM to see if I can discern aggregate investor behavior.

David

davidrmoran

>> For what interest it holds, I held my position throughout and added monthly. Chip reports similar behavior.

It holds considerable interest, I suggest, as it sets you apart from most other investors on earth, including in this forum. 40% plunge and 5-6y back to whole? I would say your behavior is extraordinary. Adding monthly.

I would like to say I would've done the same. Certainly I have done similarly since 08 in a range of investments, buying greedily and staying in equities, but this would have been a taxing experience. A lesson here in perseverance.

STB65

FWIW, I forewent (if that's a word) the annuity and still have the TIAA real estate fund in my 403b at a prior university employer (St Louis U). Perhaps they think I'll roll over eventually into an annuity, but I didn't have that understanding. In fact, as I rolled my money out of the annuity portion of my funds, I rolled it into the real estate fund. I had left that university for the private world temporarily, so that may have allowed this maneuver. As I recall,the transfer occurred at 10%/yr, so they tried to protect their participants.
A few years back that institution negotiated a good array of funds from other fund companies generally with the lowest ER each offered. My current employer offers TIAA, but only the usual choices, and I haven't chosen to play. TIAA apparently will yield to pressure if the institution is big enough, but I have no idea how this was accomplished.

I agree with those recommending the lowest cost index funds she can find. While bond funds may make one feel a bit better in the crashes, I don't see the point at 27, regardless of experts' recommendations. Start balancing 15 years (or 10) before retirement by changing the choices in your automatic investments.

chip

davidrmoran said:

I would say your behavior is extraordinary. Adding monthly.

I will admit there were times when I refused to open my quarterly statements.

hawkmountain

And I will confess that in 1973 I slammed the drawer shut and didn't open it for two years

BobC

These are horrible options, unfortunately. MetLife and Valic are the worst. TIAA-CREF is passable, but tell your DIL to NEVER put dollars in the TIAA guaranteed option. Once dollars are in that account, they cannot be moved to the CREF side. They can only be withdrawn over a ten-year time period at retirement. CREF has some ok funds, but I would avoid the Lifestyle funds altogether. And their emerging markets, managed allocation, and small cap funds are very weak. Stick with Social Choice Equity, Mid Cap Value, or Equity Index funds. Different institutions have different fund options available to participants. Just keep in mind that TIAA-CREF treats investors' dollars are their own. At retirement, they can make it very difficult to move dollars out of their custodianship. Unfortunately, insurance companies have a stranglehold on 403b options. If the college has a deferred compensation option (457), she might be better served with that, since T. Rowe Price and a handful of other fund companies have staked out claims to that territory. So...best bet is a 457 plan with a decent fund company. If that is not possible, TIAA-CREF is best 403b option, but stay away from TIAA account.

hawkmountain

Hi Bob C. Thanks for your response. It rings very true - years ago when we started our retirement savings we used...gasp...variable annuities. When we finally realized our mistake it took us 8 YEARS to gradually get out.
Anyway I have asked her to read all the responses including of course yours. It is interesting that you mention the equity index and the mid cap as those also caught my eye with particular attention to the ER and the 10 year returns. If she splits equally between the 2, her ER will average out about .5 - could be better but its not horrible.

Old_Joe

Once again Bob C comes through with solid recommendations based upon ling experience. This man is a gem!

I had forgotten how long Bob has been a pillar of support for both MFO and FundAlarm until I happened to read the "What are these Numbers?" post a few days ago, which contains a historic link to a FundAlarm page from April 2005.

There is Bob, then and now one of the most helpful folks to ever post on MFO or FundAlarm. Some other names, still with us, from the past: Maurice, Ted, David Snowball (of course!), VintageFreak, Mark, rono, and Falcon (now Accipiter). Congrats to all on longevity and minimal, if any, evidence of senility.

BobC

Old_Joe, your kind words mean a lot to me. Thanks for being around all these years with the rest of us senior citizens!

hawkmountain

Many many thanks to all who responded here!! Not only have you been enlightening and helpful to a newcomer (our DIL) but you just may have acquired a new lurker. This was the spirit of FA, and it seems it is continuing here (minus a few recent acrimonious offerings which are probably better off to just forget).
BTW, the 457 offerings thru her college are TIAA-CREF, VALIC, and ING. Well, at least ING has the old Lex Corp Leaders which might hold some interest, although why a dinosaur with 0% turnover should be charging .5 ER is, well, we know why they're charging it... I think it's back to mutual funds in the 403(b).

mrdarcey

If LEXCX is available tax deferred, buy it without thinking twice. Especially if she's getting the 9% match.