Question : How do I choose a company to use for my retirement plan?
I plan to open a 403(b) in August. I have been told that mutual funds are better (and cheaper) than annuities, and so that is what I want to put my money. (I don't intend this question to be a mutual fund vs. annuity debate). My school district sponsors 20 retirement planning companies, and their websites don't seem to distinguish the competition. Some companies include Fidelity, Primerica, Vanguard, Metro Life, Equitable, Putnam, etc. How do I choose which company is best for me whether or not I end up getting mutual funds or annuities?I teach in Florida. We have the Florida Retirement System (FRS). My school district puts money into that, which I can choose either to be a pension (with benefits after 6 years of service) or an investment plan (with benefits after 1 year). I choose the investment plan because I don't know if I will be in teaching in the long-run or if I will at least be in Florida for 6 years to get the pension benefit. According to everyone, the FRS will not be enough, so we have the option of opening up a 403(b) plan with one of these companies to supplement the FRS money. There is no matching in this 403(b).I am 23 years old.
- asked by coolman293472
All Answers:
Answer #1
I gather the school board is going to contributeto you investment plan??? You put in they put in. Ask if you can go outside the 20 companies??? Choose TRow Price--then you can invest instock--mutual funds and money market or allthree... Next choice is Fidelity and in thismutual fund is about 60 selections. Magellan isthe one your looking forFidelity Magellan I thinkyou will be happy. Since you remain with yourhead in the sand.when it comes to investing yourmoney. .
- answered by Gerald
Answer #2
Mutual funds are definitely the better way togo.Of the list you gave, my two favorite companiesare Fidelity and Vanguard. Vanguard has by farthe lowest expenses, and Fidelity has pretty goodexpense rates, but a wider selection. You can'tgo wrong with either of these two.Also, to setyour mind at ease a bit, study after study hasshown that, in the mutual fund world, WHAT youinvest in is not nearly as important as HOW youinvest. As long as you're starting early andmaking regular contributions (and increasing yourcontribution rate every time your incomeincreases), you'll be in great shape forretirement, regardless of which funds you choose. I don't know your age, but if you have 10+ yearsuntil retirement, you should be at least partiallyin stock funds (generally, the farther you arefrom retirement, the more aggressive you shouldbe, within your comfort level).I hope that helps!
- answered by El Guapo
Answer #3
One of the problems with 403b plans is theincredible number of choices many offer. Extremely confusing and also I might add extremelycostly to the participants. You are right inrejecting the annuity options. It would cost youplenty. Also you should reject the plans offeredby insurance companies for the very same reason. One estimate that I read suggested that annuitiescost you 500 basis points a year in return 1/2%. Insurance companies have a lot of hidden coststhat you do not even know about. Figure them for1/2% also. That leaves mutual funds run by mutualfund companies. Fidelity, Vanguard, and T RowePrice are three excellent choices. I do not see TRowe Price on your list. they are excellent for 3reasons. 1. they have a wide selection of fundsto choose from including index funds (I do notknow if you get to choose from all that they offeror not) 2. All three have relatively low expenseratios (very important especially for retirementaccounts of long term duration. An extra 1/2%will net you a great deal at the end of 30 years.)3. They all have an excellent long term trackrecord of decent returns. Actually all havespecial target retirement date accounts thatautomatically adjust the fund holdings to a moreconservative allocation as your approachretirement. A no brainer approach to investingfor retirement. Oh! 4. They are all no load. Myadvice. Choose one of those 3 for bestresults.Here is a comparison to help you assuminginvesting in a 2035 Target Retirementaccount.Vanguard: 3 yr return 12.61% expenseratio 0.21%Fidelity: 3 yr return 13.01% expense ratio 0.81%T Rowe Price 3 yr return 14.4% expense ratio 0.76%3 years is not a long trackrecord but these types of funds are relatively newso that is all that is available. Also pastperformance does not guarantee future performance,but I think that these are all good bets.
- answered by muncie birder
Answer #4
i, too, am a teacher. most of the plans aresponsored by insurance companies...bad deal. however, since yoiu have vanguard good deal. theyare the best! i have my 403b through vanguard andhave been totaly satisfied the last 25 years. their expense ratio is only about 0.2%....thoselife insurance companies charge around6%...horrible.go with vanguard...set up thepaperwork between you and vanguard and thedistrict...then put your money into the sp 500which seems to average 10% over the last 20years.you will be far ahead of the game in thelong haul. most teachersstick with insurancecompany anuitiies becasue they are financiallyilliterate. also, your district cannot endorseone overthe other so it is up to you to do yourownresearch and figure out what is best...vanguardnumber one...fidelity number 2...t rowe pricenumber 3...then the rest
- answered by zioncanyon
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