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Author: t67 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75375  
Subject: lend me your wisdom-sorry it's long Date: 5/15/2002 4:24 PM
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Hi all
I'm new nad it shows--I think I just posted this question on the wron board. oh well. I guess I just need your advice/opinions or whatever suggestions you may make. I'm trying to gage my retirement health if you will. Let me just tell you where I am.

I'm 34, I have "$34000" in a retirement program thru work. I put it in quotes because the actual cash amount is $17000, but if I stay with the school system, the amount is matched 100%. If I leave the school system, I can take the cash amount and roll it over to an IRA. Currently, $4500 is going into the account annually. I also have about $11000 in a 403b and I'm maxing out on the contribution monthly. I have a Roth with $4200 in it(I've already maxed it for this year). The 403b and roth are with TIAA CREF and are in aggressive portfolios. ok, am I doing enough? am I overlooking an area? Another question, I have a sum of money(about 23000) sitting in a bank and earning nothing. How should I invest? I would like it to be relatively accessible, but also not sitting earning close to nothing. I don't have any CC debts, but I also don't have a house... I guess maybe I'm just panicking because I just got divorced! Any advice would be appreciated. Thanks
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Author: ccurrie One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34537 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/16/2002 8:22 AM
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Another question, I have a sum of money(about 23000) sitting in a bank
 and earning nothing. How should I invest? I would like it to be
 relatively accessible, but also not sitting earning close to nothing

------------------------

 From the $23,000.00, keep about 3 to 6 months of living expenses in
 your bank and use the remainder in a broad market index fund.  If you
 want to diversify w/in a index fund framework, put 60% in a large cap
 index that tracks the entire market (e.g., SPY), 20% in a index fund that tracks mid-Cap stocks
 (e.g., IJJ), and 20% in a index fund that tracks small-Cap stocks.
  Check out iShares for a broad range of index funds.  Vanguard also has great index funds.


For more information, check out Paul Farrell's article on indexing (from CBS MarketWatch):

http://cbs.marketwatch.com/news/story.asp?guid=%7B76FAA82F%2DF936%2D490C%2D9F4B%2D21BB0EF5E925%7D&siteid=mktw

and remember, the more you trade, the less you earn:

http://quote.fool.com/news/symbolnews.asp?guid={C053BE74-5E65-46B7-AF41-867E84512EA5}&currticker=iwn&symbols=iwn&nx=&bx=


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Author: walbet Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34538 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/16/2002 1:51 PM
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HI TERRI --

Long since retired (1988), I have been in the financial planning field for over 40 years. I am a CLU (Chartered Life Underwriter) and a ChFC
(Chartered Financial Consultant). I'm also half-way across the country from you, (in San Gabriel, CA), so THIS IS NOT A SOLICITATION FOR YOUR BUSINESS.

In reviewing your questions, my first thought is to urge that you seek assistance from a professional in your area - one whom you can trust, and one who will look out for YOUR best interests. Along these lines, seek one who has a professional designation, (CLU, ChFC, CFP; - the latter is "Chartered Financial Planner"). These individuals can be found through referrals from friends, Trust officials, Attorneys, Bankers, etc. Be certain that the person FIRST has YOUR benefit in mind, and is ONE WHOM YOU CAN TRUST (This is vital!). Not the easist action in the world, I'd advise your talking to at least three pros before making choosing the advisor!

Hope this helps in your future planning Terri; having married a divorcee 53 years ago, (1949), I can appreciate your sense of trauma, (hope that word is not too strong!).

Best of luck in your future planning; keep in touch if you feel I might be of any assistance.

Regards.

walbet





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Author: yakers Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34541 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/16/2002 5:50 PM
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Terri,

You can manage your finances yourself but you have to decide if you want to. On the plus side you will learn a new area of expertise and you will be able to evaluate the effectiveness of various financial alternatives. On the down side it takes time and dicipline. Do you want to read the WSJ and surf the web for financial information and maybe even have to read company financial reports?
The down side of a financial advisor is they cost something (I paid a set fee over 20 years ago) and they are not perfect even if honest and some are not honest. The more you know about finance the more you will know about how an advisor can serve you or lead you astray. Of course this is true of laywers, doctors and other professions as well. But do be diligent in selecting a financial advisor. My advisor came from the recommendation of a Navy Officer whose funds he managed. He understood all the pay and benifits we received and had decent suggestions for managing service folks. I do know people who have lost money with flakey advisors.
I was lucky to have a financial advisor who set up some funds, counseled buying a house, set insurance levels and other useful advice when I knew nothing about financial issues and didn't have many assets. Now 20 years later I find one fund was pretty good (OPTFX) one OK and one missed the mark (S&P in my mind), a tech fund, fortunately the smallest one. I would not have done better at that time. But in tha last few years, before finding the Fool, I have set up my own fund and bought a few stocks and a couple DRIP funds and I definitely did better that my old advisor, better than the market and most folks on a % basis.
But I do not regret the financial advice I received over 20 years ago and I have not felt it necessary to change funds only to add ones to fill out other areas of interest.
So keep asking questions and learning. Despite the Fool emphasis on managing your own finances I see nothing wrong about professional advice but you should know that you can do it yourself.
There really should be an interesting discussion as to do it yourself VS professional advice. There is a case for both but the more you know the more you can select and monitor a professional service.

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Author: WauseonFox Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34542 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/16/2002 6:36 PM
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Walbert:

I concur with most of your response, and trust you are finding your retirement to be all that you had hoped.

The only thing I wish to amend is that CFP refers to the license of a Certified Financial Planner, vice 'Chartered'. I assume that your typing fingers just ran away from you.

All the best!

--WauseonFox--

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Author: magiquedarkayne Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34546 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/16/2002 9:00 PM
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I am a big believer in home ownership but it isnt always cost effective or easy, depending on your area and on your comfort level with what you want in a house. I own a small, old wood frame house that suits me and appealed to me. The monthly payments are less than 260 per month(very Foolishly gave a big down payment and payed points to get a better interest rate, and then refi'ed when it was smart, also got seller to cover nearly all closing costs). The 23000 could be used that way. But if home ownership isnt your cuppa tea(and there ARE drawbacks), then I would definitely find a better, more lucrative place to put it than the bank. The other sounds fair enough, tax advantaged and relatively safe.
But you ARE in the right place for answers. Lot of REALLY smart, knowledgable people here to ask.


fwiw,
Magique

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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34552 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/17/2002 1:00 PM
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Hello T, and welcome to the Fool.

Sorry about your divorce. That must be very hard.
Congrats, though, on you're new endeavor to learn to manage your own finances. It's a great thing.

You sound like you're doing a pretty good job. Generally, there's an order to do things that people recommend:

1. Have 3-6 months of living expenses saved in an Emergency Fund.
You seem to have this, the only advice I would give here is to perhaps think about putting it in a higher interest bearing MoneyMarket Account. I have mine at Netbank (www.netbank.com) and I'm very happy with them.

2. Max out your employer retirement up to matching.
You're doing that with your 403B. Good for you.

3. Contribute the max to an IRA.
You're doing that. And both your 403 and IRA are at TIAA-CREF...a very good choice. You say it's in agressive funds -- which ones?

4. Then, and only then, start investing into taxable investments.
Somebody else mentioned a good index fund. VTSMX is good, as is TIAA's TCEIX.

Of course, way up on the list is get rid of credit card debt. I left that out because you have none. Good for you! GREAT for you!

I think you're doing a great job. It's a good thing you're here on the Fool. You'll learn a lot here. Just keep reading and learning. Managing your own finances is actually pretty fun. I can recommend two books: "Mutual Funds for Dummies" and "Personal Finance for Dummies." Both are by Eric Tyson and both are really good for getting over that initial hump of "what exactly am I suppose to be doing?"

I hope this helps.

Caat

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Author: t67 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34554 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/17/2002 3:00 PM
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Thanks everyone for your input. One day, I will get a hang of posting on this board...I think I just put up a new messege instead of replying to this thread. Sorry! Anyways, I'm thinking about purchasing index funds thru Vanguard with the extra money in the bank. I figure if I left about 4 months in emergency fund, I should be ok. Does vanguard have a good reputation? oh and Caat, my allocations with TIAA-CREF are 35%stock, 25% growth, 20% international growth, 10% real estate and 10% traditional annuities.

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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34557 of 75375
Subject: Re: lend me your wisdom-sorry it's long Date: 5/17/2002 4:20 PM
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Does vanguard have a good reputation?

The best.

************************
oh and Caat, my allocations with TIAA-CREF are 35%stock, 25% growth, 20% international growth, 10% real estate and 10% traditional annuities.

Hi T.
Sounds like you're pretty well diversified.

If I'm reading it right, this is what you have...(keep in mind I'm not really familiar with TIAA's annuity/employer division)

35% STOCK: The Personal Annuity Select Stock Index Account is a variable account specifically developed for the long-term investor who is looking for more growth opportunities and is also willing to accept some degree of market fluctuation. The account invests a comprehensive stock portfolio designed to track the U.S. equity market overall as represented by the Russell 3000™** Index; its returns should generally parallel those of the index, but may not always do so.

Sounds similar to TCEIX. Tracking the R3000 gives you exposure to the broad market. Good.

25% GROWTH: The Personal Annuity Select Growth Equity Account invests in a fund of a broadly diversified stock portfolio of companies in new and emerging areas of the economy and in companies with distinctive products or promising market conditions. The fund seeks favorable long-term returns, mainly through capital appreciation. The fund may be appropriate for investors who are looking for long-term capital appreciation and can accept the greater risk of investing in fast growing smaller companies.

Small cap. Good. Giving you more aggressive diversification.


20% INTERNATIONAL GROWTH: The Personal Annuity Select International Equity Account invests in a fund of a broadly diversified portfolio of primarily foreign equity investments. These companies are all sizes and have certain characteristics such as substantial growth, consistent cash flow and attractive stock prices. The fund seeks favorable long-term returns, mainly through capital appreciation. It may be appropriate for investors who seek above-average long-term returns, who understand the advantages of diversification across international markets and can tolerate the greater risks of international investing.

Good for diversification.

10% REAL ESTATE: The TIAA Real Estate Account looks for favorable long-term returns through capital appreciation and rental income. In the past, real-estate returns have been shown little correlation to stock and bond returns, have been less volatile than stocks in particular, and have tended to provide a good hedge against inflation.

Cruisin'. That's just about the allocation I'm hearing is right to have in Real Estate.

10% TRADITIONAL ANNUITIES: The Traditional Annuity offers maximum safety, guaranteeing your principal and a specified interest rate (3 percent for current premiums) plus the opportunity for greater growth through dividends, which have been declared every year since 1948.

Sounds like this is your fixed income source. Your previous post mentioned that you were in an aggressive portfolio. Doesn't sound much too aggressive to me. Especially for someone your age. In fact, it looks pretty good, and well diversified. Did someone in your HR dept. help you?

As far as these being annuities, I have no idea how that works within the confines of a 403B. If it were outside an employer sponsored retirement account, I would question it, but since I'm not familiar with that type of thing, I can't comment.

Overall, I think you're doing a great job. Vanguard is an excellent choice for index funds as long as you have the minimum to avoid the fees. Sounds like you do. Here's a link that explains those fees:
http://boards.fool.com/Message.asp?mid=14988801

Like I said in my previous post, the only thing I really see as a kind of red flag is your money sitting in the bank not earning interest. Money Market rates aren't very high right now, but you can certainly find some higher than others. Some people like ING savings because it's got higher interest than Netbank, personally, I like Netbank MMkt for the extra conveniences that it has, such as ATM and checkwriting ability for emergencies. I like the idea that I have instant access to my cash, rather than having to wait several days for it to be transferred. But that's a personal choice.

Hope this helps.
Caat

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