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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75384  
Subject: Wow. Scary stuff. Date: 10/5/2007 11:44 PM
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OK,now I can finally rollover all the the money out of the stupid annuity (403b)that I had with my last employer without penalty.

So, here comes the scary part...knowing that I can screw myself if I make the wrong choices.

I have some money in Fidelity through my current job and have some in Vanguard. I would really, really appreciate it if you guys can tell me your suggestions for asset allocation and if I should merge the money and stuff.

Female. Single. 37 years old.

Current:

VANGUARD

Roth IRA - Total Stock Market Index - $11,500

Rollover IRA - Target Retirement 2035 - $4,000

Vanguard Total Stock Market Index Fund 71.9%
Vanguard European Stock Index Fund 10.5%
Vanguard Total Bond Market Index Fund 10.0%
Vanguard Pacific Stock Index Fund 4.7%
Vanguard Emerging Markets Stock Index Fund 2.9%
Total — 100.0%


FIDELITY (current 403b)

Four In One Index - $7,000

55% Spartan 500 Index
15% Spartan Extended Market Index
15% Spartan International Index (follows MSCI EAFE Index)
15% Fideltiy U.S. Bond Index

The only other index to speak of with my employer plan is the Total Stock Market, and US EQ Indexes


Old 403(b) - Amount to rollover somewhere $25,000

My original plan was to rollover the 25K into the Four in one Index, (I can roll it right into the current account, right? Or is there a separate "rollover account" with the new employer?),but I really don't like having 15% in bonds. I have no problem with risk, and I hear many say that you don't need bonds until 10 years from retirement.

Anyway, I feel like I have money in all these different places and I don't know what I am doing with it all. I don't know if I should send the 25 K to Fidelity or not. Or Vanguard? Or should I roll my rollover IRA with Vanguard to Fidelity? And what funds?

I guess the question comes down to percentages (how much do I put in large, small, mid, international?) and where to keep it.

I'd really appreciate your help!

Thank you!
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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59435 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/5/2007 11:48 PM
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Oh, and obviously I want to know if I should ditch the Four in one index all together and what I should be putting all future 403b money into.

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Author: mrparrotfez Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59436 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/5/2007 11:57 PM
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Howdy, Female.Single.37,

I agree that you don't need 15% in bonds. I don't think you need anything in bonds yet.

You're clearly an index fund investor, which is perfectly fine, and a saner choice than many might make. ("i want 2 dubl my $ this yr what stox shud i bi?") I'd probably exit out of fixed income.

For your age, you have a quarter century to retirement--a little more than I do, so my perspective is similar to yours. Offhand I like the idea of having a third in large caps, a third in mid and small caps, and a third well distributed about the rest of the world's equities. My logic is this. I don't think we are headed for The Great Collapse. I do think that our piece of the world pie will grow at a smaller rate than the pie itself grows, as the developing world begins to produce and consume and otherwise churn money at rates catching up with North America and Europe. I think if you can stomach the mood swings of foreign markets, on balance they will outperform.

Thus, if it were me, I'm not sure which account you should roll your money into (I know nothing of 403b rules). But to respond to your overall question about asset allocation, I might shoot for (using index funds if that's your style):

30%: US Large-cap/broad market stuff
15%: US Mid-caps
15%: US Small- and/or micro-caps
8%: China
7%: Latin America
8%: Europe
7%: India/Korea/other Asia
5%: Canada

That would give you a good mix of domestic and world assets, with only 22% exposure to what could be considered emerging markets--not enough to give you sleepless nights, but enough to make sure that you share in the gains one may reasonably expect.

Good hunting.

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Author: Hohum77 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59438 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/6/2007 2:01 AM
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Hi MTBer,
My original plan was to rollover the 25K into the Four in one Index, (I can roll it right into the current account, right? Or is there a separate "rollover account" with the new employer?),but I really don't like having 15% in bonds. I have no problem with risk, and I hear many say that you don't need bonds until 10 years from retirement.

Anyway, I feel like I have money in all these different places and I don't know what I am doing with it all. I don't know if I should send the 25 K to Fidelity or not. Or Vanguard? Or should I roll my rollover IRA with Vanguard to Fidelity? And what funds?

I guess the question comes down to percentages (how much do I put in large, small, mid, international?) and where to keep it.

I'd really appreciate your help!



Okay, to start with, take a few deep breaths...

First, you get a link to a site helpful with 403b matters
http://www.403bwise.com/index.html


Next, I will say you have a few options with your old 403b account
1. You can do a rollover and move it to an IRA
2. You should be able to transfer it to your current plan (though I'm not sure this is a great idea, given it's 15% Bond allocation).
3. You may be able to leave it in the existing plan (usually allowed if the account has more than $5000, which you do).


Yes, accounts in multiple accounts can be a pain but this can be remedied to some degree with the help of a spreadsheet (rows- represent assets class, columns- accounts ) e.g

Asset Class	Account 1	Account 2	Account 3	Total
Lg Cap
Mid Cap
Sm Cap
International
Bonds
Etc


You can further split each account column and the total column, into 2 columns ($, %).


The ones that will be problematic will be
- Vanguard Total Stock Market (Different percentages of Lg Cap, Mid-Cap, Small Cap, Intl and Bond)
- Spartan Extended Market Index (Different percentages of Mid Cap and Small Cap)

The others are easier- just place each asset type into it's correct cell by row and column. For example, Let's use your current 403b as account 1 and assume Spartan Extended Market Index is 2/3 Mid Cap, 1/3 Small Cap. Your 1st column would look like

	        Curr 403b	
Asset Class $ %
Lg Cap 3850 55
Mid Cap 700 10
Sm Cap 350 5
International 1050 15
Bonds 1050 15
Etc 0 0
7000 100



Voila! first account is done.
Rinse and repeat




Good luck!
Hohum

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59457 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/6/2007 3:25 PM
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You can use the Morningstar X-Ray tool to look at all of your portfolios combined.

Here is a link.

http://portfolio.morningstar.com/NewPort/Free/InstantXRayDEntry.aspx?dt=0.7055475

I didn’t add it up but your international exposure looked a bit low and does not include any exposure to large areas like Canada, Russia, and South America, you might want to get into a more general international fund.

It looks like you just have something around $1,500 in bond funds which sounds OK to me but you could deceases it if you wanted.

The targeted retirement accounts are very conservative and will slowly add more to the bonds so you might want to eventually get out of that.

Greg

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59469 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/6/2007 11:46 PM
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Wow. You guys are great! I was able to take something useful out of every singe one of your posts!

Thanks!

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Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59488 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/8/2007 11:40 AM
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I agree that you don't need 15% in bonds.

Many do this simply to reduce their volatility. 15% in bond won't hurt her too bad and should give her some significant downside protection when the markets do make those 10%+ corrections.

Investing should always be tailored for the individual person and that often includes tolerance to downside volatility. I have seen way to many people pull out from an investment that is doing well, simply due to them not being able to emotionally handle a temporary loss.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59491 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/8/2007 12:49 PM
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>> Many do this simply to reduce their volatility. 15% in bond won't hurt her too bad and should give her some significant downside protection when the markets do make those 10%+ corrections. <<

Agreed. Many people (myself included) hold a little bit in bonds and cash despite having a long enough time horizon where they don't make sense, if for no other reason than it makes it emotionally easier to stay the course when the market hits an air pocket.

No allocation is of any use if it leads to emotional decisions to buy high and sell low, so if moderating the volatility a bit makes it easier for people to stay in, then so be it.

#29

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Author: Jubii Two stars, 250 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59569 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/11/2007 1:00 AM
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Rollover IRA - Target Retirement 2035 - $4,000

I vote you add the $25K rollover to your target retirement fund. It's simple, one-stop-shop investing, you get all the diversification you need, it's rebalanced for you over time, and with Vanguard you have low fees and a solid reputation.

Sounds like you're feeling tentative and overwhelmed. Good luck!

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59791 of 75384
Subject: Re: Wow. Scary stuff. Date: 10/23/2007 12:11 AM
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Thanks for the additional thoughts, Hawkin, #29,and Jubii.

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