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Frequent Contributor

Re: TIAA Portfolio Review & Traditional Question

QNikki wrote:

"But the reality is that my dad died at 61 and my mom had the first of 3 strokes at 40, so I want to make sure that I don't HAVE to work until 70. You know what I mean"

Yes, I know what you mean.  It means that you need to be especially alert to your own health and that of your children.

You come across as a very thoughtful person so I am certain I am not saying anything to you that you haven't already thought of.

By the way, welcome to the TIAA site at Morningstar!

Bob

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Re: TIAA Portfolio Review & Traditional Question

@QNikki : Thanks for your thoughtful response to many posts.  Just two notes:

1.  I am glad that "relatively young" people like you still have the right perspectives.  There are many things in life that are much more important and precious than money, and maybe more than life itself; for example, one's value/integrity/love, health, family, and happiness. 

@QNikki : "To some we may live a simple life but we don't want for anything and don't strive to be rich (otherwise my wife would be out working--she has a BS and M.S. in Industrial Engineering, and I would be at a research I university chasing grants)"

2.  There are many who I consider as mentors in this forum, especially in the TIAA threads.  I do not want to name them one by one, but I missed Ray (?).  They are ahead of you in the academia and carry with them loads of excellent experience/wisdom as they face each life decisions.  Stay around and make sure that you get their kind advice when needed.  

Just an input.

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Participant ○○○

Re: TIAA Portfolio Review & Traditional Question

Because of my activities in the past couple of days, I am a latecomer to this thread.  Three comments:

@QNikkihas conducted himself very well in this thread right from the start.  I believe he is on track in life.  It is a good idea to follow discussion boards.  In addition to that, to acquire a strong base knowledge, I suggest reading at least several well-selected personal finance and investment books.  (I do not mean books on choosing individual stocks or getting rich quickly.)  Learning is a lifelong process.

Others posted excellent responses to make this thread a special one.  I'll post it if I think of something new that would contribute to this discussion.

I wish every thread was as good as this one.

 

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Re: TIAA Portfolio Review & Traditional Question

Late to the thread, so I'll add my comments without analyzing all other replies.

That $75k in CDs is basically an Emergency Fund; that's fine.

You are quite heavy in stock funds, but apparently you've gone through a few corrections without panic selling with the intent of avoiding further loss. This shows good behavior that not everyone has.

However, you don't have much non-stock funds with which to rebalance into stocks when they go on sale at a 10% or even 20% discount. So I would consider going to a 90% stock, 10% liquid TIAA Traditional allocation using new contribs over the next year.

Success in retirement investing is largely a function of how much new money is going into your investments, particularly as a percentage of gross income. Not sure what your current percentage is, but maybe strive to increase it by 1% most years. This won't be easy over the next decade+ with growing kids.

Good luck...

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Explorer ○○

Re: TIAA Portfolio Review & Traditional Question

The regulars here are doing a fine job of responding at the "cosmic life issues" level, as I would have expected, so I'll just make a few comments at the "portfolio construction" level.

While you have multiple stock-holding vehicles, diversifying the number of funds is not the same as diversifying their underlying holdings or their likely market behavior, and you've actually got a lot of overlap.

The CREF Equity Index holding in the employer plan benchmarks to the Russell 3000 while the Vanguard Total Stock Market in the spousal IRA indexes to another which does also include some smaller companies.  But otherwise, being capitalization-weighted, they're both very much dominated by the same large companies.

The U.S.-indexed portion of your CREF Stock also overlaps both of the above.

Although you are dedicating new contributions to CREF Growth, I'm guessing that most or all of the stocks in CREF Growth are already contained in the U.S.-indexed holdings of all three of the vehicles above.  Large-cap growth has been having a good run ever since the financial crisis of 2008.  Are you convinced this will continue, and will you be OK, and continue to hold on, if it doesn't?

I just checked TIAA's June 30 Fact Sheets for CREF Equity Index, CREF Stock, and CREF Growth, and Amazon is in the top three largest holdings of all of them.  According to Morningstar, it's also in the top three largest holdings of your Vanguard Total Stock.  So I don't get the reason for your stand-alone holding of Amazon.  There's no particular "harm" in it if you want to emphasize this one company and believe it has a great future of price appreciation, but it doesn't seem necessary.

Your Vanguard Extended Market, although it does contain small-cap stocks, is market-weighted and therefore has returns which closely parallel those of Vanguard Mid-Cap Index, and it's the sort of "odd man out" here, i.e., has the least extensive portfolio overlap with the others.  That seems fine if you'd like a place to emphasize mid-cap.

The really unique things offered by TIAA, things which you can't get at any mutual fund company known to me, are TIAA Traditional and the TIAA Real Estate Account.  I'm agnostic about TREA; I see reasons to own it and also reasons not to.  But I think there's always a place for a very substantial holding of TIAA Traditional, a vehicle which has no "price" subject to market turmoil, whose nominal value goes in only one direction--up--and which allows the possibility, although not the requirement, of eventual annuitization for lifetime income.

Finally, the bias I should have made clear at the beginning of this post: I'm a person who values simplicity.  I try to minimize the amount of unnecessary clutter in my life, because I really don't enjoy having to spend much time and energy keeping track of things and shuffling them around.  Some people share that disposition, others don't.  But if I had gradually accumulated a portfolio like your present one, and I was seeking greater simplicity, I'd be wanting to reduce these overlapping holdings.  CREF Stock or Global Equities, but not both, if you consider international exposure important, CREF Equity Index if you don't, and then perhaps the ongoing mid/small-cap emphasis represented by your Vanguard Extended Market Index.  I probably wouldn't keep CREF Growth at all, because it has already experienced a good run-up, and its holdings are already among the "growthiest" holdings of all the other large-cap vehicles here.  In any case, if I kept CREF Growth, I would treat it as a small emphasis and would not be directing all new contributions toward it.  And I would be building up TIAA Traditional.

Best wishes in whatever you decide.

 

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Re: TIAA Portfolio Review & Traditional Question

Respectfully,  I "get" the individual Amazon position. It's a younger man's walk on the wild side. I did that several times--sometimes to considerable effect, and sometimes I got handed my a..

In no case, did it throw off my principal portfolio. A 3.9% position isn't  going to do in QNikki. 

Bob

 

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Explorer ○○

Re: TIAA Portfolio Review & Traditional Question

As I clicked the button to submit my post above, I thought to myself: I'll bet that, among all the things I said, someone is going to single out my comment about holding individual Amazon stock.

So I was right in that hunch.

I any case, we're not in disagreement about whether "a 3.9% position is going to do in QNikki."  I already said that I saw no harm in it, but also didn't think it necessary, and I expressed my own desire for portfolio simplicity, which may or may not be shared by QNikki.

 


 

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Re: TIAA Portfolio Review & Traditional Question

It was a "remembrance of things past" moment, Etoile.  :-)

Bob

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Re: TIAA Portfolio Review & Traditional Question

Hi @NSkipper. My wife (who is hovering as I type:) reports that she hadn't thought about substitute teaching--she'll definitely add it to her list! Her area is human factors and she has started thinking through how she will slowly re-enter the workforce in the next few years. She has made the decision that part-time would be her preferred start and consulting will definitely allow her to set her own parameters, but you are right that she also needs to start getting back up to speed soon. She already knows 2 of her former colleagues who are off on their own so she plans to follow-up with them to find out more about doing consulting.

Thanks for reading and for the great tips!

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

Thanks for the warm welcome Bob :).

 

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Re: TIAA Portfolio Review & Traditional Question

Thanks @51hh. Am definitely motivated by the responses and plan to stay de-lurked :).

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

Hi @Learner. Thank you for reading! I truly appreciate everyone taking time to give input and ask great questions to try to help. It's been a great first post experience!

I do plan to keep reading--I bought a lot of the books on the bogleheads list and have read them, but will revisit and expand the list often as I continue to slowly understand more about investing.

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

Hi @TheWizard. I really didn't understand all of the different categories and am now beginning to understand what diversification means. My wife and I spent a lot of time going over this thread and we reached out today to some of our friends to see if they have advisers that they would recommend, because it's clear that at this point, we may benefit from some directed help. We still both plan to keep learning, and I'll keep on top of things, so that I'll know when I should be doing the types of rebalancing that you mentioned.

Our base contribution level is 12% of income to my work 403b. But for the past few years we have consistently been able to max the spousal IRA and have 1-2k to put into my Roth. I like the idea of increasing the contributions by 1% a year. What we've been doing with the small increases we've received over the past few years is to route those funds to the 529 (we started out with just $50 a month but are now doing $3k each a year and want to increase each year). Our raise is usually about 2% so we could do 1% to our retirement and 1% to 529. I like this idea! 

I'm hoping that we will see some income increase in the future if my wife decides to return part-time, or if I move into an admin-type position, but neither of us are committed to living to work so I don't anticipate us jumping into high stress type jobs. I should mention that my salary of $85k is for about 9 months of work but is paid over 12mths by the university (we have a January semester that I don't teach since most of the classes in my field cannot be taught in 3 weeks). I also have some flexibility if kids expenses rise beyond our income as I can probably pick up some adjunct work at the local community college or online. But great point that we must keep this in mind and plan for increased costs.

We're in the thick of it so all we can do is keep pushing forward :).

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

QNikki,

Your attitude is going to take you a l o o n g way.

Bob

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Re: TIAA Portfolio Review & Traditional Question

@EtoileDuMatin  Great points! I mentioned in another response that at this point we concede that we may need to contract an adviser because there are so many moving parts and as you note, diversification is a much deeper level than just having different funds. We definitely feel based on the feedback in this thread that now is the time to get some help before we move too much further down this path, so thanks for the comments.

Ahh...the foolishness of youth :). In my "younger days" I thought that the way to "do" the stock market was individual stocks so we held Amazon, Caterpillar, GM and Microsoft. At the last clean up when TIAA changed contracts, I cleaned up everywhere and sold everything but held on to Amazon because...??? Not sure--I guess for the nostalgia :). I know that's a silly reason but there you have it. The kid in me believes that Amazon will hit $10,000 and we'll be set for life (although the adult knows that's impossible given the piddly number of shares we own). But have no fear, each time I get the "we should buy Tesla"-type feelings, my wife reminds me of my Caterpillar purchase (we bought at the very top and it never got above what we put in even with dividends). Perhaps I should have kept Caterpillar for the nostalgia :).

Thanks for the feedback!

-QNikki

 

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Re: TIAA Portfolio Review & Traditional Question

Alas Bob, you hit the nail on the head :). It is was a younger man's folly :).

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

No harm taken at all @EtoileDuMatin. Again, all feedback and questions are much appreciated :).

QNikki

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Re: TIAA Portfolio Review & Traditional Question

Thanks for the kind words, Bob! I think that I'm pretty easy going (at least that's what my students say) but mostly am EXTREMELY thankful and humbled by every one of you who have taken time out of your own lives to help a stranger!

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

Also everyone I apologize because I now think that I've been spamming you all by using the @ symbol. Based on other posts, I shouldn't be throwing it around like that. I'll figure out the etiquette soon.

Sorry!

-QNikki

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Explorer ○

Re: TIAA Portfolio Review & Traditional Question

Of course, advice from paid financial advisors isn't necessarily disinterested. And you’d not be unlikely to get as many different opinions as the number of different advisors you consulted. I'm not sure there's a good alternative, especially for smart, energetic young people, to figuring it out for themselves, with input from books and articles, forums such as this one, and perhaps an occasional consultation with a fee-only advisor. 

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