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The funny thing about risk and bonds is that people who jump to bonds because they are risk-averse are jumping from the frying pan into the fire.
It is true that equities can go up and down a lot, but when they go down it is never permanent; they always recover. You just need to be patient and not panic and sell when they are down.
Bonds on the other hand are vulnerable to inflation because the face value of the bond does not float with inflation. Stocks rise in value with inflation, bonds do not. Inflationary loss to bonds is permanent, unlike the loss to stocks. Inflation is low right now but this is an unusual period and inflation will no doubt increase. If it gets up to 3-4%, which is pretty likely, than after 10 years your long term bonds will have lost more than 40% of their value! That is as much as stocks lost in 2008. But this loss will never be regained while stocks recovered by 2013.
IMO, bonds are far more risky than equities. And insidious; inflation just creeps up on you so you don't see it coming.
Yes I had been thinking about that also. Long-term bonds don't protect you from inflation, and short-term bonds have very low yields.
However, my main problem with the TIAA recommendations is that the 90/10 has a projected yield of 1%, which would be ENTIRELY eaten up by the TIAA fee and the fund fees.
So I could hollow out a tree trunk and stick the money in there, with the same result.
One of the things this thread is perhaps highlighting is the flaw in demanding fudiciary responsibility in all circumstances. It is quite possible that the TIAA advisors are covering their rear ends and when asked for advice by a person who wants safety. They give them that even if in the long run it may not be the best thing for them. It is meeting their fiduciary responsibility and covering their rear ends at the same time.
Again one of the things you learn when you begin to read and actually finish books by Jack Bogle is the definition of risk, allocation, balanced portfolios and market efficiency.
.... It is quite possible that the TIAA advisors are covering their rear ends and when asked for advice by a person who wants safety. .......
I am not sure if "covering their rear ends" is an accurate description. I can say that over years with different meetings and different advisors, I have always been asked to complete a risk assessment questionnaire. The advisors then make general investment recommendations based on my risk tolerance. I would suspect it is all but impossible during the current economic situation to achieve any meaningful returns for someone who wants to avoid all risk.
I am not sure if "covering their rear ends" is an accurate description. I can say that over years with different meetings and different advisors, I have always been asked to complete a risk assessment questionnaire. The advisors then make general investment recommendations based on my risk tolerance. I would suspect it is all but impossible during the current economic situation to achieve any meaningful returns for someone who wants to avoid all risk.
The adviser could have easily said that. Instead of giving me an elaborate plan that essentially does nothing.
It's like going to the car dealer and being offered a fancy car, the only trouble is it just sits there and doesn't move.
I told him I want low risk and he said fine, he could give me a plan that will work. He did not bother to mention that his plan would be worse than a regular savings account.
Oh actually -- the proposal shows I am MORE likely to run out of money if I kept it in a savings account. That is deception, there is no other way to describe it.
Sounds like you have had nothing but issues with numerous TIAA employees. Why not rollover your money to a different financial institution? It should be very easy to do that. Go to the new institution. Usually they will obtain the correct forms, fill them out and all you need to do is sign them.
Sounds like you have had nothing but issues with numerous TIAA employees. Why not rollover your money to a different financial institution? It should be very easy to do that. Go to the new institution. Usually they will obtain the correct forms, fill them out and all you need to do is sign them.
It would not be easy at all. It has to be done in 10 years in installments.
Also, I can't get the same fixed payout rate somewhere else. It's higher at TIAA because the account was there a long time.
I have no reason to think employees at other companies are better. They might all be deceptive for all I know.
I am learning to be extremely skeptical about financial advisers.
So far, no one here as seen any errors in what I have said. I am assuming that, as far as I know right now, what I said about the TIAA plan was pretty much correct.
I hate deception and I am somewhat outraged by this.
I'll see what the adviser says after I send him my list of problems with his analysis. Maybe he will be honest and admit that the report is deceptive, not at all transparent. Or he will try to confuse me into thinking I misunderstood somehow.
Not that any of this matters very much, since I have already decided NOT to give TIAA any more of my money than what it already has.
I am not sure if "covering their rear ends" is an accurate description. I can say that over years with different meetings and different advisors, I have always been asked to complete a risk assessment questionnaire. The advisors then make general investment recommendations based on my risk tolerance. I would suspect it is all but impossible during the current economic situation to achieve any meaningful returns for someone who wants to avoid all risk.
My point, so they recommend what the OP got even if it could cause negative returns or negligible returns.
My point, so they recommend what the OP got even if it could cause negative returns or negligible returns.
He could have said that, but he did not. If he were honest, he would have said:
"I will come up with a low-risk retirement plan for you. It will cost you about $3k or $4k a year in fees, and the return on your investments will be ZERO percent, after the fees have been subtracted. You can withdraw about 3 or 4 percent each year, and you probably won't run out of money until age 95.
"I will give you a report that shows how my plan compares with keeping everything in low interest money market accounts. You will see that, since there are no fees for keeping everything in money markets, you would be much better off with that alternative.
"I recommend that you completely ignore the report I will give you. I hope you enjoyed wasting your time on these pointless meetings."
Frankly, none of this makes any sense and I am familiar with TIAA plans and funds.
The OP states his money is tied up and he can only remove 10%/year. In addition he states his returns depend on the length of time he was invested. That means he has rates that vary depending on each year he contributed. Those statements appear to refer to the TIAA traditional retirement annuity plan. The participant cannot invest those funds in bonds or in equities nor can he cannot pick an allocation. Money can be pulled out and invested alternately but only at the rate of 10% per year.
Besides complaining about being unfairly treated, I am not sure what the OP is trying to accomplish. If he wants investment advice or options this thread probably belongs on the Investment forum.
Frankly, none of this makes any sense and I am familiar with TIAA plans and funds.
The OP states his money is tied up and he can only remove 10%/year. In addition he states his returns depend on the length of time he was invested. That means he has rates that vary depending on each year he contributed. Those statements appear to refer to the TIAA traditional retirement annuity plan. The participant cannot invest those funds in bonds or in equities nor can he cannot pick an allocation. Money can be pulled out and invested alternately but only at the rate of 10% per year.
Besides complaining about being unfairly treated, I am not sure what the OP is trying to accomplish. If he wants investment advice or options this thread probably belongs on the Investment forum.
What I am trying to accomplish:
Explain my analysis of the TIAA plan. I really CANNOT BELIEVE anything could be this ___ can't think of a nice word here, you can fill in the blank.
I am trying to figure out if the report is deliberately deceptive, or just carelessly confusing. At this point I suspect it is deliberate.
I am trying to WARN other investors about my recent experience.
No one besides me seems to be at all SHOCKED by this. Am I just naive? Is it ignorant of me to expect honesty from such a well-known company?
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