Los Angeles Unified/Teachers Union Investment Planning Workshop November 15

UTLA-LAUSD Investment Headline


Another great 403b/457b work­shop is sched­uled for Sat­ur­day, Novem­ber 15 at United Teach­ers Los Ange­les Head­quar­ters. It’s another all day event with sev­eral pre­sen­ters includ­ing Dan and I with light break­fast and FREE LUNCH!

Dan and I will show and dis­cuss what we did to plan for our retire­ment as teach­ers. We will also dis­cuss the Emmy Award­ing win­ning PBS Front­line doc­u­men­tary: The Retire­ment Gam­ble, fea­tur­ing one of the par­tic­i­pants, our very own ele­men­tary teacher, Crys­tal Mendez! (Watch the first 3 min­utes to see her, but its rec­om­mended you watch the entire doc­u­men­tary). She will be on hand to talk about how she saved $160,000 at her young age (she just turned 34!).

  • Find out more about LAUSD’s Award Win­ning 457b plan!
  • Find out how to find a finan­cial plan­ner that doesn’t sell you any­thing, but looks after your best interests.
  • Find out how to diver­sify your port­fo­lio to reduce risk and increase returns.
  • Find out why insur­ance prod­ucts (annu­ities) are not appro­pri­ate for retire­ment planning.
  • Find out how the stock mar­ket can work for you, not against you. Cal­STRS invests in the stock mar­ket to pro­vide a decent pen­sion plan for all of us, why not you and I for our 403b or 457b?

Please join us and get informed. Years from now when you have retire­ment money in your 403b or 457b plan to sup­ple­ment your pen­sion plan, you can retire in com­fort and be grate­ful you attended. We hear peo­ple report that they wish they heard about this infor­ma­tion years ago. Don’t be one of those peo­ple. You have a rare oppor­tu­nity to get objec­tive finan­cial infor­ma­tion. Get informed now. Do NOT keep putting this off.

Please down­load this flyer for reg­is­tra­tion infor­ma­tion and please post it on your school site bul­letin boards and make announce­ments at all of your meet­ings: Invest­ment Work­shop Flyer

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Iowa Took Courageous steps to Reform their 403b. Wish California was Courageous too.

Iowa Reforms Their 403b

In 2008 Iowa took steps to move from an “any will­ing provider 403(b) envi­ron­ment” to a com­pet­i­tive bid process. In Cal­i­for­nia just about every­thing else that school dis­trict need to run pro­grams is com­pet­i­tively bid by out­side con­tracts such as books, com­puter equip­ment, con­sul­tants, BUT NOT THE 403b. We tried twice to allow dis­tricts to com­pet­i­tively bid the 403b but the unions and the insur­ance agents and their lob­by­ists fought back.

Iowa rep­re­sents what col­lab­o­ra­tion among the var­i­ous stake­hold­ers can do to pro­vide a decent 403b with all PreK-12 edu­ca­tors (noth­ing like this has ever existed in Cal­i­for­nia to my knowledge).

State-Sponsored 403(b) Plan is a Win-Win for Employ­ees and Employ­ers – Saves Scarce Dol­lars for Edu­cat­ing Students

Now the National Tax Shel­tered Annu­ity Asso­ci­a­tion (NTSAA) is lob­by­ing for a return to a no-bid world: Tes­ti­mony of Christo­pher Degrassi Exec­u­tive Direc­tor, NTSAA

Orig­i­nal Iowa RFP for cen­tral­ized plan

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Retired teacher worries about running out of money & other tidbits

moneyworryA for­mer teacher wor­ries about run­ning out of money in retire­ment. Don’t we all? Look for this arti­cle in the Busi­ness Sec­tion of the LA Times this Sun­day, Sep­tem­ber 28: Click here.

Other tid­bits in the invest­ment world

Some Cal­i­for­nia Teach­ers won­der about Pension2 changes: If you are invest­ing in Pension2, you have got­ten a post­card and a let­ter about changes. Here is a dis­cus­sion about those changes expressed by three Pension2 investors and Scott Dauen­hauer, CFP, MSFP, AIF, con­sul­tant to Cal­STRS answers:

Dis­cus­sion 1: http://board.403bwise.com/index.php?showtopic=5851

Dis­cus­sion 2: http://board.403bwise.com/index.php?showtopic=5857

Bogle­heads also chimed in: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=146743

IMO: Pension2 is still a great low-cost retire­ment plan for Cal­i­for­nia Teach­ers. I would still use it for my 403b or 457b if I were still working.

Good News From Van­guard: $3 Tril­lion in Assets and a Birthday!

Van­guard just had its 40th birth­day on Sep­tem­ber 24, 1974. Here is an excel­lent arti­cle about Van­guard and the won­der­ful man who cre­ated it: http://www.philly.com/philly/blogs/inq-phillydeals/John-Bogles-40-year-history-of-Vanguard.html

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Did Garrett Planning Network Pass the Smell Test?

A Reader’s Rejec­tion When Ask­ing for Finan­cial Help

One of Their Fee-only Finan­cial Advis­ers Failed the Test

Dan and I are big advo­cates for Gar­rett Plan­ning Net­work and the National Asso­ci­a­tion of Per­sonal Finan­cial Advis­ers. Peo­ple are search­ing for a trusted finan­cial pro­fes­sional who will not screw clients with exces­sive costs or self-conflicting com­mis­sioned laden invest­ments. How­ever, my loy­alty to these fee-only pro­fes­sional orga­ni­za­tions was put to the test recently, but not what you might think nor would I have ever pre­dicted this story.

A reader (I’ll call him “Jake”) wrote after find­ing a Gar­rett finan­cial plan­ner in his neigh­bor­hood from their web­site search fea­ture: “I explained to her that I was tweak­ing my port­fo­lio and wanted to make sure I was on the right track that’s when she informed me that a lot of finan­cial plan­ners don’t like to take hourly work.” After a brief dis­cus­sion, the plan­ner sent Jake on his way.

Jake didn’t seem both­ered, but I was because I always refer peo­ple to Gar­rett. My under­stand­ing is that one of the pri­mary advan­tages of Gar­rett was their hourly ser­vice for poten­tial, savvy clients. My read­ers belong to this group. I fig­ured that these advis­ers want their clients to know about their finances, so clients can han­dle the respon­si­bil­ity which always remains with the client.

This adviser’s dis­parag­ing com­ment about hourly work does not meet the stan­dards of Gar­rett Net­work pro­fes­sional orga­ni­za­tion. She made a huge assump­tion about “a lot of” Garrett’s advis­ers. To assume any­thing about “a lot of finan­cial plan­ners” was out-of-line. If she was too busy, she could have referred Jake to a col­league. I have always under­stood that clients were pro­vided a com­pli­men­tary first ses­sion or are told that new clients are not pos­si­ble at this time. But she dis­missed Jake like yesterday’s newspaper.

Talked with This Adviser

I called the adviser. I told her that I write a finan­cial blog and try to help my teacher col­leagues find fee-only, fidu­ciary finan­cial advis­ers. I have always rec­om­mended read­ers to Gar­rett or NAPFA for pro­fes­sional help. I wanted her side of the story. Wow! Did I get an ear­ful. Con­tinue read­ing

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Can 403b vendors sell product on LAUSD school campuses?

Title for Brads access article

Los Ange­les Uni­fied School Dis­trict employ­ees have the option to enroll in two tax-deferred retire­ment plans—a 457(b) plan and/or a 403(b) plan. Dis­trict pol­icy on ven­dor access to cam­puses dif­fers greatly for each plan. In this arti­cle I hope to resolve any ques­tion regard­ing ven­dor access to school cam­puses and, for that mat­ter, any Dis­trict property.

Click here and scroll down to page 3 for LAUSD BUL-6178.0: Employee Unions, Asso­ci­a­tions, and Orga­ni­za­tions, Solic­i­ta­tions and Sale of Mer­chan­dise, and Use of School Mail, dated Octo­ber 14, 2013, clearly states that “no agent may solicit employ­ees, adver­tise or dis­trib­ute pro­mo­tional mate­ri­als for the pur­pose of insur­ance poli­cies, solic­i­ta­tion of con­tracts for tax-sheltered annu­ities, 403(b) vol­un­tary retire­ment sav­ings or sim­i­lar ben­e­fits on Dis­trict prop­erty (includ­ing vehi­cles) or through Dis­trict media, email or pub­li­ca­tions, includ­ing web­sites.” Sim­ply put, the sale of 403(b) prod­ucts on any Dis­trict prop­erty is not allowed.

The above-mentioned bul­letin also clearly states that autho­rized rep­re­sen­ta­tives of the LAUSD-sponsored 457(b) plan are allowed on Dis­trict prop­erty, includ­ing cam­puses. There is just one 457(b) plan for LAUSD employ­ees, and it is man­aged by the Dis­trict Retire­ment Invest­ment Advi­sory Com­mit­tee, which includes rep­re­sen­ta­tives of Dis­trict bar­gain­ing units and staff. (I rep­re­sent AALA on the com­mit­tee; Alan O’Hara is my alter­nate. See below for a list of union reps on this committee).

This bul­letin goes on to state that pre­sen­ta­tions on retire­ment, per­sonal finance or insur­ance also are not allowed on Dis­trict property—other than by offi­cial rep­re­sen­ta­tives of the LAUSD 457(b) plan, Cal­STRS and CalPERS (Click here for details and to ask for a rep to make a pre­sen­ta­tion on your cam­pus. Any­body can request a pre­sen­ta­tion).

Per the bul­letin, employ­ees may not use Dis­trict facil­i­ties such as tele­phones and fax machines to arrange appoint­ments or dis­cuss any phase of pri­vate insur­ance, annu­ities, 403(b)s or sim­i­lar pro­grams. They may not meet com­pany rep­re­sen­ta­tives on Dis­trict prop­erty. The only excep­tion is autho­rized rep­re­sen­ta­tives of the LAUSD-sponsored 457(b) plan.

More infor­ma­tion on deferred com­pen­sa­tion plans can be found at http://benefits.lausd.net/403b-and-457b-deferred-compensation-plans. The autho­rized rep­re­sen­ta­tives of the District-sponsored 457(b) plan may be reached at the LAUSD 457(b) Deferred Com­pen­sa­tion Office at (213) 241‑3136.

About the author: Mr. Rum­ble is prin­ci­pal of Esper­anza Ele­men­tary and serves as the AALA rep­re­sen­ta­tion to LAUSD Invest­ment Advi­sory Com­mit­tee. He is one of sev­eral union reps listed below on this committee:


Building-Trades Coun­cil

SEIU Local 99

Team­sters local 572




Ben­e­fits administration

and Board of Edu­ca­tion rep

If your union is not listed and you are inter­ested in becom­ing a rep or an alter­nate, please call (213) 241‑3136.  ALL unions are wel­comed and encour­age to send a rep. No finan­cial back­ground or expe­ri­ence is necessary.

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Money Roundup: Portfolio Evaluation, CA couple saved 1.5M under 40 w/ 2 kids! & other tid bits.

Port­fo­lio Eval­u­a­tion Any­body?

Lis­ten to my friend Ron DeLegge of the Index Invest­ing Show eval­u­ate a listener’s port­fo­lio. Ron just did his weekly Port­fo­lio Report Card on a $95,0000 retire­ment port­fo­lio for Charles — a farmer, in Sweet­wa­ter, OK.  If you want your port­fo­lio eval­u­ated, send your request to Ron and he will do it for FREE. Ron’s port­fo­lio eval­u­a­tion is right on point. He talks about diver­si­fi­ca­tion, asset classes, stock/bond split, per­for­mance and most impor­tant invest­ment COSTS.Take a lis­ten: http://theindexinvestingshow.podomatic.com/entry/2014–08-28T05_00_00-07_00 (I lis­ten to all of his pod­casts on my iPhone at the gym).

A Young Cal­i­for­nia Cou­ple with 2 young chil­dren tell you how they did it!

You must read this inspi­ra­tional announce­ment and dis­cus­sion about a young cou­ple, he is 39 and she 38 amassed $1.5 mil­lion. Dan and I are thrilled that young peo­ple are get­ting the invest­ment process right. As we have said in our book and on this blog, learn­ing to invest is not com­pli­cated and the rewards are tremen­dous. For starters, peace of mind! These folks have no more money prob­lems for the rest of their lives! Take a look at their amaz­ing story and the responses: http://www.bogleheads.org/forum/viewtopic.php?f=2&t=145652&newpost=2170897

For My PreK-12 Teacher Colleagues.

If you are look­ing for finan­cial advice and don’t know where to turn, you need to con­tact your union and dis­trict and demand that they offer finan­cial plan­ning work­shops. The Cal­i­for­nia Teach­ers Asso­ci­a­tion has been offer­ing finan­cial work­shops. I have not been to them because I am retired, but I have heard that they are good and they sup­pos­edly do not try to sell you some­thing. Ask them to expand their work­shops to more mem­bers. Their online finan­cial web­site has excel­lent 403b/457b infor­ma­tion: http://ctainvest.org/home.aspx You don’t have to be a teacher to learn from the infor­ma­tion pro­vided.

Boglehead’s Authors Released 2nd Edi­tion of their book, The Bogle­heads Guide to Investing.

Dan and I fol­low the Boglehead’s invest­ing philosophy–stay the course, con­trol invest­ment costs and spend­ing, use the index­ing strat­egy that offers broad diver­si­fi­ca­tion over all major asset classes and do NOT for­get to have a bond allo­ca­tion approx­i­mately equal to your age. There are thou­sands of fol­low­ers of Invest­ing giant, John Bogle. The lead­ers of that great forum, Bogleheads.org, have released their newest edi­tion, The Bogle­heads Guide to Invest­ing, 2nd Edi­tion. It is highly rec­om­mended that you pur­chase this book and read it so you can become that young cou­ple men­tioned above. Pene­lope Wang wrote a great review: http://time.com/money/3108473/retirement-investors-3-smart-moves-bogleheads/

Never too Late to Start

If you are older and think its too late, you are WRONG! That’s why we wrote a book because so many of us started much later and made mis­takes. Pick up a copy of our book, Late Bloomer Mil­lion­aires, its not too late for us old­sters too.

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Which retirement plan records the most customer complaints?

Ques­tion: Why would any­body use a retire­ment plan that gen­er­ates the most cus­tomer com­plaints accord­ing to a fed­eral watch dog, FINRA?

Answer: Com­plaints or not, my pro­fes­sion, prek-12 teach­ers, sign up with tax shel­ter annu­ities by the tens of thou­sands because the they don’t know of the high costs, that annu­ities are inap­pro­pri­ate retire­ment plans and that lower cost mutual funds might be avail­able through their employer or dis­trict. The agent and the com­pany make much of the money and give the annu­i­tant a small credit. Don’t take my word. Take a look at what Finan­cial Indus­try Reg­u­la­tory Agency (FINRA) says: click here.

Dan and I have talked end­lessly that annu­ities are not invest­ments, it is a com­pli­cated con­tract with an insur­ance company.

If your employer doesn’t offer low cost index or mutual funds, look to your state pen­sion plan for a lower cost 403b that uses gen­uine invest­ments with mutual or index funds.

If you are a LAUSD employee, take a look at the award win­ning 457b plan: click here.

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Los Angeles Unified WINS 457b Retirement Plan Award!

National Asso­ci­a­tion of Gov­ern­men­tal Defined Con­tri­bu­tion Admin­is­tra­tors (NAGDCA)

NAGDCA released their annual Lead­er­ship award recip­i­ents for 2014. Los Ange­les Uni­fied School Dis­trict won in the 457b Plan Design cat­e­gory! Why did we win? Very easy, we have one of the low­est costs retire­ment plans in the country.Take a look at the fees in the fol­low­ing table:


This is huge. We are not talk­ing about just any employer, we are talk­ing about a PreK-12 school dis­trict, along with the major­ity of school dis­tricts which his­tor­i­cally has offered the worst vol­un­teer retire­ment plans ever. So bad that finan­cial author Bill Bern­stein said that teach­ers are trapped by one of the dank­est, foulest-smelling cel­lars of the finan­cial world.

But we are begin­ning to dig our way out of that cel­lar.  And this Award means we are doing some­thing right for our hard-working LAUSD employ­ees. Look at the low costs in the table above!

There were 12 plans sub­mit­ted and four got an award, includ­ing us. The com­pe­ti­tion was stiff because we were com­pet­ing with employ­ers all over the coun­try. These employ­ers were city, coun­try and state gov­ern­ments and not one PreK-12 school dis­trict, NOT ONE.

This is absolutely mar­velous for those ben­e­fit admin­is­tra­tors who cre­ated our com­mit­tee way back in 2006 and for our com­mit­tee (rep­re­sen­ta­tives from the unions) who have worked col­lab­o­ra­tively with dis­trict ben­e­fits staff for years to rec­om­mend to the CFO the pro­fes­sional con­sul­tants and Third Party Admin­is­tra­tors (TPAs) who would work for the best inter­ests of our employ­ees. This col­lab­o­ra­tion worked and should be repli­cated to other school dis­tricts.

I think we should all be proud!

Here is a list of all the award recip­i­ents and the cat­e­gories: http://www.nagdca.org/dnn/Awards/2014LeadershipAwardWinners.aspx

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Our Portfolio Mid-Year 2014 Evaluation and Performance


We have not pro­vided an update to our port­fo­lio since we pub­lished our book 1.5 years ago. In the last two years, our port­fo­lio has per­formed so well, we fin­ished remod­el­ing our house with new AC and a mas­ter bath and our port­fo­lio has remained the same!

Our pur­pose now is to show how to eval­u­ate a portfolio’s per­for­mance with the over­all stock and bond mar­ket. We also want to model a broadly diver­si­fied port­fo­lio using low-cost index stock and bond funds.

Below are two tables and a pie chart. The first table shows the over­all broad domes­tic stock and bond asset classes’ per­for­mance year-to-day (YTD), data  needed to com­pare how our port­fo­lio is performing.

The 2nd table shows our port­fo­lio and the indi­vid­ual invest­ments’ YTD per­for­mance, the cost and the name of the index or fund. We got this infor­ma­tion using the Morningstar.com port­fo­lio fea­ture. Its a great and sim­ple way to mon­i­tor your portfolio’s per­for­mance for each invest­ment and does all the work I needed to make this report. I am no math­e­mati­cian, but M* makes me look good.

Finally, the pie chart shows our over­all allo­ca­tion between stocks and bonds. To bal­ance risk and return appro­pri­ate to our ages, Dan and I need to keep tabs on the impor­tant stock/bond split.

By look­ing at the broad mar­ket results in the first table and com­pare it with our indi­vid­ual returns on the sec­ond table, you can tell quickly that our port­fo­lio is per­form­ing about the same as the over­all stock and bond mar­ket. That’s good. (Notice the very low Van­guard costs of our invest­ments in 2nd table below).


Asset Class Returns

Morn Star Printout of Portfolio.

Pie chart asset allocation


Because we with­drew a large amount of money from our bond allo­ca­tion to pur­chase our Tesla (click here), our port­fo­lio is slightly off bal­ance from our orig­i­nal 30% stock / 70% bond allo­ca­tion. We now have a 38% allo­ca­tion to stocks and we need to lower than allo­ca­tion to about 30%.

Which stock funds would you sug­gest that we sell and which bonds would you sug­gest we buy to rebal­ance the port­fo­lio back to the 30/70 stock bond split?

Read the Bogle­heads responses to my ques­tion. Its great and hilar­i­ous because it gets into the emo­tions of invest­ing MY EMOTIONS: click here. :-)

Note: Because we are retired at ages 67 and 73, we choose the 30/70 split. This split is con­ser­v­a­tive and is not appro­pri­ate for younger investors who should have a much higher allo­ca­tion to stocks.

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John Bogle Says.…

John Bogle, founder of the Vanguard Group

John Bogle, founder of the Van­guard Group

The future of the finan­cial sys­tem will be smaller, leaner, low-cost, and less com­plex (thank good­ness!).  Cur­rently, the vast major­ity of retire­ment plans (403b, 401k, 457b*) are big, fat, high-cost and way too com­plex. Retire­ment plan­ning should be about as dif­fi­cult to dis­cover and learn as our first day on the job. For teach­ers it should be a lot eas­ier than our first year in teaching.

Chick here for all of Mr. Bogle’s com­ments writ­ten by Dan Weil.

*Los Ange­les Uni­fied School Dis­trict has a low-cost 457b plan that would make Mr. Bogle smile! For LAUSD employ­ees the future is here! See the fund line up below. The four bold Van­guard choices is a sim­ple starter diver­si­fied low-cost port­fo­lio. This selec­tion of funds includes bonds and domes­tic and inter­na­tional stocks (sans emerg­ing markets).

LAUSD 457b Options-total fees


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