⚠ Why 403b's are the worst investment vehicle.

Рет қаралды 52,518

5 жыл бұрын

Today we're talking about the 403b and why they are the worst retirement vehicle out there. We'll show you how you can avoid the high fee traps in the 403b and find the right investments for you.
We're an investing service that also helps you keep your dough straight. We'll manage your retirement investments while teaching you all about your money.
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Пікірлер: 129

@aolsonx1 5 жыл бұрын

My 403b allows me to invest in Vanguard index funds with lower fees than anything my wife's 401k offers. If there were a lot of options to sort through I didn't notice because I only looked at the Vanguard funds.

@priestesslucy3299 2 жыл бұрын

I'm glad it's working out for you. What makes me hate them is having a 403b prohibits you from opening a Solo401k for no good reason

@gorditaz8728 10 күн бұрын

I agree I have a 403b and I’m also invested in the vanguard’s index funds and also in the Capital Group American Funds. I love my 403b.

@raulgonzalez8792 4 жыл бұрын

I appreciate you for asking people to do their homework!

@boudreauxish 5 жыл бұрын

I have a 403b, work in a hospital. They had me investing in that target retirement crap and I changed it to some vanguard funds that follow the S&P 500 and did mid cap fund and a small cap fund. The expense ratios were between 0.035%-0.07% from what I could find they charge me like $7.50 per quarter for rebalancing. But I turned rebalancing off. I don’t want them to end up selling stuff for a loss. I’d rather collect dividends and have them grow over time. I do keep 10% in a bond that’s like cash so if the market drops I could buy something.

@recheveste31 4 жыл бұрын

Is it really that bad? I put in $500 per paycheck and get $180 + from my organization? I do work in a hospital environment..

@Marquie22 3 жыл бұрын

SAVAGE BOii better look into it!!!!

@Jen-qb9cl Жыл бұрын

Hi Lonnie I have trowe in 403 . The choices too our midcap and sm cap. I’m planning to change my target fund. How much percentage you place in mid cap and small cap?

@EaRLy1ONe1 3 жыл бұрын

really insightful and helpful!

@silvereyedstacker1842 5 жыл бұрын

Great topic and it’s unfortunately one that few are aware of. I am a nurse and my two 403b accounts have been terrible. Luckily, I have some knowledge of finance unlike most nurses, but even so, the lowest cost index fund that I can invest in still has a fee of 0.20%, not to mention the ridiculous other fees. In this situation, you’re better off contributing to the matching, and then maxing out a Roth IRA and then contributing to a brokerage. Something that isn’t talked about is that you’ll pay the full income tax on all of the 403b money when you retire. However, the Roth IRA grows interest tax free and you pay a max of 20% of the interest earned in a brokerage account depending on your tax bracket (assuming the laws don’t change). The only reason that I almost max out my 403b contributions is to pay as little taxes now as possible, but I am blessed in that I’m also able to max out the Roth and contribute to a brokerage as well. Bottom line...Roth IRA>Brokerage>403b.

@Jen-qb9cl Жыл бұрын

Hi I have 403 too in the hosp. What diversification of funds did you choose

@brucesmith6868 5 жыл бұрын

Thanks Dustin good to know 👍

@buildyouup838 5 жыл бұрын

I have a clergy 403b invested in a s&p500 fund. It is the eq500 fund. I can use it for housing tax free starting at 59 1/2. Special program for clergy

@andrewthompson4587 3 жыл бұрын

Interesting video and quite informative. I'm a little baffled at how the 9 different kinds of annuities somehow got represented by 1 kind. What do you think about the other 8 categories of annuities?

@DIAMONDGIRL57 6 күн бұрын

You’re correct! My 403b did nothing! I am withdrawing the funds.

@deloresmae1797 2 жыл бұрын

The cute part about this video is him assuming that all school districts are actually giving teachers an option lol

@tubingit10 5 жыл бұрын

Thanks great info!! I wondered why as a therapist working in the medical field I never made more than 2% return w my 403b accounts. What a horrible sham to sell employees. They use 403 at hospital settings for therapists and nurses all the time. Sometimes they match a few percent but I think the market still beats it lol pathetic and in my opinion unethical to offer this garbage to employees

@ianstephens333 4 жыл бұрын

Interesting. I was just hired at a hospital. What retirement plan do you have now?

@shantitakemoto1058 Жыл бұрын

The comment section is pretty helpful on this video, as well as the video as a starting point! Thanks to all the commenters! I’m looking into my 403 b right now!

@christinad1651 4 жыл бұрын

My hospital’s 403(b) works like the 401(k) you described. It’s not that bad except for too few choices. I don’t have any matching because I’m here long enough to have a pension.

@meesacreef 2 жыл бұрын

Had a 403(b) for around ten years and rolled it into a solo 401(k) after retiring from that pubic service job. Fidelity only charged $25 per year for this account and I could select any number of mutual funds. Not a bad self-directed deal at all. My spouse currently has the same account through a similar public service employer. Investigated a 403(b) with a public school system a few years for my spouse and the fees were around 2% annually. Awful. The school district simply did not permit their employees to have a self-directed option. Not one. Thus the higher fees.

@jnsa9454 5 жыл бұрын

Thanks for helping out us teachers. Eligible for fidelity for 403b and VALIC only for 457. Recommendations for 403b products with Fidelity? VALIC are the annuities

@universal3024 3 ай бұрын

BTCFX

@FeliPeltier 3 жыл бұрын

My 403b has an 8% match and has avg’d 13% annual return over the last 8 years. No annuities.

@IndianOutlaw1870 3 жыл бұрын

There are different types of annuities. An immediate annuity is a personal pension of sorts. It can be a great option for retirees.

@Ms.B4real 4 ай бұрын

Im stuck i.n a 403b i no longer work for the employer and they still WON'T allow me to draw my money down. I would never get into another one.

@jeromemagat4122 Жыл бұрын

Would you recommend a ROTH 403b?

@philm4625 5 ай бұрын

How / where do you hunt for low cost funds? Is there a good resource?

@damienmiquel8513 3 жыл бұрын

my main 403B fund (QCGRRX) has a 0.5% expense ratio. Way higher than VOO but far from the 2% mentioned in the video.

@kalawrence9 Жыл бұрын

I have a Fidelity 403b (instructor at Big Ten institution). The 35 offerings available to us are more in line with what you have listed under the 401k but are mostly limited to target date funds and active funds with ridiculously high fees. There are three institutional Vanguard funds which are the only worthwhile funds available that have very low fees. I just moved 100% of my money and future money into the institutional version of VOO (VIIIX) in my 403b. So now I work with my other retirement accounts knowing that I have that heavy position in my 403b because of the lack of great options to choose from. But it sucks because I just did a rollover from my past employer and I can put that money into virtually anything I want.

@petez_el_aventurero8137 3 жыл бұрын

I work for a school district in California and the only plan that was offered to me was the following: 403(b) Tax-Sheltered Annuity Plan and within this contract, the money is invested in the following: Vanguard total stock, mid-cap, and large cap mutual funds. I did have a positive return in 2020.

@MarkSmithhhh Жыл бұрын

Is there a cap tho?

@a1elvisfan 3 жыл бұрын

Ok. You might be correct on some plans, but my 403b through a major university uses fidelity. We pay 90 dollars per year, For fees. Nothing else. We have the choice of hundreds of fidelity and vanguard funds. As of today 9/2/2020 I have funds earring 45% this year. My 403b rocks. And if I choose to work here there no other choice but this 403b.

@Jazzwealth 3 жыл бұрын

Hey Mr. Elvis fan! Sounds like you did your homework... As you can see from the comments others weren't aren't as fortunate. Glad to hear it's going well this year for you!

@millenialmusings8451 5 ай бұрын

Which funds do you have in 403b?

@a1elvisfan 5 ай бұрын

I have 1 vanguard fund VSVNX and 5 Fidelity funds Focpx fcntx fscsx fsptx and fselx. For 2023 I gained 31.14 percent. Just a warning these funds will make money in good times but can loose lots in bad times, but all these funds over there lifetimes have average gains of 10 to 20 percent a year.

@alex124241 3 жыл бұрын

What if it’s a custodial 403b through a brokerage? Like vanguard ?

@jo-annmacneill6454 4 ай бұрын

They’re not all teachers people that work at a College have 403B plan as well

@rickdaniels6741 2 жыл бұрын

How do I look to low cost funds

@childrensisland123 2 жыл бұрын

Is there a way to get out of my 403b while I'm still working?????

@ToOpen6seven 4 ай бұрын

Are there issues if your 403(b) is with TIAA with a university?

@lakorai2 5 жыл бұрын

Usually you can choose between TIAA and Fidelity in a 403b. Choose Fidelity every time. TIAAs expense ratios are way too high. Their brokarage accounts have sky high stupid fees ($25 to buy a mutual fund). Im stuck with them because my employers 401a cannot be rolled over to anyone else until im like 50 years old

@mescetacy 3 жыл бұрын

I have TIAA. It is nice. I have 45% in TIEIX (basically Russell 3k) 30% in TCIEX (International EAFE) and the last 25% split between a large cap growth (TILIX) and Russell 2k (TISBX) fund. None of these are above a 0.06% expense. I have about 20 years until retirement. It has been growing very nicely since I changed from a target date fund.

@maryfitzpatrick4656 Ай бұрын

403b has been amazing for us!

@vinman5432 2 жыл бұрын

If I have a 403(b) and I have $7,000 placed within and made $77. If I want to pull out my $7,000, what penalties or taxes would I have to pay? Would only the $77 be assigned a penalty and would the $7,000 be taxed at my regular tax rate? Also, aside from not liking the 403(b), I'm looking to use the funds to assist me in buying a condo.

@utprez 3 жыл бұрын

I'm a teacher and complete rookie to the finance game - I have the option within my 403b plan to choose Vanguard Total Stock Market Index (VITSX) - is that a solid option?

@pnkrckmom 3 жыл бұрын

My hospital just got a 403b plan. There are a number of Vanguard index funds available. That's what I'll be going with - the Vanguard 500 index Adm. fund.

@FrugalTeacherFI 3 жыл бұрын

It’s the Vtsax institutional shares equivalent. Can’t go wrong with it.

@JoeSmith-ie3cx 3 жыл бұрын

Perfectly fine choice

@StackThePlanet 3 жыл бұрын

I'm in the same boat as you... I've got VSMPX Vanguard Total Stock Market Index Fund Institutional Plus Shares. Only difference is VSMPX's expense ratio of 0.02% to VITSX's 0.03 E/R, a negligible 0.01% difference. She's been good to me thus far. Solid as a rock.

@rblues9149 Жыл бұрын

So if have Roth IRA I should invest in that instead of 403b?

@kp-gbuniqueinterest 4 жыл бұрын

I have a 403 (b) with TIAA for the past 3 years. I was happy in the beginning and I am happy with the amount in it. Thank god for the employee match X with an extra percent added. Which I think is why i dont notice the fees. But looking at the reviews of TIAA online, people who are already retired or children trying to get their parents fund has not been good. They really have bad reviews as a company. When I finally look for another Job I will transfer it to another firm. From your experiences Should I transfer as an IRA or Roth IRA? Will be able to add money to it when I transfer?

@Marquie22 3 жыл бұрын

Roth IRA

@coolcoolcool14 Жыл бұрын

If you transfer it to a Roth IRA you will have to pay some upfront taxes because a 403b is tax deferred (meaning you contributed pre-tax dollars) and a roth IRA uses after tax dollars. Just something to be aware of

@j.a.lawrencewealthmanageme9624 Жыл бұрын

This was a really good video. Goodwork DT.

@stingyblue8189 Жыл бұрын

What do think about 457 Plans?

@marveliciousgoku4343 5 жыл бұрын

Thanks for the nice info 👍How about 457b stock investments? Is it a good account?

@seankeeffe4377 5 жыл бұрын

I was going to ask the same thing.

@AllinGold2 4 жыл бұрын

The 457(b) is a non-qualified plan. So, you can fully fund a 403(b) AND a 457(b) simultaneously. For people who qualify for both, this is a fast track to early retirement.

@lilyhong1220 2 жыл бұрын

My job has a 403b with no match. Thinking of changing to roth ira as everyone is saying to do nowadays

@wjksea 4 ай бұрын

401 k, 403b. The latter like the former is voluntary investment. In the latter it’s for public employees. These accounts used to be tax deferred only. At least for 16 years a ROTH option is permitted. It depends on what VIP one is dealing with but investments can be limited but once 59.5 yo, funds may go to a rollover account for fewer restrictions on investments.

@drummerbum90 5 жыл бұрын

Dustin how about a video for us municipality workers 457 (b)

@jamalginsburg7277 2 жыл бұрын

I agree. I have a 457 b and 457 b Roth.

@ygbodybuilder3023 2 жыл бұрын

Is it possible to roll over my deceased parent 403 into my 457?

@chriss4365 4 жыл бұрын

Mine doubled in 7 years. My money is stuck in it what can i do about the stupid 10% penalty

@ImChickenLittle 4 жыл бұрын

Nothing

@GeoffreyHart_ClementsHS 4 жыл бұрын

@@ImChickenLittle Not necessarily true. You (@chriss4365) should contact your plan administrator during this quarantine and downturn of the stock market to either see if your plan administrator can do something called an "Exchange in Plan" to transfer your 403b to a reputable company like Vanguard, Fidelity, or Charles Schwab if they support them. Mine let me do this. If they don't, then ask if they offer something called an "In Service" distribution, which let's you move your 403b to an IRA while still employed. If your plan administrator doesn't offer either of those, then I think you'd best be off in just leaving it there and putting future contributions into a Roth IRA (or traditional IRA, whatever your preference is). It sucks that most people in Chris' position are just met with a "you're screwed, there's nothing you can do" response. It doesn't help anybody. Take this time you have in quarantine to educate yourself on your options

@blackphillip2393 3 жыл бұрын

Way over generalized vlog post man. My 403b investment accounts with Vanguard and Fidelity (3 diff school districts) have been exactly like your description of a typical 401K. No annuities required although that is lurking as an option often. And it is a great way to pile up tax advantaged retirement funds quickly. $26K a year at my age into Roths that are rolled over to an IRA after severing. Hey, and my Interactive Brokers IRA has >thousands< of options and I like it that way.

@MIKExMASSACREx 9 ай бұрын

Quick tip, use a 403b as a fuck around tax free savings account because you can early withdrawal for almost any life event, INCLUDING a down payment on a house

@Ms.B4real 4 ай бұрын

I wasn't allowed to draw any of my money. I worked for this company for 16 years and ended up getting cancer and was let go and they still won't let me draw any of my money.

@MIKExMASSACREx 4 ай бұрын

@@Ms.B4real was it a 403b? Because medical bills is one of the most obvious and straight fed life events you would be able to withdrawl for

@Ms.B4real 4 ай бұрын

@@MIKExMASSACREx Yes it's a 403b and I'm in so much debt from cancer treatment and surgeries.

@MIKExMASSACREx 4 ай бұрын

@@Ms.B4real that is horrible lol emergency medical bills is supposed to be like one of the main life events eligible for early withdrawal!

@Ms.B4real 3 ай бұрын

Also I worked for private School and at the time I really thought 403b was a good thing. But I'm finding out that a 401k is better.

@amyrubenstein1362 Жыл бұрын

I have a 493b with goodwill and am more than confused on all this I’m lost with no help out here I need someone physically with me looking at my account to explain it me I have called several times they talk over my head

@universal3024 3 ай бұрын

I have no choice that’s the only retirement Fidelity account my job offers

@joshz7872 4 ай бұрын

I love my 403b, most of what you said doesnt even apply. Non-teacher here, at all, in fact all of the teachers I know dont have a 403b. Mine offers 5% pretax from the job, i give 3% after tax, my job contributes 3% match. In total, that means 70% of the value of my 403b is contributed by my job. I control my roth and investment accounts the way I want with my own money. Why would I care of what my 403b is if most of it isnt even out of my pocket?

@lewisr7700 Жыл бұрын

They aren’t all terrible. My wife and I are high earners and having a 403b allows her to contribute to her PERS plan, up to 30k a year into deferred compensation plan, and up to 30 k a year into the 403b that can be Roth or traditional. It’s our best option for post tax retirement funds. And it has a fidelity s and p index fund with an expense ratio of .02. I see no way that this is a bad deal.

@mandypdx 5 ай бұрын

This is confusing. I work for a university hospital and have the same fees (through Fidelity) for my 401a, 403b and 457b.

@JasonBuckman 2 жыл бұрын

My 403(b) has Fidelity's BrokerageLink.

@danhayes4941 3 ай бұрын

Bruce Williams:) Classic

@Jazzwealth 3 ай бұрын

The best!

@HeritageWealthPlanning 5 жыл бұрын

Bruce williams! Man, I remember that guy

@mikeschlabs1196 3 жыл бұрын

I’m a nurse and my company matches up to 6%, is it worth it to take the match and then the rest in a Roth?

@StackThePlanet 3 жыл бұрын

Match beats Roth beats Traditional. Match is free $, take it. Max your Match, then put the rest in Roth (Know your income and contribution limits). It's usually safe to go with a low-cost index fund (ie S&P500 or Total Stock Market). Target date funds are typically well diversified and also dial back the risk as you get older. I recommend you consult with a fiduciary financial advisor who has a legal obligation to put your best interest before their own.

@damienmiquel8513 3 жыл бұрын

I'm confused. These numbers don't match my experience with my 403B. I pay less 0.06 in fees.

@AB-ib8dm 2 жыл бұрын

Someone in your organization or a management company selected by your employer chooses which options you will be offered. The person making the decisions may be financially savvy or be well intentioned and overly trusting. They may fall for the sales pitch and believe that their horrible picks are actually gems. The salesperson may actually believe that they are selling a good product. Whether you get good options or bad ones depends on who is making the decisions. With a 401k, the person making the decisions has a fiduciary duty, which means you can sue them if you can prove they made horrible choices. The fear of being sued keeps them motivated to do their due diligence when adding or removing funds on the approved list.

@ideapowerfulweapon 5 жыл бұрын

I guess I'm lucky. I'm in a hospital 403b and I put it 100% in a S&P 500 index fund. It also allows a Roth, so I'm going all after taxes since I got enough pretax investments and I don't want that tax bomb.

@cmiller8006 5 жыл бұрын

Same here, and can put 18,000 all after tax into it. Win win. Mines through fidelity and have thousands of funds, ETFs, stocks, to choose from.

@recheveste31 4 жыл бұрын

I agree, I am in the same strategy as you are. I am not sure why the 403 is such a bad investment? I think it's reasonable.

@Marquie22 3 жыл бұрын

SAVAGE BOii check your fees

@azjmiles Жыл бұрын

a variable annuity doesn't sound too bad to someone who just lost 40% of their 401k value.... If you're about to retire and your 401k is doing well...get out. buy an annuity with a death benefit, and enjoy life.

@billyrayband 5 жыл бұрын

Very good info. But I just became aware that 401Ks are sometimes managed by insurance companies, integrating annuity product offerings. How is this possible?

@undrgrnd734 Жыл бұрын

nobody this guy :teachers you got homework

@ghostl1124 2 жыл бұрын

lot of missionary organizations offer 403-Bs only, so I ignore it, and just buy a Roth IRA....

@alexkomolov1270 5 жыл бұрын

what do you think about blockchain investments?

@MrEnergyCzar 4 жыл бұрын

Max your HSA and Roth first. Any way to convince you to shift your investment money from a tax deferred retirement acct to your financial advisor's control, benefits the financial advisor, not you. Just pick index funds. Its not rocket science.

@sankalppandya1563 5 жыл бұрын

This also is offered to any one working in hospitals, including administrative staff. As soon as I read a couple of articles around the fees associated with 403bs I looked into my account offered and I feel like I'm okay. TIAA is offered by my employer and currently investing into a vanguard target fund with an ER of 0.09%. Unfortunately couldn't find any good index funds to combine together. Dustin what are your opinions of TIAA? Are they any other fees that I should look for in my 403b?

@ToOpen6seven 4 ай бұрын

How are you doing 4years later with TIAA?

@sankalppandya1563 4 ай бұрын

@@ToOpen6seven Doing fine, haven't had any problems. Still investing into the target fund and another Vanguard fund that tracks the SP500 with a low ER of 0.02.

@ashleytaylor994 4 жыл бұрын

I know variable annuities are dangerous. But what about a Fixed Indexed Annuity? There is a company called athene that will offer a signing bonus. I don't see why an FIA would be bad?

@librisc 4 жыл бұрын

Not sure about your research but you are grossly misinformed on 403b. Please do your homework before you spit out garbage. I couldn't be happier with my Fidelity with a 40% return over the last year. YTD 30%.....SMH

@sciencelabvideosl7558 2 жыл бұрын

He knows what he is talking about. Not all teachers or nurses are lucky to have Fidelity or Vanguard and many have garbage 403b plans. There is even a Facebook group dedicated to helping teachers get out of high cost 403b plans.

@recheveste31 4 жыл бұрын

What if i already invested $85,500 . . .

@irbeast69 4 жыл бұрын

lmfao good luck boi. You got see a 50% net worth decrease after the Great Boogaloo of 2020

@GeoffreyHart_ClementsHS 4 жыл бұрын

I wouldn't let this guy (Ayyylien007) get to you. I am a teacher and was duped into an annuity (through a Roth 403b, luckily) with a local company 5 years ago because they knew my plan supported them as a vendor. I didn't know any better. They ate the entire growth of my account over the past 5 years. HOWEVER, they did also shelter my account from the sharp decline that's happened in the stock market this month (which has essentially taken our economy back 4 years). I took advantage of this opportunity to have them transfer the funds over to Vanguard, since I found out they were also supported through my plan administrator. Now it's like that whole fiasco never happened with that local company. Now with Vanguard, I am only paying 0.04% expense ratios for VTSAX (total market index) and VFIAX (S&P500 index). They also only have a $60 annual record-keeping fee, regardless of account size. Vanguard is one of the most reputable and respected investment companies around. Take advantage of your time in quarantine and do some research with you Plan Administrator. If you find reputable companies like Fidelity, Charles Schwab, or Vanguard is supported by your plan, rollover your account as soon as possible while the markets are still low.

@user-jd6qg3sj9g 5 жыл бұрын

I like listening to you Dustin, but I have to STRONGLY disagree with your feelings about 403b's. My employer offers me and I am quite happy with it. We're part of a huge non-profit healthcare organization in Michigan and the fees associated with the 403b are discounted. I probably pay higher fees on my taxable account and my beneficiary IRA outside of the 403b.

@Jazzwealth 5 жыл бұрын

I'm glad you are happy with the offering 😊 Like I said, there are good choices in there but usually many bad one's as well.

@blade643 5 жыл бұрын

you're just feeling a bit salty.

@Bandaid17 4 жыл бұрын

I agree C. I am an RN in a hospital and we use Principal. I have nothing but good things to say about their service. I do however check out the track records of the different investments,how my mix is managed and do rebalance quarterly. Nobody is going to do it all for you. Do your homework. Everybody’s goals are different. Don’t be a victim especially when it comes to your nest egg for retirement

@Emk315 4 жыл бұрын

Of course you may be satisfied with it, but, what is your expense ratio at your 403b?

@PMitchell106 3 ай бұрын

This is bad clickbaity influencer advice. It's important to know that a 403B is regulated differently than a 401k, but it's stunningly wrong to say its the worst investment vehicle or that you're better off in a savings account. You're going to be generating a lot of unnecessary stress and outrage among people who have excellent investment options in their 403B but assume they're being screwed over because you showed them the worst case scenario and then generalized it as representative of all 403B's. Shameful.

@schnoodle3 3 жыл бұрын

Clearly you are suffering from Dunning Kruger on this subject

@valhersh1703 5 жыл бұрын

teachers... and nurses :(

@BOTUBE 5 жыл бұрын

Val Hersh cancer researchers too 😔 I don’t match mine so I’ve been collecting money from them, but putting my money in a Roth and real estate. My coworkers give me such a hard time for not using it

@valhersh1703 5 жыл бұрын

@@BOTUBE we get a pretty crappy match 25% up to 4% of our income... but they do give 3% without the employee contribution, vested at 3 yrs. The match makes me want to find a different job but oh well. I max out a roth and have a taxable account