I plan to open a 403(b) in August. I have been told that mutual funds are better (and cheaper) than annuities, and so that is what I want to put my money. (I don’t intend this question to be a mutual fund vs. annuity debate). My school district sponsors 20 retirement planning companies, and their websites don’t seem to distinguish the competition. Some companies include Fidelity, Primerica, Vanguard, Metro Life, Equitable, Putnam, etc. How do I choose which company is best for me whether or not I end up getting mutual funds or annuities?
I teach in Florida. We have the Florida Retirement System (FRS). My school district puts money into that, which I can choose either to be a pension (with benefits after 6 years of service) or an investment plan (with benefits after 1 year). I choose the investment plan because I don’t know if I will be in teaching in the long-run or if I will at least be in Florida for 6 years to get the pension benefit. According to everyone, the FRS will not be enough, so we have the option of opening up a 403(b) plan with one of these companies to supplement the FRS money. There is no matching in this 403(b).
I am 23 years old.
Mutual funds are definitely the better way to go.
Of the list you gave, my two favorite companies are Fidelity and Vanguard. Vanguard has by far the lowest expenses, and Fidelity has pretty good expense rates, but a wider selection. You can’t go wrong with either of these two.
Also, to set your mind at ease a bit, study after study has shown that, in the mutual fund world, WHAT you invest in is not nearly as important as HOW you invest. As long as you’re starting early and making regular contributions (and increasing your contribution rate every time your income increases), you’ll be in great shape for retirement, regardless of which funds you choose.
I don’t know your age, but if you have 10+ years until retirement, you should be at least partially in stock funds (generally, the farther you are from retirement, the more aggressive you should be, within your comfort level).
I hope that helps!