Tuesday, June 27, 2017

TRS Is Converting Our Bond Fund To A Balanced Fund On January 1, 2018. Should You Invest In It?




























My sources tell me that the Teachers Retirement System (TRS) is finally throwing in the towel and eliminating the poorly subscribed Bond Fund that has been associated with anemic investment returns of 1.33% or lower, before investment fees, for the last five years and converting it to a Balanced Fund that is supposed to compete with the Fixed Return Fund and will consist of approximately 70% bonds and 30% equities to juice up the fund's investment returns.  The question is would it be a good idea to invest in the new Balanced Fund?  The simple answer is no and here's why.

TRS already has a Fixed Return Fund that pays out 7% annually, without an investment fee to UFT members and 8.25% for non UFT members.  By contrast, the new Balanced Fund will have investment fees that will reduce the total investment returns.  Moreover, its highly unlikely that the Balanced Fund in a low inflation environment that we are currently in, will achieve anything close to a 7% return. Finally, if equities have a bad year, its possible that the Balanced Fund will have trouble showing positive investment returns that year.

Logically, since the Balanced Fund is for very conservative investors who don't like to take risks, why would one take a chance to invest into a fund where you might have trouble getting a good return when you can stash the money into the TRS Fixed Return Fund and get a guaranteed 7% and not worry about the ups and down of the stock market?

If TRS really wants to assist their members, they should allow for a ROTH option, not a fund that shows little promise to enhance the investment returns when a superior Fixed Return option is already available, with no risk.. Personally, I see no reason whatsoever for investing in the Balanced Fund.

7 comments:

Anonymous said...

Good points. Makes no sense to offer this fund as long as the fixed fund is what it is.

Anonymous said...

Agree with you Chaz.

Anonymous said...

Why is there no ROTH option for the TDA?

Anonymous said...

the last of school, for some the freedom from the chains and pains of the DOE!! good luck to those who retired. for the rest of you September is right around the corner.LOL

Anonymous said...

Chaz, when you ever decide to retire, you should be a financial advisor. You are really good at it.

Anonymous said...

Hi Chaz, Any idea how ATRs get those promised parking placards? Thanks.

Shady C. said...

@5:40 p.m.
There is an email they were using like parkingpermit@schools.gov or parkingpermits@schools.nyc.gov. I am not sure what it is any more but you can email and see if one of those emails work. However, the parking permits given now to teachers are only good for the school that you are at. They have a specific address or street that permit could only be used on. Supposedly, mayor and carmen hired an extra 12 people to go after teachers using parking permits on streets or in front of schools they are not supposed to be used on. If every staff member is to get a permit then ATRs should get them too. I got mine since I was assigned to a school as a provisional. Or you could email UFT but that's like saying call central. If I get a chance to find you more info then I will post here.

Maybe someone will sell one of their permits on ebay. Keep an eye open. LOL