My wife is a teacher in New York state. I'm getting her 403(b) set up and am going over the investment options for it.
There are a handful of funds to choose from, basically what you would expect - one focused on bonds, a couple of different ones focused on equities, etc...
We're in our early 30's, so I was planning on just putting about 80-90% in equities, and the rest in bonds, and calling it a day. But then I noticed one of the option is a "Fixed Return Fund". The relevant page is here.
It shows that for the 1/3/5 year lookbacks, the fund has returned exactly a flat 7.00%. The fine print states that,
Returns for the Fixed Return Fund are set by New York State law. Currently, members affiliated with the United Federation of Teachers are credited with 7% annually on TDA investments in the fund
Maybe I'm missing something, but it sounds like she's guaranteed a 7% return on any contributions. This is well into "too good to be true" territory. Historic long term returns for equities is right around 7%, so it sounds like she'd get all the upsides without any of the risk. I've got to be missing something here...
Submitted November 27, 2017 at 06:37PM by Febtober2k http://ift.tt/2ibVNg1
