I'm going to focus on the investing made by one segment of the population in this article: the public school teacher. Teachers do not necessarily make huge sums of money each year, but they have traditionally had good benefits. However, Wisconsin has led the way in scaling back with the benefits. Therefore, teachers may need to make some better decisions with their money, and those decisions might be different from the traditional teacher investments.
First off, forget the 403b investment programs someone has tried to sell you at school. Fees are high and flexibility is low. Lisa had a 403b because some handsome, young investor convinced her she needed to put some of her money away. His firm charged big fees to do nothing, and then the investment started losing money, and Lisa was still paying fees. Years after we converted it to a Roth IRA, she probably is still getting charged fees. In the five years she had the account, she must have had at least that many guys contact her about the account. I can only assume that the fact that fresh-out-of-college investors keep rotating as the people in charge of the investment is probably a bad sign. Just remember that 403bs are not young and good-looking forever. Even if it seems like some kind of exclusive educators-only investment, it's not necessarily a good one.
If you want to work with an investor who respects teachers, has experience navigating the market, and is seen by his peers as a leader, call Kirk at Bluemound Asset Management. Say a teacher sent you.
Going in reverse a bit, before you call any investment firm or cute 403b manager, consider paying off your student loan, and certainly pay off your credit card or wedding expenses. I have met way too many people who are giving 5-15% away to banks every year so they can invest at 6%, and then suddenly weather a mini-crash. Keep in mind that those loans you pay are fixed, and the bank keeps making the money. If you have an annuity that makes twice your loan interest rate, go for it, but I'm doubting that's happening for you.
Investing is not the only place school districts DON'T offer the best deals. Many teachers do receive some kind of free life insurance from the district. It's one year salary, which is about enough for your pine box and a meal for your relatives. Other plans offered by your district or your union are group plans. Avoid these, unless you're planning on failing a physical. Group plans cost more because the healthy folks cover for the not-so-healthy. Especially avoid plans that don't need a physical. Get the right life insurance for your family by going to an independent life insurer like WisQuote that will compare prices and features for you. Get term life insurance because the other kind is always a bad investment. Pray you survive the term. The money you gave to the insurance company was just that: insurance against your death. Be happy if you wasted the money. I remember Bruce Williams on the radio suggesting people have parties when their terms were up. If you don't survive the 30-years, be sure you get enough for your spouse and kids to pay for the house and move on. Five million dollars might be excessive. One year's salary, however, is pretty sad. If you choose WiQuote, again say a teacher sent you.
Most teachers still expect to get the state retirement money and hope that those investments remain solvent and out of greedy investors' hands. Let's hope there is a pension for us as teachers, but let's also plan for other scenarios.
Written by Brian Jaeger, owner of Satisfamily, McNewsy, PassivNinja, Educabana, RealWisconsinNews, ManCrushFanClub, WildWestAllis, SitcomLifeLessons, and VoucherSchool.