Retired from Microsoft. I have ~$600K in 401K at Fidelity and ~$600K at Ameriprise in non-401K personal portfolio. Another $500K in paid off real estate. As soon as I left MS both Fidelity and Ameriprise have become very interested in moving the money to other investments...no surprise. Any opinions on Fidelity vs. Ameriprise? I'm 50. They both want me to move about 20% to a more conservative investment like an insurance company run holding that is a more guaranteed investment that pays out like a pension at 60. So ~$250K that will pay around $18K annual to death to supplement SS. It would pay out market value to beneficiaries upon death. Sounds like they make money and conver their risk via fees from the original $250K investment over time. Anyone doing something this?
Ameriprise has a sketchy background
Vanguard. Fidelity is significantly better than your other current option. Expense ratios tell the story.
So that's a vote for Vanguard but if not there, then Fidelity is significantly better than Ameriprise?
Yes.
Fidelity is light years better than Ameriprise. I wouldn't get into any sort of annuity like they seem to be pushing. Just invest in a standard 3 fund portfolio using index funds
Microsoft's 401k gives you access to institutional class investments with extremely low fees. No rollover account will come close to those fees.
Vanguard Admiral shares?
The institutional class shares that msft 401k can get are typically lower than retail costs for even really low cost funds
MSFT 401k is well above average for a 401k, but it's still pretty bad in absolute terms. You'd be far better off just rolling over to Vanguard or Fidelity. Vanguard Admiral shares are very close to the institutional share classes, so close That you can't tell the difference.
Explain further? What absolute terms? Their index funds have expense ratios like 0.01%. So I disagree about pretty bad in absolute terms. It is one of the 401(k) plans that I could actually recommend leaving in the 401(k) when leaving the company, for people who are passive enough.
They only have a few index funds in one or two asset classes. Impossible to create a truly diversified low cost portfolio inside the 401k. No good international options and mediocre bond options.
No free lunch. If you are paying 1.4 pct, that is a lot over 20 years. Also, there is both the liquidity issue and what I call the fine print issue, meaning, these are complex products and you are an amateur playing against professionals. Go to someplace with cheap fees, and invest in liquid investments you can understand or in real estate.
Stick with passive investing as most of the active mangers can’t beat their benchmarks.
How much does Ameriprise charge you? And then annuities? Is Fidelity asking to have you pay 1+% for their management services? I would assume all of these options are bad by default.
Yeah, it's a variable annuities issued by Minnesota Life Insurance Company and distributed through Securian Financial Services (MyPath Ascend 2.0 optional lifetime income benefit) Annual cost (greater of benefit base or contract value) 1.4% (2.25% max). I don't know if Ameriprise has a charge on top of that, something I should ask about I guess. From other comments on this thread I guess that's I high cost but could an argument be made for the guaranteed income being worth the cost if the market goes evil during retirement which could happen if I went down the road of the cheaper options listed?
My understanding is that in retirement you reduce exposure to equities and increase generated income by moving to bonds. I’m not an expert. But I think annuities are broadly regarded as snake oil.