Gyroscopic Investing

I've finally decided to plunge into setting up a PP, and the posts on this topic have been wonderfully helpful.  However, I'm still a bit stuck on a couple of points:

1.  My 403g accounts on TIAA-CREF have a "TIAA Traditional" fund that is described as an annuity, with the principle guaranteed and a minimum of 3% interest.  While this isn't the same as cash, would it not serve the same purpose?  There aren't any other attractive funds in these accounts - the stock index fund has a high expense ratio of nearly 0.5, compared to 0.1 in Fidelity, and there are no appropriate bond funds.

2.  I discovered that Fidelity sells and stores precious metals, including gold bullion coins, for both taxable accounts and IRAs.  Storage is non-segregated, in a bank in Nova Scotia.  For amounts less than $10K, fees are 2.9% above gold price to buy, 2% to sell.  Storage is 0.125%, although you can opt for delivery instead (presumably only on taxable accounts).  Has anyone tried this?  It looks like a much better way to keep gold in a retirement account long-term than having to rely on ETFs, but maybe I'm missing something.

cathyS wrote: 2.  I discovered that Fidelity sells and stores precious metals, including gold bullion coins, for both taxable accounts and IRAs.  Storage is non-segregated, in a bank in Nova Scotia.  For amounts less than $10K, fees are 2.9% above gold price to buy, 2% to sell.  Storage is 0.125%, although you can opt for delivery instead (presumably only on taxable accounts).   Has anyone tried this?   It looks like a much better way to keep gold in a retirement account long-term than having to rely on ETFs, but maybe I'm missing something.

Thanks for this tip; I've been a Fidelity customer for years and never heard about this!

Storage is 0.125% per quarter.

Thanks for letting us know about this option.  I use Fidelity, however, I'm thinking this is not a good idea because having physical metal is supposed to be for those worst case scenarios where the entire financial system is breaking down, in which case, Fidelity might not give you your coins back for some unknown reason, or they might be forced to liquidate or confiscate them by the government.

So, it seems like you have the worst of both worlds - you pay a very high fee for storage, and have counterparty risk.

I still think the best storage is probably a buried PVC pipe in your backyard.

cathyS wrote: 1.  My 403g accounts on TIAA-CREF have a "TIAA Traditional" fund that is described as an annuity, with the principle guaranteed and a minimum of 3% interest.  While this isn't the same as cash, would it not serve the same purpose?  There aren't any other attractive funds in these accounts - the stock index fund has a high expense ratio of nearly 0.5, compared to 0.1 in Fidelity, and there are no appropriate bond funds.

I am using TIAA traditional as the cash portion of my PP. I think this is a great vehicle for holding cash: where else can you get at least 3% interest and guaranteed principal?

The risk, however, is that TIAA-CREF goes under, which seems unthinkable but I am sure it is possible. If TIAA-CREF failed due to systemic reasons, we'd have a lot bigger things to worry about than our cash. If it was due to some issue particular to TIAA-CREF, perhaps the SIPC would cover investors' losses, but that would be a HUGE loss to cover.

Drewskers wrote: I am using TIAA traditional as the cash portion of my PP. I think this is a great vehicle for holding cash: where else can you get at least 3% interest and guaranteed principal?

Hey Drewskers, this sounds like a great option.  I believe TIAA CREF is a pretty safe institution.  Do you have to be a teacher or work for a specific employer in order to use their funds?  I would love to get 3% in my cash accounts if possible.  Can anyone invest?

Thanks!

cathyS wrote:
2.  I discovered that Fidelity sells and stores precious metals, including gold bullion coins, for both taxable accounts and IRAs.

When I first got into the pp (2010), I saw Fidelity promoting that every time I logged in. Definitely tempting, but I haven't tried it yet. I use Fidelity for my 401(k) only, so it's full of long bonds. By the way, 30-year auction's coming up in a few days, O. I should really get a Fidelity taxable account, as I like the bond purchasing there so much better than Vanguard's Bond Desk. (And the 401(k) account is already full to the gills).

EDIT: Correction! Looks like I learned about it here at this forum.
http://gyroscopicinvesting.com/forum/ht ... 8820#p8820

Storm wrote: Hey Drewskers, this sounds like a great option.  I believe TIAA CREF is a pretty safe institution.  Do you have to be a teacher or work for a specific employer in order to use their funds?  I would love to get 3% in my cash accounts if possible.  Can anyone invest?

My understanding is the Traditional Annuity is only available to a school employee making contributions through the plan sponsored by their educational institute. I only have access because I inherited an IRA from my father, who was an educator.