Choosing a Vendor
In deciding which of the following investment options to choose, you should consider:
- Your specific objectives for your retirement savings, and
- The potential impact of continued inflation on your income after
retirement.
In general, you can choose to:
- Protect your current savings by investing in options with very little
risk, but also with comparatively low rates of return that may not
keep up with inflation; or you can
- Put your savings at greater risk for a potentially higher rate of return
that may meet or exceed the inflation rate; or you can
- Select funds that try to balance rate of return against relative risk.
NOTE: All your choices are subject to vendor and federal restrictions.
Please contact the vendor for individual fund restrictions.
ANNUITY PROGRAMS
An annuity is a life insurance company used frequently in retirement
savings plans. The word annuity is commonly used for two very different
products: (1) a fund to accumulate money for use in retirement and (2) an
insurance product that pays out retirement income checks. In this
document, we are using the term annuity in the first sense, as an
accumulation product. There are two kinds of annuities: fixed and
variable.
FIXED ANNUITIES
- These products are investment pools joined by interested investors who share
a concern about minimizing risk.
- Fixed annuities are contracts sold by insurance companies that guarantee
fixed rates of return to investors.
- All contributions are guaranteed against investment loss. A minimum
interest rate is also guaranteed by the insurer.
- Fixed annuities protect participants from market downturn, but investors do
not directly benefit from market upturns as in mutual funds.
Participants simply receive the declared interest rate each year
regardless of market conditions. In exchange for the insurance
guarantees, fixed annuities usually do not allow complete transfers of
money out of the product in a short period of time. Time delays and
surrender charges may apply.
VARIABLE ANNUITIES
- These are also insurance company products that are usually offered in
combination with a fixed annuity product to give participants
more fund options.
- Variable annuities more closely resemble mutual funds. These products are called variable because they invest
money in the general marketplace for securities. They "vary"
with market fluctuations rather than ensure the results.
- As with mutual funds, variable annuities pool investor money to minimize
risk and maximize return over time.
Teacher's Insurance Annuity Association/College Retirement Equities Fund (TIAA-CREF)
TIAA-CREF was founded by the Carnegie Corporation and the Carnegie Foundation for
the Advancement of Teaching. TIAA offers a fixed annuity, real estate
fund, and CREF offers a selection of funds including stock, bonds, social
choice, global equities, and money market funds. These products are
available through both the Retirement Annuities (RA) and the Supplemental
Retirement Annuities (SRA).
Variable Annuity Life Insurance Company (VALIC)
VALIC is one of the nation's largest commercial insurance companies
specializing in the marketing and servicing of tax-deferred annuities. A
subsidiary of the American General Corporation, VALIC serves more than 14,000
organizations in the United States. VALIC offers two fixed annuities, a
variable annuity, and a variety of mutual fund and money market investment
options.
NOTE: Contact these annuity vendors directly to receive additional commercial information published
for your use. For the location of vendor web sites or local offices, visit our Investment
Vendors Page.
MUTUAL FUND PROGRAMS
A mutual fund is a corporation that exists solely to invest the money
contributed by its shareholders in financial markets as defined in the
fund's prospectus. Most funds practice an active management
approach by employing professional investment managers who expertly invest shareholder
contributions. These money managers attempt to meet or
exceed the fund's investment goals by making the
greatest investment income with minimal risk to the shareholder.
- The levels of risk and return vary according to the markets a fund in
which a fund primarily invests.
- The term "mutual" refers to two features of the product:
- Shareholders combine their investment resources to allow money managers to diversify the fund. Broad
diversification reduces the risk associated with owning only one or a
few securities and is therefore mutually beneficial.
- The other benefit of mutual funds is the shared objective of the fund.
Most funds invest in market niches such as money markets or domestic
growth companies. Investors join a fund because of this mutual
interest in a particular market.
- Mutual funds should be selected according to a person's life planning
strategy. In other words, people should select mutual funds according
to their time horizon and tolerance for
risk.
- Your return on an investment is based on the performance of the mutual fund; the
performance will fluctuate as prices change for the securities held by
the fund.
- Mutual fund returns are not guaranteed.
Fidelity The Fidelity group of mutual funds was established in 1946. It is one of the
largest investment managers in the country, servicing millions of
shareholder accounts. Fidelity offers a large number of funds,
and your contributions can be directed to any one fund or a combination of
funds. Each fund has a different investment philosophy and goal. The funds
invest in a wide variety of money market, bond, and equity instruments.
DWS Scudder
DWS Scudder is the US retail brand name of Deutsche Asset Management (DeAM),
which is the global asset management division of Deutsche Bank, and has more
than US $715 billion in assets under management globally. DWS Scudder leverages
the strength and reputation of DWS -- Deutsche Bank's mutual fund brand in
Europe and Asia, with that of Scudder Investments, a respected US asset manager
founded in 1919.
Vanguard
Established in 1928, Vanguard has become one of the largest mutual fund companies in
the country. Vanguard is an industry leader in operating with low
expenses. The Vanguard funds are all managed by external managers that are
employed by the funds themselves. The group manages more than $120 billion
in assets for investors.
NOTE: Contact these annuity vendors directly to receive their
additional commercial information published by each vendor for your use.
For the location of vendor web sites or local offices, visit our Investment
Vendors Page.
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