I’ve been saving for my & my wife’s retirement (per ROTH and Traditional IRAs) for quite a while now. At first, I used Morgan Stanley (loaded funds w/ great histories); this was for about 5 years. Needless to say, the "broker" there didn’t give a rat’s dropping about my account, probably because I wasn’t a big fish. I never received phone calls from her – I was always the one who intitated (some) interest. I changed careers, moved back to my hometown, and am now using a local "investment" person for retirement. The family of funds he offers (through NYLife) are also loaded; and they all have great histories. Problem is, those histories don’t take into account inflation (3% per year) NOR the amount they ding you for managing funds year after year after year. WHY DOESN’T EVERYONE USE VANGUARD & PAY AS LITTLE AS 0.25% PER YEAR TO MANAGE RETIREMENT ? Am I a TOTAL idiot for purchasing loaded funds in the first place? If I switch to Vanguard now, I’ll pay some hefty fees.

 

  • jebediabartlett 5:12 pm on October 3, 2009

    No, you are not an idiot…you are just looking for something " better".. you’re getting closer to retirement so you’re paying more attention…I guess you could just call that " education".
    Seems to me, now that you’re paying more attention, you could manage your own funds ..on-line… with Vanguard, Schwab..I love Fidelity.
    Pay the fees to transfer…if that’s the case….BUT …then just invest in a couple or three solid funds that beat that 3% inflation rate handily… FAIRX ? JSVAX ? FBALX ?
    …but start reading a little more about funds and ETF’s and put about 10 or15% to work in international or " sector" funds.

    You could very easily recoup those fees in a couple of weeks in one or two " aggressive" funds.

    Believe me, it pays to get involved and take care of things with or without a broker’s help. My wife and her friend , 30+ years in a company managed 401 type plan…. made a nice bundle…BUT…BUT.. in the last 4 years by paying attention and getting involved..I have almost doubled both nest-eggs… you cannot believe how much brighter their retirement looks !!

    P.S. It’s not rocket science… if something doesn’t meet your expectations ( say 8-10% ) after a while you move on…. ( with Fidelity…in their funds…some of the short-term trading periods are as little as 30 days ..( small fee for trading before that time) .. but most buys and sells can be done with NO transaction fees….and as far as management fees…I gladly pay the 1.2% any time to get returns in the high teens and better. ( FLVCX..FLATX..FEMKX..ICBMX..)
    If those are tooooo scary..try something like FNMIX…monthly divs just keep your balance growing…with more shares…on top of more shares.
    Good luck.

  • src50 5:12 pm on October 3, 2009

    I think Vanguard and T. Rowe Price are the best fund houses around. As long as you know your way around basic mutual funds, that’s the way to go. The only reason to maintain a brokerage account is if you want to directly invest in stocks or ETFs.

  • StockTrdr 5:12 pm on October 3, 2009

    First off that was a well stated question…..

    Now for the answer: Vanguard is an index fund passive management house. They do not manage your money and instead push you towards every bubble that comes along. Yes you are paying less but, and here is the absolutely critical question…..do you want to experience every bubble that comes up…and feel all the same pain as the etraders of the world and then pay for it, oh yea and then after that would you be interested in making a taxable mistake that could cost you serious money while you retire or just as you retire?
    Using a financial advisor is not about the fees, if you were to use any other setup the cost for the service and mangagement of an advisor would be cost prohibitive. The responsiblity of an advisor is to manage your money as a THIRD party. People who do it themselves are emotionally attached to their money and will chase returns and the like…(would you perform surgery on yourself, or use a doctor) Fiancial advisors are paid based on the assets they manage. The fee is just that a fee for the service but they are also fully aware of your situation and it is their job to pick a strategy and stick to it. If your girl at the one brokerage house did not call you then you were right to fire her, but that does not mean go running to the romper room. if you didnt like a doctor’s bedside manner after he told you that you have cancer you would not run and hide you would go see another doctor.

    Not unlike finding a doctor you should be interviewing financial advisors from multiple houses and choosing the one that you like. There are however a few things that you should be aware of……:
    1. not all advisors are alike and there are plenty of ones out there who have minimum account sizes…its not that they are pompus it is that they have a segment that they serve.
    2. Be leary of the advisor who comes from a fund house or an insurance firm. "When you’re a hammer then everything else looks like a nail" Funds are good but make sure that your advisor uses an open platform(a lot of these fund house and insurance house advisors are only licensed with a series 6 and/ or can only sell you mutual funds that their company manages)
    3. Choose the advisor that works for you Not everyone is a candidate for a big producer at a national house but that does not mean that you are going to be looked at as a small fish. Ask the one who tells you that you can’t make their minimum who they would recommend. If they send you outside of the firm *"my buddy down at Dewy Cheetam Fund services* they are blowing you off, if they personally introduce you to the person that they referr you to then you know that this is a for real referral.

    Vanguard is for the people who do not want advice. Statistically speaking, and yes there are tons of studies out there, those who go it alone end up making less to the tune of 3% less NET OF FEES! from those who have someone actively managing their money.

    Now the loaded funds question, yes you are probably not doing it all that right if you have tried to do a diversified portfolio. Loaded funds generally take around 10 years to return to profitable after you factor the fees and the loss of principal in the market. Funds go in and out of favor every year, and you need to be able to get in and out of them regularly which loaded funds will not allow you to do. A good Financial advisor will steer you towards a setup with "A" shares (loads waived) that his firm has developed through a realationship with the fund companies. That is actively mangaed and can trade as the funds go in and out of favor without you having to pay loads each time.

  • bgrace12 5:12 pm on October 3, 2009

    Hi,
    Several things. One, what do you actually hold? Two, how many years to retirement. Your risk tolerance and goals must also be taken into consideration. I think there is nothing wrong with paying a load if you get a good fund. Not everyone agrees. One of the posters said that Vanguard Funds are index funds and although they probably do have the best index funds, they also have actively managed funds. They are known for their low fees and I applaud that, but sometimes you pay a little more and get a lot more. Here is a fact: anyone in the S&P 500 in the last 9 years made no money. Flat.
    So there is constantly the argument of passive vs. active.
    Your situation is not untypical and it needs to be addressed seriously. Two sites I recommend that have excellent reputations and are dedicated to investment questions are 1)morningstar.com– has a free board for questions; the rest is a pay site. No spam- moderated.
    2) http://www.moneyrec.com, fairly new, no spam, moderated and you can post your current holdings and get informed opinions, you’ll see from the other questions that it is a serious site. Free to users. I would not mess around on sites that are not investment sites.

    Good Luck,

    Grace