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Started By
Message
How about VUG for my Roth IRA, with some foreign ETF mixed in?
Posted on 12/6/21 at 11:20 am
Posted on 12/6/21 at 11:20 am
***Update: I’ve suspended my Roth contributions with my financial advisor and opened one with fidelity. Now I need to settle on what I’m going to invest in. I was thinking VTI OR VUG with a little foreign split. Maybe like 90% with 10% VXUS. I’m only 27 so I’m all about growth and won’t be needing this money anytime soon. Is it smarter to invest in VUG instead of VTI? It seems to have far more growth than VTI but maybe is riskier? It’ll be 30 years or more before I pull anything out of this so hopefully for now I can ride out any down waves in the market. I’d appreciate the boards thoughts on that because most seemed to suggest VTI.
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I usually check my balances/transactions through my financial aggregator. I hadn't logged into the more robust portal on American Funds in quite a while. I'd always made adjustments via my financial advisor since they run the account.
Apparently it looks like you can buy funds right through American funds now. I don't think they had that capability 4 years ago when I started the fund.
Anyway I can see through there that I'm paying about 5.75% in fees each month for each transaction. Is there anyway around this to minimize fees or is that about standard? I'm still in my 20s so I'm trying to increase my savings and reduce my costs anywhere I can because anything I do now will obviously balloon exponentially by the time I'm able to retire.
*************
I usually check my balances/transactions through my financial aggregator. I hadn't logged into the more robust portal on American Funds in quite a while. I'd always made adjustments via my financial advisor since they run the account.
Apparently it looks like you can buy funds right through American funds now. I don't think they had that capability 4 years ago when I started the fund.
Anyway I can see through there that I'm paying about 5.75% in fees each month for each transaction. Is there anyway around this to minimize fees or is that about standard? I'm still in my 20s so I'm trying to increase my savings and reduce my costs anywhere I can because anything I do now will obviously balloon exponentially by the time I'm able to retire.
This post was edited on 12/9/21 at 8:15 am
10
Posted on 12/6/21 at 11:23 am to jlovel7
You want to save fees, don't invest in American Funds to begin with. Just go with Vanguard ETFS or funds if you just want passive exposure.
This post was edited on 12/6/21 at 2:10 pm
Posted on 12/6/21 at 11:32 am to jlovel7
I made this same mistake when I started in my 20s. American Funds are the highest load funds out there, and I would get rid of any advisor that would put you in those.
As the next post said, you can get in some long-term Vanguard funds for fees under 1%. Your American Funds would have to outperform Vanguard by 5% just to break even for you, and they aren't doing that.
As the next post said, you can get in some long-term Vanguard funds for fees under 1%. Your American Funds would have to outperform Vanguard by 5% just to break even for you, and they aren't doing that.
Posted on 12/6/21 at 11:39 am to jlovel7
I have Fidelity and just put all my money in the FXAIX. It’s their 500 index fund clone. Expense ratio is 0.015%.
quote:
Fidelity® 500 Index is one of the cheapest options for well-diversified, low-turnover, low-cost exposure to U.S. large-cap stocks. It delivers high-fidelity replication of the performance of the S&P 500, a market-cap-weighted portfolio representative of the large-blend Morningstar Category. Its razor-thin expense ratio gives the fund a durable performance edge over its category peers. These considerations earn it a Morningstar Analyst Rating of Gold.
Posted on 12/6/21 at 11:56 am to jlovel7
RUN AWAY FROM EDWARD JONES!!!
WTF do you need a FA for? do you have millions you need help with? About to retire and need advice?
WTF do you need a FA for? do you have millions you need help with? About to retire and need advice?
Posted on 12/6/21 at 8:24 pm to jlovel7
quote:
Am I paying too much in fees for my Roth IRA?
Is your Roth IRA with vanguard? If not, then yes.
Posted on 12/7/21 at 8:15 am to jlovel7
quote:It seems apparent you do not understand how much you are actually paying in fees. 5.75% might be the loads to purchase/sell some securities, but you're most certainly also paying a management fee if you have an advisor (who is getting commissions on buying and selling your AF mutual funds).
I usually check my balances/transactions through my financial aggregator. I hadn't logged into the more robust portal on American Funds in quite a while. I'd always made adjustments via my financial advisor since they run the account.
Apparently it looks like you can buy funds right through American funds now. I don't think they had that capability 4 years ago when I started the fund.
Anyway I can see through there that I'm paying about 5.75% in fees each month for each transaction. Is there anyway around this to minimize fees or is that about standard? I'm still in my 20s so I'm trying to increase my savings and reduce my costs anywhere I can because anything I do now will obviously balloon exponentially by the time I'm able to retire.
Regardless, you're paying WAY too much to accomplish what you want to accomplish...financial advisor or not.
If you want to do it yourself, read a lot of the responses above. You can find low-cost, no-transaction-fee ("NTF") mutual funds or ETFs that provide exposure to the markets in which you should be diversified. You could literally save thousands of dollars a year doing it this way if you know what your doing and are comfortable with your level of sophistication to apply a prudent investment strategy across your portfolio.
If you want a financial advisor, you should be able to find a fee-only advisor with management fees below 1.2% depending on your assets under management. You can start your search on NAPFA.org. You don't have to pay commissions to implement an excellent investment strategy. I'm a CFP(R) professional and a fee-only financial advisor. The ONLY way our firm gets paid is through one-time financial planning fees and management fees based on AUM. We implement strategies with no-load mutual funds from mutual fund companies we have researched thoroughly and trust their process. But because we don't accept commissions, we are not beholden to them and can literally move all our client assets to other mutual funds tomorrow with no consequences other than taxes in non-retirement accounts.
There are tons of reasons to hire a financial advisor or planner that are outside the realm of "investments". If you asked my clients what I do, they would describe major life events (family member dying, job transition, saving for kids college, tax planning, etc.) I helped walk them through and major decisions I helped them think through. Very few, if any, would mention investments first. The main driver of not hiring one is expense. A do-it-yourselfer can save money by managing their investments themselves. For those folks, a financial planner makes more sense to review their situation and give them some great direction.
tl;dr - You are paying way too much in fees. Consider doing it yourself with low-cost ETFs or mutual funds or hiring a competent, fiduciary, fee-only financial advisor or planner.
Posted on 12/7/21 at 11:59 am to jlovel7
I moved my Roth from American funds last August because of the fees. My current returns in Fidelity is over 20% and paying very low fees. Wish I would moved earlier. Still set for retirement thoughts. I will have 4 income streams not including investments.
This post was edited on 12/7/21 at 12:11 pm
Posted on 12/7/21 at 7:42 pm to jlovel7
quote:
American Funds
Posted on 12/7/21 at 8:17 pm to jlovel7
8 years ago I didn't have a Roth, which was dumb. At the time I was super busy and didn't know enough about investing. My friend connected me with his friend at NW Mutual. So of course, I was put into AF with those 5.75% fees you're describing. Flash forward a year and me taking the time to learn and I decided to open a Vanguard account. FA said stick with AF as the fees come down once you hit $20k (which they did to 5% I believe). Anyway, I said ok I'll split 50/50 to see which "wins".
A few years into the race the VTSAX has been better by 7%. I now put all $6k into my Vanguard account each year.
ETA: that 7% is better than that when you add in the delta of fees between V and AF.
A few years into the race the VTSAX has been better by 7%. I now put all $6k into my Vanguard account each year.
ETA: that 7% is better than that when you add in the delta of fees between V and AF.
This post was edited on 12/7/21 at 8:18 pm
Posted on 12/8/21 at 1:56 pm to jlovel7
My wife's account is with American Funds. It's such a pain to get mutual funds transferred.
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