Investment Advisor made 36% on wife's IRA!?!

[SumpChump]

Money destroys marriages, so I let my wife (who is a fool for the old "middle man" ways of buying) decide in her own Ith IRA with Edwards Jones locally.

So this post is not about "are we Savin enough" etc.

I just think something is fishy. She gained $1k in the past three years and claims , "he said I gained 15%!" So happily. Then she goes on to say, "he only takes $10 a month" , "he's only made $360 off me in three years".

In my estimation that's %36 for sitting at a desk! Is that typical? My God, if that's the case ... I'm prepared to argue that she go to a Fidelity low overhead index fund.


Seem fishy to you?

 

[Bandito440]

You'd be better off just going the index route.

My Roth IRA money is in Vanguard's Total Stock Market Index Fund VTSAX. Fees of 0.05%.

I don't know if his $10 monthly fee is fishy or not, but it's a waste of money. Have her look at this page and Bogle's information on index funds. Maybe she'll be mad at us rather than you.

 

[supton]

How much did she put in? Sounds like about $6,700, if $1k is a 15% gain. $120/year on a $6k sum is 0.02% expense.

Now I'm curious.

 

[Mr Nice]

SumpChump,

As a man.... How could you let a stranger touch your wife's assets ?

LOL

Just Kidding

 

[Leo99]

I manage my own IRA and even did some day-trading in it. If you have less than $10k in the IRA, then there's not enough to justify $10 a month for someone to manage it. Throw it all in Disney or Apple or biotech fund IBB.

 

[Leo99]

Originally Posted By: supton
How much did she put in? Sounds like about $6,700, if $1k is a 15% gain. $120/year on a $6k sum is 0.02% expense.

Now I'm curious.


2%

 

[Chris Meutsch]

I left Edward Jones because of the 5% rake they took on every fund. I manage my own in Fidelity now and only pick no-load funds that have a 10% return or better over the life of the fund.
Makes life easy for the long-view.

 

[SumpChump]

Originally Posted By: supton
How much did she put in? Sounds like about $6,700, if $1k is a 15% gain. $120/year on a $6k sum is 0.02% expense.

Now I'm curious.


I think I saw a total input of like $3500

 

[supton]

Originally Posted By: Leo99
Originally Posted By: supton
How much did she put in? Sounds like about $6,700, if $1k is a 15% gain. $120/year on a $6k sum is 0.02% expense.

Now I'm curious.


2%


Doah, you're right.

Way too high. OTOH if that was $120/year even on a six figure amount, not bad, assuming it beats the market in growth.

 

[Yah-Tah-Hey]

No load index funds will beat managed funds almost every year.What ever you do, don't let anyone sell you an annuity. There are better investments.

 

[BubbaFL]

If she's getting an hour of his time per year, I'd consider that fee reasonable for an account that small.

 

[Leo99]

I prefer ETFs to any type of mutual fund.

 

[Mr Nice]

Originally Posted By: Leo99
I prefer ETFs to any type of mutual fund.


Why do you like ETF's over mutual fund ?

 

[surfstar]

She doesn't only pay $10 a month. She pays for overpriced front-load fees to purchase the funds, maintains a high yearly expense ratio, and may even have to pay to sell the funds.

EJ and similar advisors only care about making money off you, not for you. But they sure are friendly and can talk a good game, right?

Imagine you invest $1000 with EJ. There's a front load fee of 5%, so your initial investment only buys you $950 worth of mutual fund. Lets say its a "good" fund or year and it went up 10%...! Great, right? Should be back up to $1045, right? Nope, EJ's 2% ER means you only returned 8% for the year and you're at $1026. Or, in other words, your initial investment gained 2.6% for the year, AFTER their fees.

So, that "2%" annual cost/fee? That actually ate up 20% of your 10% return. That's where the fees kill you in compounding over the years.
https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-cost

Have your wife watch:

http://www.pbs.org/wgbh/pages/frontline/...-facing-us-all/

http://www.pbs.org/wgbh/pages/frontline/...-fees-cost-you/

 

[Hokiefyd]

Originally Posted By: Bandito440
You'd be better off just going the index route.

My Roth IRA money is in Vanguard's Total Stock Market Index Fund VTSAX. Fees of 0.05%.


This makes up much of my strategy as well. I've got VTSAX and VFIAX (their S&P 500 index). Both carry expense ratios of 0.05%...as low as anything I've seen.

 

[Silverado12]

I have used Vanguard and they are very good. I have my investments with Thrivent Financial now. They are a non-profit religion-based (Lutheran) outfit and IMO they do a really good job. My local rep (Midlothian, VA) is very helpful and gives me good advice.

 

[raytseng]

Problem here is the account is too low.

Its like if you had a checking account with $500 and they charge a $4 monthly fee. You also can make a sensational headline like this.

Even the etf people. if you only had $1000 in stock and made 1 buysell transaction the commissions will eat you up for them to work with your money at all.

You need to always consider the fixed costs not just %s

 

[Leo99]

Originally Posted By: Mr Nice
Originally Posted By: Leo99
I prefer ETFs to any type of mutual fund.


Why do you like ETF's over mutual fund ?


This gives a nice summary. http://www.investopedia.com/articles/exchangetradedfunds/08/etf-mutual-fund-difference.asp

I like the flexibility of ETFs and the large variety.

Another cool type of investment is motif investing.com. You can create your own mutual fund and manage it yourself. You can buy like up to 50 stocks for only $9.95 total.

 

[philipp10]

Originally Posted By: raytseng
Problem here is the account is too low.

Its like if you had a checking account with $500 and they charge a $4 monthly fee. You also can make a sensational headline like this.

Even the etf people. if you only had $1000 in stock and made 1 buysell transaction the commissions will eat you up for them to work with your money at all.

You need to always consider the fixed costs not just %s




Too low is true but even at higher amounts of money, EJ's fees will eat up significant amounts of money. Your wife does not need hand holding, just go to Vangard and do an index fund. These investment advisors are totally un-necessary.

 

[bigt61]

I like TD Ameritrade - no cost to set up accounts and they have 100 Commission-free ETFs available. VIG is a good safe long term equity holding. Vanguard is known as the Walmart of ETFs - they're cheap.

http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp