Ok, here is my situation. I currently have my primary retirement savings (Roth IRA) spread across 4 managed mutual funds. I feel comfortable with these funds and the current annual fees (although, I know, they are higher than index fund fees).

Outside of this, I have $8,000 stuck in an past employer's 403(b). I would like to transfer this money into a new traditional IRA with another web-based broker. I have done some research on idex funds and would like to put this $8,000 into these types of funds. I have a fairly good understanding of how they work and why they are able to offer lower fees. I am considering Vanguard and Fidelity, but would be open to other good options. I'm willing to be a little more aggressive with this money since I am well diversified with my other retirment funds. I will be approaching retirement in about 20-25 years. The index funds I have seen don't seem to be producing any higher returns than my similiar-objective managed funds, but I understand the lower fees can level the playing field or even tilt it towards index funds. I have seen several sector-specific index funds that are alluring due to their high returns, but with the high volatility..........basically, I would just like to hear from people who have advice about specific index funds they are happy with (taking into consideration fees, performance, ease of broker web site to use, minimum investment levels, etc....)

Thanks!

I use Vanguard and am very happy with them. I have both a Traditional IRA and a Roth IRA. I have also used Fidelity in the past - for a few taxable funds.

Positives for Vanguard

1) Decent website
2) Ability to see your personal performance over 1, 3, 5, & 10 year rate (if you hold the funds that long)
3) Very low expense ratio
4) lots of index fund choices.

Negatives for Vanguard-
1) When I held fidelity Mutual funds, I could execute a trade or a purchase and it would go through within the hour. With Vanguard, it is always the next day
2) This may be true for Fidelity also - but the minimum investment is usually around 3k per fund.


If I were you, without knowing anything about your other portfolio positions - I would go with the Total Stock market index - 3K minimum investment.

But this is really hard to answer without knowing more about your current portfolio positions. Tell us what your 4 managed funds are, tell us if there is anything else to your portfolio, and maybe we can help.

If you want it really easy though, go with one of the Target Retirement funds. Both VG and Fidelity have them.

I would strongly advise you to move out of the managed funds. The fees will eat up more in your return than you're understanding they do right now. Further, managed funds show no evidence of providing a better return than the market

try, I think its Transparent Investing.

Anyways, I use strictly index funds, and there are plenty of them out there so that one can segment the market up into swaths. Take a foreign index for more risk and more return, or something like that.

You've got to understand how much money you're giving away to your fund managers. 2% is ALOT!

My wife and I currently invest 15% of our monthly income into Roth IRA's with the American Funds. Our monthly investments are deposited evenly between four funds:

1)American Balanced Fund
2)EuroPacfic Growth Fund
3)Fundamental Investors
4)The Growth Fund of America

Combined, we have $10,000 spread between these funds (we just opened them within the last 2 years) We will be maxing out our Roth limits this year into these funds.

I also have a military retirement plan that will pay me 50% of my highest pay after 20 years (from this year) up to 75% of my highest pay should I serve 30 years. Thanks for the advice.

You're paying a 5.5% load up front for those Funds. That's a HUGE amount of future money you're losing out on. Get out of those and into index funds, which have no loads

http://money.cnn.com/2008/03/18/pf/fund ... 2008031910

Well, actually I'm purchasing B shares (no load) until I hit the first break point which I believe is around $25,000, then the A shares (loaded) make more sense.....I see what you are saying though, I'm going to have to reconsider this whole situation..........arggghhh

Debtfree,

The B shares have a back end load that is actually worse than the front-end load.

http://www.usatoday.com/money/perfi/col ... usat_N.htm

The article I referenced in my previous post states to avoid B shares.

http://articles.moneycentral.msn.com/In ... dFees.aspx

Due to what are called breakpoints, or commission discounts applied to A shares but not other share classes, a purchase of $100,000 in load-fund shares would generate an average commission of $3,500 for A shares, but $5,000 for B shares.

Brokers, who also sometimes misrepresent B shares as "no-load funds" because the commission is hidden as redemption and 12b-1 charges, had great luck with B shares until the tech bubble burst in 2000. That year B shares accounted for 31.2% of all load-fund sales.

Debtfree, whoever got you into the B-shares did you an extreme disservice.

Thanks. That article referenced NASD.com (or finra.org). That website has a great expense analyzer on it that compares costs of any fund. Very helpful.

yeah, i don't know how you got roped into American Funds, but i would disengage, ASAP.

I have American Funds for my 401K. I don't like it. I get A Shares with no load, and yet i STILL feel like i'm getting screwed.

Look, you are probably thinking - I don't see an easy way out of this without losing money - but just get out. I held American Express Funds for 7 years before I smartened up.

How do you get A shares with no load?? You have over $1 million with them or something??? Does your employer pay the load?

I would say that Vanguard Index funds are the way to go. I'll throw my hat in with the consensus so far and agree that managed mutual funds are usually terrible. There are very few that every can beat a diversified index fund and those that have are probably just about to regress to the mean. When you consider that you're losing 2% for the pleasure of having them throw darts at the Wall Street Journal it really makes index funds better.

I have always liked the Vanguard target retirement index funds. However, those will only have the correct balance of risky and non-risky assets for a certain risk profile but it's probably reasonable for most people.

i get A shares with no sales charge b/c it is for an employer 401k. I don't believe my employer pays the load, I just think that most times when dealing with company 401ks, the investment houses waive the load.

Ok, so like i've been sitting here reading this stuff for a while now drinking vodka and coke and I'm like..what the heck are you talking about? Her'es whatI know. Mutual funds are crap. Dude, my dad was a broker for ol ed jones and basically mutual funds have loads man. LOADS and they provide residual income for the broker who sold them to you. I don't believe in brokers and having other people manage your money. Cuz seriously what do they ahve to lose? uh...hmm.. oh yeah.. YOUR money. Not theirs. yah. Start a company. Most people on this forum don't seem inclined to work for themselves. I work at a bank though and I can see what's really going on. It's like a rectangle is a square but a square is not a rectangle. So Basically like self employed people aren't always successful but successful people.. and I don't mean like engineers.. I mean WILDLY successful people, work for themselves man. Own a corporation. That's what I'm trying to do.

Richard, not all mutual funds have loads. Please put down the Kiyosaki-aid. You can go to Vanguard or Fidelity and get some great no load mutual funds. Fees are cheap.

And I think its very ironic that you state that folks here don't seem inclined to work for themselves. I guess JD doesn't count?

Owning a corp takes 500 dollars and some paperwork. Making wealth last, that takes alot more

Of course, all mutual funds are not crap. And not all mutual funds have loads or punishing MER's. The trick is to do your homework.



You've got it backwards. All 4-sided equiangular polygons are rectangles. A square is a 4-sided equiangular polygon in which all 4 sides are equilateral. Or, in vodka-and-coke-speak: "All squares are rectangles, but not all rectangles are squares."

So if mutual funds are crap, what do you suggest people do with their money?



Isn't that easier said than done? And doesn't buying index funds both eliminate costly fees and grant the individual partial ownership in a whole basket of corporations?

(The answers, BTW, are "yes" and "yes")