Al in Ohio
Thinks s/he gets paid by the post
It better have lots of glitter and sing a tune when you open it for $4k!
Fees Taking a Third of Profit ?
- Thread starter reubenray
- Start date
It better have lots of glitter and sing a tune when you open it for $4k!
reubenray
Recycles dryer sheets
While discussing this with the wife she brought up taxes. I am assuming I would have to pay taxes on the $$ if I draw it out and put it in something else on my own.
You'd pay no taxes for selling/buying you do with your IRA or 401K funds. For your other funds you would pay taxes on any capital gains you have (and if you have losses in those funds, the losses would actually reduce your taxes.) Most of your money is in 401Ks and IRAs according to one of your earlier posts.
Even with your non-IRA/Non-401K funds, you could still transfer your MF holdings to a new broker. You wouldn't be selling them, just transferring them to another company to keep them for you. Thus, there's no tax on them and you also immediately avoid paying your FA's 1% fee on that money every year. You'd still pay the expenses that these funds charge to their investors (like we said before, that's about 0.5% more on average for your funds than you'd pay for low-cost index funds), but you could gradually get out of them and get into cheaper funds so you wouldn't have to pay the taxes all at once.
marinauser
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- Jan 27, 2013
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I would agree that 12% total return the past year would not be unusual. But that is different from a 12% in dividends and interest. Not likely in my experience.
If you time it right you won't miss a thing. If you own shares on the day the dividend is given, you get it. So the only problem would be if the new fund and old fund have different dividend dates, or the transfer between brokers keeps you out of either fund when dividends occurred. If either case happens, just sell a few shares for cash to make up the difference. It won't kill you
.When transferring a retirement account (401k/IRA) have the financial institutions handle the transfer instead of doing it yourself. That ensures you don't get hit with taxes. You can do it yourself, but there are a few hoops to pay attention to.
If you're talking about selling certain funds and buying others, then yes you would pay capital gains tax if the account is not an IRA or 401k. If it is in a 401k or IRA, then no taxes would be due.
If you are talking about moving between two brokerage companies, then as long as the 401k is rolled into an IRA, no tax would be due.
reubenray
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I have dug deeper and the program is called "FundSource".
?? What are you talking about?? The Wells Fargo "here's a mix of funds what we want to sell you" program? If so, it's certainly not worth paying 1% + for that.
You can plunk your money into a single "Target Date" retirement fund at Vanguard and get an asset mix that is just as broad and likely to have returns that are just as good. Or, if you want to understand how this all works, buy the book by William Bernstein called "The Investors Manifesto" (The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between: William J. Bernstein, Jonathan Clements: 9781118073766: Amazon.com: Books ), read it, and pick a portfolio from in there. Or any one of the other good books recommended in the FAQ pages here.
MRG
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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- 11,078
Do yourself a favor. Google that name and see what the Morningstar forum says about Fundsource. It's not this forum. I'm not now or ever have been a Vanguard employee. I don't even have an account with them. I do own one of their index funds in my 401k.
Best wishes,
MRG
reubenray
Recycles dryer sheets
Baby Steps!!
I just wanted to let everyone know I am still looking at my options. I am not one that will jump into anything without doing a ton of research. So I will be taking baby steps. Being my accounts are the only income I have coming in now until my other retirement funds kick in at the first of the year I am hesitant to gamble with that right now.
But I am looking at the accounts my wife has. I am thinking of taking her smallest account and switching to an index fund to see what happens. Her account is 100% invested in ABALX and it has a year-to-date growth of 13.4% which I think is doing pretty good. So I will need some advise on which index fund to look at. Her second account has a year-to-date growth of 9.3% which has a mixture of 6 funds in it.
We will be talking to our FA about cancelling out her FundSource account being it has only a year-to-date growth of 1.2%. I will also see about moving some of my FundSource money to other monthly income funds.
I just wanted to let everyone know I am still looking at my options. I am not one that will jump into anything without doing a ton of research. So I will be taking baby steps. Being my accounts are the only income I have coming in now until my other retirement funds kick in at the first of the year I am hesitant to gamble with that right now.
But I am looking at the accounts my wife has. I am thinking of taking her smallest account and switching to an index fund to see what happens. Her account is 100% invested in ABALX and it has a year-to-date growth of 13.4% which I think is doing pretty good. So I will need some advise on which index fund to look at. Her second account has a year-to-date growth of 9.3% which has a mixture of 6 funds in it.
We will be talking to our FA about cancelling out her FundSource account being it has only a year-to-date growth of 1.2%. I will also see about moving some of my FundSource money to other monthly income funds.
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You are right to be cautious with these accounts. I strongly recommend you do your research by first reading a few books. They are not "heavy reading", but they are essential in order for you to get a foundation in how asset allocation works. The wrong thing to do (and what I did at first) is to look at recent fund performance and dump funds that are lagging and buy funds that are doing great. It sounds logical, but it is a great way to lose a lot of money. Instead, what many experts recommend is to buy a number of low-cost funds invested in a diverse array of assets --US stocks, foreign stocks, US bonds, maybe foreign bonds, maybe real estate, and some "cash" (actually CDs or money market funds). To gain an understanding of how this has worked over time, you need to read some actual books. Folks here can recommend some others if you don't like the ones I've already suggested. There are also a lot of crummy books out there that will not help you in the slightest.
Before you do much of anything, develop your asset allocation plan. You want to know your target stock/bond balance and what kinds of equities and bonds you want to own. While you should be well diversified in both, it seems like you are heavily into income generation. So you'll probably want to lean toward dividend producing equities. That can be a little tougher to set up, to my mind, than using a "total return" approach. You need to find not just good diversified investments, but good diversified investments that also pay good dividends.
ABALX is a perfectly good fund. No need to replace it any time soon, especially if you paid 5.75% to buy it in the first place (see where you may be getting fleeced there?). But until you figure out what your portfolio should look like, you won't know what to replace it with.
