Join Early Retirement Today
Reply
 
Thread Tools Display Modes
How are my Rate of Return in my Roth IRA?
Old 04-28-2021, 10:04 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
How are my Rate of Return in my Roth IRA?

I started to invest in Roth IRA in early 2007 with Edward Jones. I know EJ has a bad reputation in the F.I.R.E community because of their loaded funds and some high expense ratios.

I have invested $54k so far till present day and my balance is at $141,192.74. Is this considered as good as if I were to buy low cost index funds? My MF’s are actively managed so fund managers are suppose to beat the average index market.

Should I stay with EJ or go to something like Vanguard?
F.I.R.E User is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-28-2021, 11:00 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
MRG's Avatar
 
Join Date: Apr 2013
Posts: 11,078
Here's a tool I didn't know existed for S&P returns over time: https://www.officialdata.org/us/stocks/s-p-500/2007
Might be a good comparison.
MRG is offline   Reply With Quote
Old 04-28-2021, 11:11 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
Quote:
Originally Posted by MRG View Post
Here's a tool I didn't know existed for S&P returns over time: https://www.officialdata.org/us/stocks/s-p-500/2007
Might be a good comparison.
I can only put in the amount I invested in 2007.
F.I.R.E User is offline   Reply With Quote
Old 04-28-2021, 11:17 PM   #4
Full time employment: Posting here.
Whisper66's Avatar
 
Join Date: Apr 2014
Location: Houston
Posts: 957
$54,000 invested Jan 1,2007 would have grown to $209,578 by today. You can make some comparisons using www.portfoliovisualizer.com . Use the "backtest portfolio" function. So EJ cost you $60,000 if those numbers are right. Suggest you go run them yourself to make sure the input is correct for your situation. "VOO" can be used for the S&P 500 index fund to compare to.
__________________
"Learn everyday, but especially from the experiences of others. It's cheaper! " - John Bogle
Whisper66 is offline   Reply With Quote
Old 04-28-2021, 11:19 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
Quote:
Originally Posted by Whisper66 View Post
$54,000 invested Jan 1,2007 would have grown to $209,578 by today. You can make some comparisons using www.portfoliovisualizer.com . Use the "backtest portfolio" function. So EJ cost you $60,000 if those numbers are right. Suggest you go run them yourself to make sure the input is correct for your situation. "VOO" can be used for the S&P 500 index fund to compare to.
But I did not invest $54k in 2007 and besides there is a cap for us. This year it’s $6k.
F.I.R.E User is offline   Reply With Quote
Old 04-28-2021, 11:34 PM   #6
Full time employment: Posting here.
Whisper66's Avatar
 
Join Date: Apr 2014
Location: Houston
Posts: 957
Quote:
Originally Posted by F.I.R.E User View Post
But I did not invest $54k in 2007 and besides there is a cap for us. This year it’s $6k.
Ok, then you may need to put your data into an excel spreadsheet showing how much you invested each year and calculate a total return if you had invested that money in some benchmark (VOO or other) you are comfortable with. Alternatively you can just compare your return each year to the return each year of your benchmark and see if EJ has clearly beaten your benchmark or the other way round. If you don't know how to do this, you may have some number crunching friends that enjoy these calculations. BTW - a good financial investment company will pubish it's results with a comparison to a benchmark. The key is to make sure they are including all costs in their calculation and that they are using a reasonable benchmark.
__________________
"Learn everyday, but especially from the experiences of others. It's cheaper! " - John Bogle
Whisper66 is offline   Reply With Quote
Old 04-28-2021, 11:37 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
Quote:
Originally Posted by Whisper66 View Post
Ok, then you may need to put your data into an excel spreadsheet showing how much you invested each year and calculate a total return if you had invested that money in some benchmark (VOO or other) you are comfortable with. Alternatively you can just compare your return each year to the return each year of your benchmark and see if EJ has clearly beaten your benchmark or the other way round. If you don't know how to do this, you may have some number crunching friends that enjoy these calculations. BTW - a good financial investment company will pubish it's results with a comparison to a benchmark. The key is to make sure they are including all costs in their calculation and that they are using a reasonable benchmark.
How can I do this? Where do I get the built-in excel formulas?
F.I.R.E User is offline   Reply With Quote
Old 04-29-2021, 04:43 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
target2019's Avatar
 
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,669
The built-in XIRR function is described here:
https://support.microsoft.com/en-us/...b-a303ad9adc9d

On-line calculator here:
https://www.free-online-calculator-u...alculator.html
target2019 is offline   Reply With Quote
Old 04-29-2021, 05:11 AM   #9
Full time employment: Posting here.
dirtbiker's Avatar
 
Join Date: Apr 2019
Posts: 630
There is also the Dave Ramsey investment calculator. It's fairly simplistic, but easy to use. Put in your starting investment and the average of how much you invested monthly, and then play with the annual return until you get your actual total. Then compare this annual return with the S&P 500 annual return over the same time period.

https://www.ramseysolutions.com/reti...ent-calculator
dirtbiker is offline   Reply With Quote
Old 04-29-2021, 06:05 AM   #10
Full time employment: Posting here.
 
Join Date: Oct 2020
Posts: 926
None of this is getting at the risk adjusted returns. If the EJ portfolio is riskier than the market, it might well have beaten it, but you may still not want to own the EJ portfolio in a downturn if it takes a bigger beating.

I think you can get useful information about risk adjusted returns by using Portfolio Visualizer with a hypothetical investment in your fund vs. others and it gives you information about risk like the Sharpe ratio, Sortino ratio, standard deviation and maximum drawdown that will give you a better feel for the risk adjusted return. I would either look up when your fund was founded and go back that far or at least try different dates in Portfolio Visualizer and let it tell you when data became available for your fund.

But even with data, how would you separate luck from skill? Maybe it was a Tech fund and this has been the era of Tech, just like past eras were dominated by coal, railroads, autos or oil. But maybe the next decades will be the era of genomics or space or nuclear or solar or robotics or even crypto and your fund could be left in the dust.

The market is an information processing machine so once something is known, it's in the price before you can blink. Since none of us get to see the future, we are equally clueless about what the market will do next. So two things matter - diversification so you get the market return and the cost to get it. I would get out of EJ and get to a low cost, broadly diversified fund, like a total stock market fund. Vanguard, Fidelity, Schwab all have low cost total market funds available.
Exchme is offline   Reply With Quote
Old 04-29-2021, 08:20 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
Quote:
Originally Posted by F.I.R.E User View Post
But I did not invest $54k in 2007 and besides there is a cap for us. This year it’s $6k.
What you could do is to do a Portfolio Visualizer Run for each deposit comparing what Fast Eddie has you invested in to some benchmark consistent with the AA that Fast Eddie has you invested in... comparing the performance of each deposit... you could even then add them up if you want to.

I did an exercise similar to this for a friend a few years ago... she had an old 401k that was invested in certain funds... I compared her last 3 year performance with an index fund with a similar AA as her 401k investments... not surprisingly the index portfolio won by a wide margin.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 04-29-2021, 09:49 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Feb 2021
Posts: 2,324
Quote:
Originally Posted by F.I.R.E User View Post
I have invested $54k so far till present day and my balance is at $141,192.74. Is this considered as good as if I were to buy low cost index funds?
More info is needed to answer that. How is the EJ account invested? What funds are you in? You need to make sure you're doing an even comparison to see how those funds performed compared with comparable index funds.
disneysteve is offline   Reply With Quote
Old 04-29-2021, 09:50 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 7,863
From 2007 to 2021 is about 14 years. The following article has some data about how many actively managed funds outperformed indexes over a 15 year timeframe. This data is from 2018, so it covers most of the period you're talking about.

(The answer is about 5% or so of funds, so you have about 1 in 20 chance of beating the indexes.)

https://www.aei.org/carpe-diem/more-...ls-cant-do-it/

I am not sure whether this article ignores taxes, risk, effort, and survivorship bias. If so then the real probability is much closer to zero.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 04-29-2021, 09:52 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Feb 2021
Posts: 2,324
Quote:
Originally Posted by SecondCor521 View Post
From 2007 to 2021 is about 14 years. The following article has some data about how many actively managed funds outperformed indexes over a 15 year timeframe. This data is from 2018, so it covers most of the period you're talking about.

(The answer is about 5% or so of funds, so you have about 1 in 20 chance of beating the indexes.)
Exactly. Actively managed funds are supposed to beat the indexes; they do not.
disneysteve is offline   Reply With Quote
Old 04-29-2021, 09:58 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 13,184
The question should not be whether your EJ account beat an index in the past. They might have, especially if they took more risks.

The question is, what are the chances that EJ will be an index in the future, with a similar risk/volatility in investments, especially given their fees? Not likely. But if you want to stay with EJ, that's your business.
RunningBum is offline   Reply With Quote
Old 04-29-2021, 12:36 PM   #16
Recycles dryer sheets
 
Join Date: Mar 2012
Posts: 388
Quote:
Originally Posted by disneysteve View Post
Exactly. Actively managed funds are supposed to beat the indexes; they do not.
A better way to put it is....In aggregate, actively managed funds lose to the market indexes by their fee's and expenses. Exactly what you would expect. One of the earlier papers on this topic was written by Mike Jensen titled "The performance of Mutual Funds in the period 1945-1964" You can find it in the May 1967 journal of finance.
__________________
FIRE'd---4/27/2018 @ 54. DW--RE date 03/01/19.
tdv2 is offline   Reply With Quote
Old 04-29-2021, 01:02 PM   #17
Full time employment: Posting here.
 
Join Date: Nov 2016
Location: Fargo
Posts: 981
Rather than looking at your past results, look into the future.

https://www.dinkytown.net/java/compa...ment-fees.html

Use 3 different fee structures. Use your actual numbers and contribution rates. Use a reasonable return rate. 4% maybe.

Our all up cost at Vanguard is .06%

Use .10% 1% and 1.5% (or your best guess based on your funds and fees at EJ).

Look out 30 years. Well, you may not want to.

Just 1% is quite awful over 30-40 years.
bloom2708 is offline   Reply With Quote
Old 04-30-2021, 08:57 AM   #18
Recycles dryer sheets
ducky911's Avatar
 
Join Date: May 2010
Posts: 497
If you know when and how much you put into your account. You can use MRG's tool above.
Say 14 times once per year. Plug each amount and year in. Add up by hand. No spreadsheet needed!
__________________
You've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?
Retired July '11 investments in very low cost index and mutual funds, balance once a year at best.
ducky911 is offline   Reply With Quote
Old 04-30-2021, 10:55 AM   #19
Thinks s/he gets paid by the post
 
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
Quote:
Originally Posted by ducky911 View Post
If you know when and how much you put into your account. You can use MRG's tool above.
Say 14 times once per year. Plug each amount and year in. Add up by hand. No spreadsheet needed!
I do know the exact amount I contributed each of the years but not the increments for each year.
F.I.R.E User is offline   Reply With Quote
Old 04-30-2021, 11:07 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
MRG's Avatar
 
Join Date: Apr 2013
Posts: 11,078
Quote:
Originally Posted by disneysteve View Post
More info is needed to answer that. How is the EJ account invested? What funds are you in? You need to make sure you're doing an even comparison to see how those funds performed compared with comparable index funds.
+1

With qualification. Ed Jones sells 6 fund families*. You can buy the same fund all by yourself and pay the load, looking at you AFS. Of course you save the 1% nonsense, avoid 6% fe loads, keep it for yourself. Now maybe Jones has some insights into how each managed fund will perform in the future. That is their value add. [emoji854]

*My understanding of the fund families choosen is for their ability to calculate and pay Ed Jones their commissions.
MRG is offline   Reply With Quote
Reply

Tags
edward jones, fidelity, vanguard


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Confused choosing between: 401K, Roth 401K, Roth IRA or Traditional IRA? krldrummerboy FIRE and Money 22 05-26-2016 11:46 AM
Can I do both Backdoor Roth IRA and Mega Backdoor Roth IRA? growerVon FIRE and Money 8 07-30-2015 01:04 AM
converting IRA to Roth IRA based on new Roth Rules vs. 72t mbmmccoy FIRE and Money 27 09-28-2009 06:27 AM
Questions about limits surrounding ROTH IRA, SEP IRA and ROTH 401k RockSplat FIRE and Money 14 06-08-2009 12:30 PM
Can I max out my Roth IRA, Trad. IRA, and SIMPLE IRA? thefed FIRE and Money 9 09-24-2007 04:52 PM

» Quick Links

 
All times are GMT -6. The time now is 04:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.