How are my Rate of Return in my Roth IRA?

[F.I.R.E User]

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.

What is wrong with a bigger beating in a down market? I benefit from DCA.

I do have just VTSAX at Vanguard for my non retirement account.

 

[F.I.R.E User]

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.

Is that free to do?

 

[F.I.R.E User]

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.

I posted what AF Class A funds I am invested in. Please take a look.

I am trying to compare with VTSAX.

 

[F.I.R.E User]

Exactly. Actively managed funds are supposed to beat the indexes; they do not.

So how are these fund managers keeping their jobs?

 

[F.I.R.E User]

Rather than looking at your past results, look into the future.

https://www.dinkytown.net/java/compare-investment-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.

$54K divide by about 13 years?

 

[OldShooter]

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/retirement/investment-calculator

If I understood the OP correctly, he has added assets to the account, so those will look like account growth to any calculator. He has to subtract the current value of those assets from the account value before he tries to get a rate of return.

But the real world is that if he has been paying front end loads to Fast Eddie, his return will be in the toilet vs the S&P. Just that fact is enough; no mathematics necessary.

 

[F.I.R.E User]

If I understood the OP correctly, he has added assets to the account, so those will look like account growth to any calculator. He has to subtract the current value of those assets from the account value before he tries to get a rate of return.

But the real world is that if he has been paying front end loads to Fast Eddie, his return will be in the toilet vs the S&P. Just that fact is enough; no mathematics necessary.

What is my actual ROR after fees?

 

[Whisper66]

So how are these fund managers keeping their jobs?

Ask yourself why you are with EJ. They provide you something you value. Only you can answer what that is. But you allow them to manage your money without understanding the real monetary returns they are providing. If you understand why you’ve stayed with them this long, you will understand why they are keeping their jobs. They fill a need for some people.

 

[pb4uski]

Yes

Is that free to do?

 

[Sunset]

So how are these fund managers keeping their jobs?

People are bad at math.
People want someone to handle the "complex stuff".
People have no interest in saving or investing, often don't even know what the interest rates are of loans, savings, etc.
People don't read EVERY page of the annual report that the brokerage sends them so they never see the 1%->2% fee.
People think 1% is only 1 out of 100 so that's low.

 

[disneysteve]

People think 1% is only 1 out of 100 so that's low.

Yeah, $1 from $100 doesn't sound so bad. $10 from $1,000 isn't much either. They don't think about what happens when it starts being $1,000 from $100,000 or $10,000 from $1,000,000.

 

[Whisper66]

@F.I.R.E. - am curious where you ended up on your thinking. You are currently in relatively expensive funds (see attached) provided by a relatively expensive financial advisor company. But reading this discussion thread, you possibly seem to be uncomfortable working numbers and managing your assets yourself?

 

[OldShooter]

Yeah, $1 from $100 doesn't sound so bad. $10 from $1,000 isn't much either. They don't think about what happens when it starts being $1,000 from $100,000 or $10,000 from $1,000,000.

Here's a chart I use in my Adult-Ed investing class:

​

 

[pb4uski]

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?

Based on the investments that you made as outlined in post#25, I ran Portfolio Visualizer assuming a deposit as of Jan 1 of each year through April 2021 invested in VTSAX with dividends reinvested. I came up with a total of $160,844... almost 14% higher. I'm actually pleasantly surprised that it was so close.

2007.... https://www.portfoliovisualizer.com...3=Portfolio+3&symbol1=VTSAX&allocation1_1=100

2008... https://www.portfoliovisualizer.com...3=Portfolio+3&symbol1=VTSAX&allocation1_1=100

You get the idea.

 

[MRG]

OP, I know is Ed should be able to get you your return and if they can't American Funds can. One thing I know about AFS/Capital Group is they support their customers.

 

[OldShooter]

... I know is Ed should be able to get you your return and if they can't American Funds can. ...

Sorry, to me this is equivalent to simultaneously believing in the Easter Bunny and in Bigfoot. If you have statistical study data to support your assertion, please provide it.

 

[F.I.R.E User]

Ask yourself why you are with EJ. They provide you something you value. Only you can answer what that is. But you allow them to manage your money without understanding the real monetary returns they are providing. If you understand why you’ve stayed with them this long, you will understand why they are keeping their jobs. They fill a need for some people.

Front load decreases with account value.

 

[F.I.R.E User]

People are bad at math.
People want someone to handle the "complex stuff".
People have no interest in saving or investing, often don't even know what the interest rates are of loans, savings, etc.
People don't read EVERY page of the annual report that the brokerage sends them so they never see the 1%->2% fee.
People think 1% is only 1 out of 100 so that's low.

Which category do I fall into?

 

[F.I.R.E User]

Yeah, $1 from $100 doesn't sound so bad. $10 from $1,000 isn't much either. They don't think about what happens when it starts being $1,000 from $100,000 or $10,000 from $1,000,000.

Are you talking about the ER?

 

[F.I.R.E User]

@F.I.R.E. - am curious where you ended up on your thinking. You are currently in relatively expensive funds (see attached) provided by a relatively expensive financial advisor company. But reading this discussion thread, you possibly seem to be uncomfortable working numbers and managing your assets yourself?

I am not very good at complex stuff. I still have not gotten any comparison to the index market vs the MF I am invested in.

 

[F.I.R.E User]

Here's a chart I use in my Adult-Ed investing class:

​

He helps with what will my expenses will be in retirement and checks out my 401K to see if any re balancing is needed.

 

[F.I.R.E User]

Based on the investments that you made as outlined in post#25, I ran Portfolio Visualizer assuming a deposit as of Jan 1 of each year through April 2021 invested in VTSAX with dividends reinvested. I came up with a total of $160,844... almost 14% higher. I'm actually pleasantly surprised that it was so close.

2007.... https://www.portfoliovisualizer.com...3=Portfolio+3&symbol1=VTSAX&allocation1_1=100

2008... https://www.portfoliovisualizer.com...3=Portfolio+3&symbol1=VTSAX&allocation1_1=100

You get the idea.

I invested in random days throughout the year so it was not on first of January for those years.

Appreciate your assistance.

You mean I could have had almost $20K more in my Roth IRA if I invested only in VTSAX from 2007 compare to the funds that I listed that I am invested in now? Taking into the account the Front load/ER fees for EJ.

 

[F.I.R.E User]

OP, I know is Ed should be able to get you your return and if they can't American Funds can. One thing I know about AFS/Capital Group is they support their customers.

It does not go back more than 5 years in the app.

 

[F.I.R.E User]

Sorry, to me this is equivalent to simultaneously believing in the Easter Bunny and in Bigfoot. If you have statistical study data to support your assertion, please provide it.

AF would not have my info. EJ would right?

 

[MRG]

AF would not have my info. EJ would right?

Both. Jones holds your total picture, they push six fund families so they have to aggregate the statements for some customers. Your funds are likely registered in your name, not Jones, so AFS knows you as a Jones customer. I think it works like this but have never tested that theory.

Now will AFS answer your questions? I'm not sure, obviously they want you to love their products and they have all the data if the account is registered in your name. You'll have to call and go fishing, I'm sure you're not the first Eddie Jones guy to call. You pay a premium for American Funds might as well ask for their premium services. Your question is very basic, the data exists albeit it may need interpretation.