The Caller said he was considering investing in a fund with a 4.65% load?

[rayinpenn]

Today, Saturday morning I'm shaving and listening to a nationally syndicated investment/retirement show... The Caller said he was considering investing in a fund with a 4.65% load?
I would have said are you kidding? Why would you ever buy a load fund. Objective study after study has shown that generally is only good for the guy pushing the load? (You do know the load goes to the salesman right?). The advisor doesn't say word one about the load.

The show guy does what ever he can to get you to call him off air so his people can sell you something with fees, fees fees. I find it vulgar.


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[jim584672]

I remember when loads were 8.5% on a lot of funds. I always said to myself who would buy such a fund? Well I guess brokers need to eat and have nice cars.

[DrRoy]

Why not flush 4.65% down the toilet? How about putting it on the fire? There are so many options.

[MRG]

IIRC, American Funds who only sells their loaded retail funds through advisors is still number 3 in AUM.

[rayinpenn]

I couldn't sell load funds ...wasting good trusting folks precious retirement funds. God has something special planned for those folks.

Similarly
My wife takes the family car into Toyota for an oil change and new battery (battery is years old and I don't want to risk it). The dealer checks the battery and says yeah it need to be replaced. Then he wants me to have my vents cleaned - mold and mildew you know - he wants to clean the throttle body too.. I say no thanks. I have had cars now for 40 years never once cleaned the vents... Scam? Yeah I'll clean the throttle body when the car has a need.

Seems all they want to do is pad the bill.


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[target2019]

I ask the dealer to print out the estimate for add on work. Drive to auto parts store and get the filters and blades. Then just install parts on a nice day.

[rodi]

Quote:

Originally Posted by jim584672 I remember when loads were 8.5% on a lot of funds. I always said to myself who would buy such a fund? Well I guess brokers need to eat and have nice cars.

I remember when my 401k (small employer) only offered funds with 5-8% loads. Fortunately, that was a shorter term job (less than 2 years) so I wasn't stuck in those funds very long - and able to roll them out.

I had a post here several years ago - DH's 401k had loads ranging from 3.5-5%. But to get the match - you needed to participate.

I hate loaded funds.

[DrRoy]

Quote:

Originally Posted by rayinpenn My wife takes the family car into Toyota for an oil change and new battery (battery is years old and I don't want to risk it). The dealer checks the battery and says yeah it need to be replaced. Then he wants me to have my vents cleaned - mold and mildew you know - he wants to clean the throttle body too.. I say no thanks. I have had cars now for 40 years never once cleaned the vents... Scam? Yeah I'll clean the throttle body when the car has a need. Seems all they want to do is pad the bill. Sent from my iPad using Early Retirement Forum.

I had a similar experience 20 years ago. I took my 2 year old car to a place that advertised a good rate for an oil change. While the car was there, I get a call and they say that the hoses and belts need to be replaced for a couple hundred bucks. I said no and never went back there. I had the car for 8-9 more years and never needed to replace any hoses or belts.

[frank2009]

A few years ago, I interviewed a financial planner. He said that he charges 2-4% to manage a portfolio. When I told him that I doubted he could beat my cheap index funds, he waffled and I walked out. No thanks! It's just not that difficult.

[jim584672]

I think these load funds are such a rip off, however. if a person has decided not to do any homework, and they agree to it, they get what they deserve.

[GalaxyBoy]

My EX-employer's 401k SDBA touted many funds that had no transaction fees. Of course, they were all load funds. Including index funds with 4%-5% loads.

I chose a Vanguard ETF since mutual funds not on the list had a $50 fee per transaction. Would've gotten a bit pricey over 26 pay periods per year.

Perhaps it goes without saying the alternatives in the base 401k account were unacceptable as well.

[rayinpenn]

Quote:

Originally Posted by GalaxyBoy My EX-employer's 401k SDBA touted many funds that had no transaction fees. Of course, they were all load funds. Including index funds with 4%-5% loads. I chose a Vanguard ETF since mutual funds not on the list had a $50 fee per transaction. Would've gotten a bit pricey over 26 pay periods per year. Perhaps it goes without saying the alternatives in the base 401k account were unacceptable as well.

How to run most American companies
1) pay as little as possible to all but the top 5/10/100
2) always choose the cheapest alternative
3) cut benefits and rationalize it by stating it is the industry standard
4) focus on short term planing
5) don't pay for training
6) provide needlessly costly/ underperforming 401k investment options because he's a golf buddy.
7) tout the ceo as the great messiah even if the stock price hasn't moved and he/she lost billions on bad decisions.

Tell your employees they work for a special great company and don't ask if they agree or explain why? (By the by they know it isn't true)



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[mickeyd]

Evidently 4.65% is the cost of financial ignorance.

[pb4uski]

IMO anyone who buys a load fund is a fool.

While it is tempting to add that anyone who sells a load fund is a thief... this is still a free country.

[jabbahop]

Unfortunately I was one of those fools. :-(


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[Souschef]

I had a trust where I could withdraw 5% of the principal every year. The lawyer who set it up said in 20 years you will have withdrawn it all. That is why he is a lawyer not a CPA
My wife was rolling over a 10 year annuity, and the guy said if you roll it over we give you a 9% bonus. I looked at the small print, and the service charge was higher if you took the one with the bonus! By year 8 you were in the hole
Last Year I was switching funds and I had a choice of a load or no load option. The broker said the service charge on the no load fund was higher, so I ran a spreadsheet, and found you would never make back the money paid in the load,even with the lower service charge. I told the broker that and they were amazed.

[mickeyd]

Quote:

The broker said

This may be the root of your difficulties.

[travelover]

Quote:

Originally Posted by Souschef ........I told the broker that and they were pretended to be amazed.

Fixed it for you

[Bryan Barnfellow]

In my first year of marriage in 1985 I hired the husband of a w*rk colleague do our taxes. The tax guy recommended a friend of his who could advise us on investing. Wow..me an investor, with actual investments! My ego was rising to the stratosphere.

So, the advisor met with us and presented a rosy scenario of about 12% annual growth using funds he could get us into. Reading over the brochures that evening I noticed some fine print about fees. I was trained as an economist in grad school, so numbers weren't difficult, but I started to learn about new concepts such as loads, marketing fees, after tax performance, etc. Wow, did we look THAT stupid? So, I sent a note saying we weren't interested. A week later, My colleague said that her husband's friend just couldn't figure out why I was passing up such a great deal. I determined that year to always do my own investing and my own taxes!

Skip ahead 30 years. In April of 2015 my wife and I retired (in Switzerland no less) on income from our home made portfolio. We have had to hire tax accountants however to navigate the US and Swiss tax declarations -- we have to file and pay in both countries. It just too complicated, especially when one isn't in English.

-BB