So my adviser calls me the other day and tells me that with my Roth IRA they are getting rid of the Capital World Growth & Income CI B Fund that I am currently contributing to. He then proceeds to ask me if I would like to replace it with the A Fund which is a front load of 5.57% or if I would like the C fund that has no upfront cost but a yearly fee of 0.75%. I asked him which he recommended. He advised me if I was going to keep in it long term to go with the front load, so I should put it in the A Fund...I took him at his word.
I started to think if it was the right decision and did some calculations. I am currently putting in 100.00 a month(setting aside another hundred/per month for investments) and with the front load of 5.75%, about $94.25 goes into the fund? I thought IM PAYING ALMOST 6% UP FRONT? The fund would have to make 6%+ for me to break even? To me that doesn’t make much sense? Especially now that I am losing 10-20% month. I will be checking these funds and I am not planning to keep for the long haul so the upfront load would be a bad investment.
I am currently looking into opening another Roth IRA with a no-load fund and no fee where I can invest and build a portfolio of low cost, diversified funds. I mean in the end I can do all this investing myself with a little research without the yearly fee to the advisor?
Tuesday, March 10, 2009
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