Tuesday, March 10, 2009

Does my adviser have my best interest in mind?

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?

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