|
Posted by Chip on July 17, 2008, 6:52 pm
My adviser recommended American Funds Growth Fund of America and
EuroPacic Growth Fund along with several other American Fund Growth and
Equity and Bond Funds for my $450K 401k turn over. The mix sounds good
for my status as a 67 yo retired with a retired 64 yo wife. I want a
minimum of $25K/yr (~5.5%/yr) out of this to supplement the $75K we get
in SS and pensions. Since inflation is still going up, more would be
better, but less would put a serious crimp in our lifestyle! American
Funds, esp the 1st two, have a good rep (Morningstar and Motley Fool)
and the package has a combined expense ratio of 0.68% and a 12.29% 5 yr
average return. However, the upfront sales charge of 2.5-5.75% disturbs
me a little.
As I can get no-front charge Vanguard funds that are approximately
equivalent, why should I pay these sales fees? Are American Fund
managers that much better?
Chip
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by Douglas Johnson on July 17, 2008, 7:53 pm
>I want a
>minimum of $25K/yr (~5.5%/yr) out of this to supplement the $75K we get
>in SS and pensions. Since inflation is still going up, more would be
>better, but less would put a serious crimp in our lifestyle!
You better think real seriously about trying to get 5.5% a year out of your
portfolio. Depending on assumptions and asset mix, you've got around a 20%
chance of running out of money in 20 years. The favorite "rule of thumb"
around here is that 4% is a more reasonable withdrawal rate.
>American
>Funds, esp the 1st two, have a good rep (Morningstar and Motley Fool)
>and the package has a combined expense ratio of 0.68% and a 12.29% 5 yr
>average return. However, the upfront sales charge of 2.5-5.75% disturbs
>me a little.
American funds do have a good rep, but you have hit on the major problem.
>As I can get no-front charge Vanguard funds that are approximately
>equivalent, why should I pay these sales fees?
Only if you like giving money away.
>Are American Fund managers that much better?
Nope.
-- Doug
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by PeterL on July 18, 2008, 11:47 am
> My adviser recommended American Funds Growth Fund of America and
> EuroPacic Growth Fund along with several other American Fund Growth and
> Equity and Bond Funds for my $450K 401k turn over. The mix sounds good
> for my status as a 67 yo retired with a retired 64 yo wife. I want a
> minimum of $25K/yr (~5.5%/yr) out of this to supplement the $75K we get
> in SS and pensions. Since inflation is still going up, more would be
> better, but less would put a serious crimp in our lifestyle! American
> Funds, esp the 1st two, have a good rep (Morningstar and Motley Fool)
> and the package has a combined expense ratio of 0.68% and a 12.29% 5 yr
> average return. However, the upfront sales charge of 2.5-5.75% disturbs
> me a little.
>
> As I can get no-front charge Vanguard funds that are approximately
> equivalent, why should I pay these sales fees?
Why indeed.
>Are American Fund
> managers that much better?
>
Nope.
> Chip
>
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by Default User on July 18, 2008, 11:57 am
Chip wrote:
> My adviser recommended American Funds Growth Fund of America and
> EuroPacic Growth Fund along with several other American Fund Growth
> and Equity and Bond Funds for my $450K 401k turn over.
You don't have an advisor, you have a salesman. You wouldn't consider
the guy down at Larry's Friendly New and Used cars to be your
"transportation advisor", would you?
> The mix sounds
> good for my status as a 67 yo retired with a retired 64 yo wife. I
> want a minimum of $25K/yr (~5.5%/yr) out of this to supplement the
> $75K we get in SS and pensions.
As others have said, that's pretty aggressive. Depending on how much
you want to leave behind, you might consider some immediate fixed
annuities.
Vanguard has some new managed payout funds, that supposedly guarantee a
certain level of return. They are pretty new, and I don't know much
about them.
> As I can get no-front charge Vanguard funds that are approximately
> equivalent, why should I pay these sales fees? Are American Fund
> managers that much better?
Besides the sales charge, AF funds carry higher expense ratios. Check
the chart for GFA against the S&P:
<http://finance.yahoo.com/q/bc?t=my&s=AGTHX&l=off&z=m&q=l&c=&c=%5EGSPC>
Also EPG against Vanguard's EAFE index:
<http://finance.yahoo.com/q/bc?t=my&s=AEPGX&l=off&z=m&q=l&c=vdmix>
As always, past performance does not guarantee future results, and
that's only 10-15 years of results. Still, no evidence that the AF
funds you mention are world-beaters.
Brian
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by kastnna on July 18, 2008, 1:41 pm
> Besides the sales charge, AF funds carry higher expense ratios. Check
> the chart for GFA against the S&P:
>
> <http://finance.yahoo.com/q/bc?t=my&s=AGTHX&l=off&z=m&q=l&c=&c=%5EGSPC>
I don't follow how the above statement correlates to the link. That
chart doesn't have much to do with expense ratios. Sure, higher
expense ratios lead to "investment drain", but nearly a dozen other
factors could be the cause for that performance variance. GFA invests
primarily in LCG, avoids LCV, and can hold as much as 25% of its
assets in non-S&P equities and debt. According to M*, both GFA and EPG
have expense ratios that are less than half the average for their
respective categories. If one was FORCED to by loaded funds, these
aren't bad choices.
That aside, I'm in the no-load passive index fund camp.
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
| Similar Threads | Posted | | American Dream | February 22, 2008, 1:37 pm |
| "Wash" sales | December 25, 2007, 3:28 pm |
| Experience with Tax Lien Sales? | February 8, 2008, 1:01 pm |
| Gainskeeper or other sales tracking programs | April 3, 2008, 7:27 pm |
| sovereign wealth funds vs. hedge funds | June 21, 2007, 4:06 pm |
| Foreign Funds | September 27, 2006, 3:54 pm |
| Inherited Funds | March 12, 2007, 4:21 pm |
| dimensional funds | April 9, 2007, 12:28 pm |
| 529 or mutual funds, or something else? | October 21, 2007, 7:03 pm |
| Suggestions for IRA funds | March 4, 2008, 11:00 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap