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Posted by Elle on June 11, 2008, 4:44 pm
>I have maybe $50k spread amongst a couple of 401k accounts
>and an IRA.
> I'm considering moving all the money into an American
> Funds account
> and letting a financial adviser manage it and future
> contributions for
> me.
Do you mean you no longer hold employment with the companies
that originally held the 401(k)s, and so you want to roll
them all over to a Traditional IRA?
> With the dollar being kind of low right now, though, is it
> a bad
> idea to sell my current holdings so I can move the money
> into a new
> fund --
What is your current asset allocation among large caps,
small caps, domestic, bonds, etc.? What funds do you hold
now?
If you do not understand asset allocation, then please
consider experimenting (over a few hours on a weekend) with
the free, interactive, online asset allocation tools linked
at http://ellessite.googlepages.com/assetallocation
> particularly since it'll cost me about $2250 in a one-time
> fee
> to do so?
>From where exactly is this fee coming?
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Posted by joetaxpayer on June 11, 2008, 4:51 pm
Mike wrote:
> I have maybe $50k spread amongst a couple of 401k accounts and an IRA.
> I'm considering moving all the money into an American Funds account
> and letting a financial adviser manage it and future contributions for
> me. With the dollar being kind of low right now, though, is it a bad
> idea to sell my current holdings so I can move the money into a new
> fund -- particularly since it'll cost me about $2250 in a one-time fee
> to do so?
When you ask "good time", I don't really know what you mean. Whether the
market is high, low, or in between, the rollover should be based on
other issues which you don't address.
My 401(k) happens to contain an S&P index choice which has a 5 basis
point (i.e. .05%) overhead. It would cause me some pain to move that to
an IRA with even VFINX at 15 basis points. Yet, since most 401(k)s do
not offer a lower expense ratio, the VFINX is exactly what I recommend
for one's S&P indexing. You can search through older posts here for the
comparison between IRA and 401(k). There are a number of advantages to
one over the other depending on one's situation.
I'd think twice about moving to funds with such a large overhead, that
5% load is 100X what I brag about paying. Think on that, I will pay less
over my lifetime on my index fund than you are willing to pay in one
year. Yes, I understand the 5% is a load and not each year, but those
expenses are quite a drag compared to reading, researching, and learning
to allocate your assets on your own.
Regular poster here, Elle, has a list of asset allocation tools listed
neatly at
http://ellessite.googlepages.com/assetallocation
Joe
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Posted by John A. Weeks III on June 11, 2008, 6:53 pm
In article
> I have maybe $50k spread amongst a couple of 401k accounts and an IRA.
> I'm considering moving all the money into an American Funds account
> and letting a financial adviser manage it and future contributions for
> me. With the dollar being kind of low right now, though, is it a bad
> idea to sell my current holdings so I can move the money into a new
> fund -- particularly since it'll cost me about $2250 in a one-time fee
> to do so?
The answer is "NO", it is never a good time to pay a fee of $2250
for anything. IRAs and roll-overs are free. Don't pay for that
service. An IRA should cost $50 a year max to manage, do pay
anyone any loads or fees for what should be free.
-john-
--
======================================================================
John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
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Posted by joeu2004 on June 11, 2008, 7:16 pm
> The answer is "NO", it is never a good time to pay a fee of $2250
> for anything. IRAs and roll-overs are free.
I concur with one caveat: it is not uncommon to charge a fee for
closing a 401(k) or IRA account. That said, of course $2250 would be
an exhorbitant fee for that purpose. So I that it is.
My suspicion is that it might be a back-end load for the investment(s)
within the 401(k). If that's the case, the OP should consider whether
his target IRA investment (American Fund or whatever) is expected to
do significantly better than the 401(k) investment(s) over the long
term. (Emphasis on "long term".) The OP provides insufficient
information for any intelligent discussion of that here.
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Posted by Mike on June 12, 2008, 9:20 am
Hi, all. Thanks much for the advice so far. Here are some answers to
your questions:
I'm 38 with about $50k saved up in retirement funds. Not a lot, I
know, but I'm making a lot more money this year and should be able to
contribute more. I have the following accounts:
Fidelity
$19k
FID Freedom Fund 2040
401k
Morgan Stanley
$15k
different funds
401k
Vanguard
$16k
Target Retirement 2045 Fund
Roth IRA
I think that all breaks down into 66% US stocks, 19% non US stocks,
and 10% bonds. I'd like to combine them all into one account and have
someone with more time/knowledge manage it for me and help me get the
amount to where it should be.
The person I'm working with is a financial and investment planner, and
she's somewhat of a friend of the family. She wants to put the money
into American Funds; I was ok with that. I like AF's management and
incentive structure because I think it reduces the motivation for
cheating on the part of its personnel; and it has a low stock turnover
rate, which I assume means they probably aren't prone to knee-jerk
reactions to the market.
Anyway, AF charges a one-time sales fee to purchase their funds, and
it has to be done through a financial advisor. For amounts over $50k,
the charge is 4.5%. The financial planner gets a portion of that, for
which she'll manage my account and any future contributions until the
end of time.
As for my concerns about the importance of the value of the dollar,
that may be ignorance on my part. I had assumed that a depressed
dollar would reduce the value of my investments, such that if I
purchased $10,000 worth of shares of some company back when the dollar
was high, those same shares might be worth only $8000 or so now. If I
sell them now, then, so that I can combine all my money into one
account, I had assumed that I'd be losing money.
Or am I missing something basic here? Is moving money to a new account
not the same as selling?
Thanks!
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