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|Subject: Re: Best way to invest in a ROTH IRA||Date: 9/20/2005 11:19 AM|
|Author: rkmacdonald||Number: 47634 of 80003|
Author: PTPFool | Date: 9/20/05 10:21 AM | Number: 47630
My wife is a school teacher, and somehow, through her school, she was introduced to a financial advisor. I just turned 33 years old and she is 25.
This financial advisor has talked her in to opening a ROTH IRA (smart move and something we have meant to do for some time now), but he wants to take 5.75% from each deposit - his fee and his brokers fee (ING Direct)? Once he takes his cut, he is suggesting she use the rest of the proceeds to purchase AMERICAN FUNDS families of mutual funds. They do look to have good performance, and she wants something that she can directly deposit money into each month and not look at or touch. She likes funds because she does not want to spend time researching individual stocks.
She has watched me invest in different FOOL STOCKS (I subscribe to Hidden Gems and Stock Advisor) and she thinks I trade WAY too often. I have definitely cut back on "trading" since getting married to her (and it has served me well), but quite honestly, I find it fun sometimes to buy / sell. I am trading mostly within my IRA, so I understand there are no tax disadvantages - I just have to swallow the service fees... and swallow the fact that I sold Quality Systems WAY TOO SOON..
Anyways - She wants to invest her way, and she wants me to invest my way, and we are going to compare in 15 years. I stand 100% behind her and won't doubt she beats me. However, I can't get over this 5.75% fee. Of every $300 we deposit, she is only buying about $282 worth of the fund. Is this a typical fee? How can she set up a ROTH IRA with direct monthly deposits that is automatically invested in mutual funds of her choice without paying this financial advisor to do nothing more than a bit of paperwork and cheerleading?
I think the fee you are talking about is the 'load', and 5.75% is a typical percentage.
From the American Funds website at: http://www.americanfunds.com/funds/classes/index.htm
The American Funds are distributed through financial advisers because we believe that all investors benefit from