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Author: Selphiras Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75540  
Subject: dumping mutual funds Date: 9/29/1999 10:48 AM
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Over the last four years, I've invested about $3000 in mutual funds for an IRA (now Roth). Since I've recently started to become Foolish, I'm considering cashing these out towards getting into the FF. However, the funds have something like a 5-year span until they are no-load on selling. They're performing pretty well, 17% average annual return total (one's a LOT better, one worse).

If I cash them in next fall, I will have enough money to start a FF portfolio Dec 00. Otherwise, it will be two years from now before I start the FF. I will not be contributing much (<$500) between now and next fall to my retirement accounts (for good reasons). Then it would take a year to get enough to make the purchases worthwhile.

My question is: Should I go ahead and cash these out next fall even though I will get hit with some fees on them in order to get a year's start on the FF? Or do I just keep them around until the loads are mostly gone (3-4 years from now)?

Thank you!
Selphiras
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14130 of 75540
Subject: Re: dumping mutual funds Date: 9/29/1999 10:58 AM
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The best way to answer this kind of question is to set up a spreadsheet, enter your load costs, and the return you expect to get in the future for the investment alternatives. Finally calculate what the account balance will be in say 5 years leaving the investment where it is or moving it and paying loads.

If there is a clear choice one way or the other, this calculation will usually reveal it. (But much depends on the quality of the data entered and especially your estimates of future returns. That is why the question is difficult to answer.)

It is the right question to ask though. Best of luck in your decision.

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Author: bacon Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14140 of 75540
Subject: Re: dumping mutual funds Date: 9/29/1999 9:24 PM
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<<Since I've recently started to become Foolish, I'm considering cashing these out towards getting into the FF. However, the funds have something like a 5-year span until they are no-load on selling. They're performing pretty well, 17% average annual return total (one's a LOT better, one worse).>>

What's the load you'll pay if you dump the funds in any of the years between now and when the load goes to zero? What's the historical return of the FF variant you intend to buy? The year your 17% (or the long-term return as of that year) plus that load becomes less than the return on the FF would seem a good year to make the move into the FF.

Hope this helps

Eric Hines

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