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Author: LACRetiree Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Evaluation Date: 8/9/2006 9:33 PM
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I became aware of Motley Fool a year or two ago. I have been subscribing to MF Stock Advisor Newsletter for about a year and Rule Your Retirement Newsletter for about six months. I'll admit to being a fool (little “f” here) for taking so long in coming up with these facts and figures, but after reading the “Rule Your Retirement” discussion board regarding “Explaining Broker Terminology”, I figured I'd better do something fast.

My husband and I are both retired, 65 and 63 healthy years old respectively. In 1999 we began “investing” with a “Financial Advisor”. In early 1999 we made deposits of more than $200,000 from my parents' estate, plus smaller deposits throughout the years between 2000 and 2006.

To try to give you a pretty true – though fairly brief – picture of our situation, I am listing the funds we currently have with this “Financial Advisor”, plus the amounts deposited in each fund as well as the value of the funds as of 6-30-06.

Current Value Deposits
WIFE'S ROTH IRA ACCOUNT
“SP stands for Strategic Partners Fund
SP Mid Cap Growth Fund M Class (NASDAQ: GBMGX) $ 3,742.62 $ 3,830.00
SP Concentrated Growth Fund B Class (NASDAQ: CBGSX$ 2,116.21 $ 3,000.00
SP Managed Index 500 Fund M Class (NASDAQ: MBIFX) $ 2,257.72 $ 2,085.58
SP Large Cap Core Fund B Class (NASDAQ: ???)
Funds Transferred to IRA Account on 02-08-06 ($1,335.70)
Remaining Balance $ 1,197.94 $ 2,390.52
SP Concentrated Growth Fund B Class (NASDAQ: ???)
Funds Transferred to IRA Account on 02-08-06 ($1,267.55)
Remaining Balance $ 1,079.17 $ 2,200.00
SP Mid Cap Growth Fund B Class (NASDAQ: ???)
Funds Transferred to IRA Account on 02-08-06 ($ 537.79)
Remaining Balance $ 1,447.97 $ 1,826.00
TOTAL FOR WIFE'S ROTH IRA $ 11,841.63 $15,333.12


HUSBAND'S ROTH IRA ACCOUNT
SP Capital Growth Fund M Shares (NASDAQ: MARBX) $ 3,717.57 $ 3,350.00
SP Core Value Fund M Class (NASDAQ: SVCBX) $ 3,732.33 $ 2,916.60
SP Relative Value Fund M Class (NASDAQ: NBBVX) $ 2,714.66 $ 2,650.00
SP Small Cap Value Fund B Class (NASDAQ: PZVBX) $ 5,656.07 $ 3,258.22
SP Relative Value Fund B Class (NASDAQ: ???) $ 1,900.53 $ 1,700.00
TOTAL FOR HUSBAND'S ROTH IRA $ 17,721.16 $15,049.80


WIFE'S IRA ACCOUNT
SP Mid Cap Growth Fund Class B (NASDAQ: ???) $ 509.37
SP Concentrated Growth Fund Class B (NASDAQ: ???)$ 1,204.87
SP Large Cap Core Fund B Class (NASDAQ: ???) $ 1,314.83
TOTAL FOR WIFE'S IRA $ 3,029.07


AMERICAN SKANDIA LIFE VEST ANNUNITY
Prudential Annuity Service Center
Issue Date: 11/23/1999
AST Neuberger Berman Mid Cap Growth $ 14,859.22 $13,862.05
AST T. Rowe Price Natural Resources $ 18,363.75 $ 39,359.91
AST Neuberger Merman MidCap Value $ 31,613.48 $ 15,380.48
AST PIMCO Total Return Bond $ 20,756.57 $ 15,380.48
AST Small Cap Growth $ 5,123.81 $ 11,939.49
AST Small Cap Value $ 31,672.32 $ 15,380.48
AST Marsico Capital Growth $ 35,299.06 $ 39,359.91
AST William Blair International Growth $ 17,075.52 $ 19,225.60
AST Gartmore GVIT Developing Markets $ 5,304.43 $ 22,563.81
TOTAL AMERICAN SKANDIA
LIFE VEST ANNUNITY $ 180,068.16 $192,452.21

Seligman Municipal Fund SER INC
South Carolina $ 2,360.04 $ 1,825.16


GRAND TOTAL OF FUNDS INVESTED
WITH THIS “FINANCIAL ADVISOR”
WITH THE LARGEST MAJORITY OF
FUNDS INVESTED IN 1999 $215,020.06 $224,660.29




Since we have saved with this “Financial Advisor” for about seven years and have lost almost $10,000, I want to get rid of all the worthless funds, but am wondering if there may be any that are worth keeping. Needless to say, I am furious with the “Financial Advisor” for her handling of our funds (and our willingness to go along with it.) Yes, she may have given us "choices” of funds to choose from, but unfortunately we did not realize that most (if not all) of the fund choices that were offered to us by her were advantageous to her and almost (if not totally) worthless to us. (I think there is a “trust” issue here.) Thanks to Motley Fool we have become a little more knowledgeable and realize we need to take care of our money and not let her keep her hands in our pockets. I am now more than willing to try it on our own.

My questions are:
1. Are any of these funds worth keeping?
2. Should we dump them all immediately – regardless of their current value? And what about the annuity?
3. Is there any hope of any of them showing a worthwhile profit?
4. How do we minimize our loses?
5. Would it be appropriate for us to ask the Financial Advisor for an ADV Form for all years she's worked with us?
6. Does it sound as if she has been legally unethical in not advising us of the losses we were incurring?
7. Numerous funds are “back-end” load, i.e., Class “B” Funds. Is it recommended to exit these funds even though there would be payments to do so, or wait until the expiration of the time window, if any window exists, that cancels such payments? How would the threshold be computed to wait and therefore, hold, or to act and dispose of the Class “B” Funds? Does Class “B” Funds payment window ever exist indefinitely or is the payment window defined for a specific number of months, varying by each individual parent fund?

Aside from the above accounts, I have purchased about $7,000 worth of stocks using the M/F Stock Advisor suggestions during the last year. We also have some funds with Merrill Lynch, and another Financial Planner (we will be analyzing these funds as soon as we take care of the current situation).
Additionally my husband has rolled over his 401-k into an IRA that is currently in a Reserve Savings Account with TDAmeriTrade awaiting advice and recommendations for investing.

Our combined Social Security is about $1,600 per month and my husband has a Department of Defense retirement pension also of about $1,600 per month. Our current month-to-month daily expenses are about $3,000 to 3,200 each month. Our hopes are that we will have enough money to finance long and hopefully continued healthy lives, plus have enough for about two out-of-the-country trips each year for as long as we are able to enjoy them and then possibly several in-country trips. It would also be nice to have enough left over to leave a nice estate for our five children.

Thank you for any help you can give us to attain our life goals.
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Author: Jim2B Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53046 of 75381
Subject: Re: Evaluation Date: 8/9/2006 10:27 PM
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LAC,

Here's a repost with your numbers formated:

WIFE'S ROTH IRA ACCOUNT Current Value Deposits

“SP stands for Strategic Partners Fund
SP Mid Cap Growth Fund M Class (NASDAQ: GBMGX) $ 3,742.62 $ 3,830.00
SP Concentrated Growth Fund B Class (NASDAQ: CBGSX $ 2,116.21 $ 3,000.00
SP Managed Index 500 Fund M Class (NASDAQ: MBIFX) $ 2,257.72 $ 2,085.58
SP Large Cap Core Fund B Class (NASDAQ: ???)
Funds Transferred to IRA Account on 02-08-06 ($1,335.70)
Remaining Balance $ 1,197.94 $ 2,390.52
SP Concentrated Growth Fund B Class (NASDAQ: ???)
Funds Transferred to IRA Account on 02-08-06 ($1,267.55)
Remaining Balance $ 1,079.17 $ 2,200.00
SP Mid Cap Growth Fund B Class (NASDAQ: ???)
Funds Transferred to IRA Account on 02-08-06 ($ 537.79)
Remaining Balance $ 1,447.97 $ 1,826.00
TOTAL FOR WIFE'S ROTH IRA $11,841.63 $15,333.12

HUSBAND'S ROTH IRA ACCOUNT
SP Capital Growth Fund M Shares (NASDAQ: MARBX) $ 3,717.57 $ 3,350.00
SP Core Value Fund M Class (NASDAQ: SVCBX) $ 3,732.33 $ 2,916.60
SP Relative Value Fund M Class (NASDAQ: NBBVX) $ 2,714.66 $ 2,650.00
SP Small Cap Value Fund B Class (NASDAQ: PZVBX) $ 5,656.07 $ 3,258.22
SP Relative Value Fund B Class (NASDAQ: ???) $ 1,900.53 $ 1,700.00
TOTAL FOR HUSBAND'S ROTH IRA $17,721.16 $15,049.80

WIFE'S IRA ACCOUNT
SP Mid Cap Growth Fund Class B (NASDAQ: ???) $ 509.37
SP Concentrated Growth Fund Class B (NASDAQ: ???) $ 1,204.87
SP Large Cap Core Fund B Class (NASDAQ: ???) $ 1,314.83
TOTAL FOR WIFE'S IRA $ 3,029.07

AMERICAN SKANDIA LIFE VEST ANNUNITY
Prudential Annuity Service Center
Issue Date: 11/23/1999
AST Neuberger Berman Mid Cap Growth $14,859.22 $13,862.05
AST T. Rowe Price Natural Resources $18,363.75 $39,359.91
AST Neuberger Merman MidCap Value $31,613.48 $15,380.48
AST PIMCO Total Return Bond $20,756.57 $15,380.48
AST Small Cap Growth $ 5,123.81 $11,939.49
AST Small Cap Value $31,672.32 $15,380.48
AST Marsico Capital Growth $35,299.06 $39,359.91
AST William Blair International Growth $17,075.52 $19,225.60
AST Gartmore GVIT Developing Markets $ 5,304.43 $22,563.81
TOTAL AMERICAN SKANDIA
LIFE VEST ANNUNITY $180,068.16 $192,452.21

Seligman Municipal Fund SER INC
South Carolina $ 2,360.04 $ 1,825.16


GRAND TOTAL OF FUNDS INVESTED
WITH THIS “FINANCIAL ADVISOR”
WITH THE LARGEST MAJORITY OF
FUNDS INVESTED IN 1999 $215,020.06 $224,660.29

I don't have any specific comments on your funds or fund companies.

My general advice is
1) Determine what fees these funds charge. If it's more than ~0.5% then you should sell it.
2) Any funds you decide to flush from your portfolio should be done with a plan in mind. In otherwards don't jump until you know what you're jumping to.
3) Check TMF Champion Funds (they should provide a free 30 day trial if you ask nicely). You can see what they look for in a good fund.
4) Several fund companies provide a wide selection of low cost funds. I'm personally familiar with Vanguard, T Rowe Price, & Fidelity. I'm satisfied (maybe even happy!) with each of these fund companies.
5) Consider your portfolio strategy & risk tolerance. If you're already in retirement, you should have a certain percent of your portfolio allocated into short term cash reserves (e.g. CDs), intermediate funds (e.g. Bonds/REITs), and long term funds (e.g. stock funds). I would recommend that you determine what portion of your stocks should be allocated to small, mid, and large-cap plus international stocks.


Oh and I think your financial advisor sold you the funds which made them the most money!

Jim

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53047 of 75381
Subject: Re: Evaluation Date: 8/9/2006 10:35 PM
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LAC

Wow. That's some list of funds that you listed. And I can't even begin to answer your many questions.

I'd like to suggest however that you also post your info and questions over on the Vanguard diehards board. I suspect that you'll get lots of good feedback. Here's the link:

http://socialize.morningstar.com/NewSocialize/Asp/AllConv.asp?forumId=F100000015

Lethean

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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: 53048 of 75381
Subject: Re: Evaluation Date: 8/9/2006 10:57 PM
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Welcome, LACRetiree. Glad you could join us.

As you are a subscriber to Rule Your Retirement, note there is a separate board for those subscribers, and you are likely to get more personal attention over there. You might want to post some of your questions there. It is at--

http://boards.fool.com/Message.asp?mid=24448753

To answer your questions, first note that much of your funds are in AMERICAN SKANDIA LIFE VEST ANNUNITY. If you move your funds from there, there likely would be a surrender fee. You will want to know when the surrender fee ends. Then evaluate the performance of what you have compared to indexes. If the performance is poor, perhaps you should go ahead and move them, but I would be inclined to leave them there until after the surrender fee period if performance is not too bad.

You can move your annuity funds tax free to another annuity using a 1035 transfer. But you still must pay surrender fees if any are due and you can get hit for sales commissions on the new ones. Hence, it can be costly to change. But note that companies like Vanguard, TRowe Price, and Fidelity now have low fee annuities. That can be a good place to move your funds. But pick out ones with good performance compared to the indexes.

In the meanwhile, you might be able to change investments within your annuity to ones that perform better without incurring additional fees. That can be something to look into. But ask about the charges before you decide. And be sure the performance history of what you pick is favorable.

Your other investments seem mostly to be in mutual funds. Those can be checked on Morningstar.com. See how they rank in performance compared to the indexes and compared to other similar funds. If they are ranked above average, it might be OK to keep them. If they are below average, you probably want to move your funds to something else. The B funds are usually back loaded. That can make moving the funds costly, but if they are not performing you have to. Compare the performance you expect with the costs. If the payout is less than 3 years, change. If longer than 3 years, perhaps it will be OK to wait. (Morningstar will also tell you about other fees such as expense ratio and 12b-1 fees. Don't be surprised if these funds turn out to be costly compared to others.)

As to losses, there is no real way to avoid them. Today some of your funds are worth somewhat less than they were. The real quesion is whether they will recover or not. Your best indication of that is their performance history. Over time equities funds should be OK, but in the short term it can be bumpy. Right now high oil prices, the war in Iraq, and the problems in Lebanon are worrisome to the stock market. Some investors are being cautious. In the long term, things will probably be OK, but for now you may have to be patient. Small investors usually do best to select a diversified portfolio and hang on, though some will prefer to move their funds to money markets or fixed income investments until the future looks clearer. There is no easy answer.

Good luck.


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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53049 of 75381
Subject: Re: Evaluation Date: 8/9/2006 11:00 PM
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Jim

That was a very nice reply from you to LAC. I hadn't seen it.

And while LAC was waiting for responses here, I figured she might as well tap into another very good board over at the VanGuard Diehards. Most of them tend to be indexers. I don't use index funds myself, but it is an excellent board. I read it.

I'm still stunned by that list of funds.

Another thought that may or not make LAC feel a little better??? I wonder what the S&P 500 has done since 1999? I'll bet it's nearly scratch. Implying that ($10,000) may not be as bad as it sounds.

I'll be back with a report on that if I can find it.

Lethean









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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53050 of 75381
Subject: Re: Evaluation Date: 8/9/2006 11:13 PM
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Here is PGR vs S&P 500 from 6/30/99 - 6/30/06. Using the only way I know of to get the index return. Index return is basically zero in that time frame.

My only point being? - that LOTS of people took tremendous hits in the market over the last 7 years. It could have been much worse, LAC.

Good that you are taking control, though. I had my own learning experience.

Good luck. And I'll be watching with interest as the replies come in.

Lethean

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53051 of 75381
Subject: Re: Evaluation Date: 8/9/2006 11:19 PM
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Forgot to link it:

http://finance.aol.com/quotes/the-progressive-corporation/pgr/nys/charts?dr=CUS&compidx3=on&symbs=&ag=&index=&te=line&se=default&hs=on&vs=on&sym=PGR&exch=USA&state=1&settings=1&vl1=off&ss1=on&dv1=off&hs1=on&vs1=on&scs=0&daysb4=&fromdate=06%2F30%2F99&todate=06%2F30%2F06&freq=3&timeframe=100

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Author: theHedgehog Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53052 of 75381
Subject: Re: Evaluation Date: 8/10/2006 12:14 AM
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Hi LACRetiree,

My thoughts on your portfolio is to liquidate the whole thing and start over. Firstly, if your advisor is authorised to trade your funds for you, then revoke that authorization. While you're there, ask for a list of all the surrender fees and fee expiration dates that would be applicable on each of your funds. Examine it yourself and decide whether it's worth waiting for any of the fees to expire (if applicable). Then, sell as much as you can without losing a lot of money, but wait for any nearby expiration dates, if any. There may not be any surrender fees for your annuities. One place I looked said not, but I didn't pursue it.

In any case, unload it all. Leave the money in the cash or money market section of your IRA account for awhile. Spend some time at the Beginning Investers FAQ here on Fool at: http://boards.fool.com/Message.asp?mid=11107803. Take the time to go to the Fool's School at: http://www.fool.com/school.htm?ref=G02A06.

Then after all this is accomplished, you should be able to develop some realistic goals for your investments. You'll probably want to give some strong consideration to either index funds from Vanguard or index ETFs. You'll also probably want to consider putting 60% or 70% of your funds in a CD ladder spread out over the next 5 years or so. Doing this, you should be able to withdraw between 3% and 4% per year to take your trips, while still conserving most or all of the $215,000 (or whatever) that you are able to realise by liquidating your current investments.

I have to admit that I don't know a lot about IRA accounts, and what you're allowed to hold in them. It may also depend on where the account is held. You may even have to move the account somewhere else to get unfettered access to Vanguard index funds, etc. There are a lot of people who can help you with IRA specifics, but I suspect that they are overwhelmed by the sheer volume of your existing funds and perhaps an unwillingness to come out and tell you to dump it all.

In any case, I wish you the best, and I hope that this post hasn't offended you in any way. Good luck, and welcome to the first day of taking over your own financial future.

Hedge

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Author: clifp Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53053 of 75381
Subject: Re: Evaluation Date: 8/10/2006 5:32 AM
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Thanks Jim for reformating them

Ok I plugged about 1/2 of the Strategic Partners funds in Morningstar. It appears all of the Strategic Partners funds are closed to all investors. Some are merely medicore, with high expenses and average returns, other have hideous returns and high >2% expenses. They all unfortunately have a 6% defered load. You'll need to talk to your financial planner to understand if having been with these dogs for 6+ years to see if you can avoid the fee. Worse case you'll pay a bit over $1,000 to sell the $17K worth of funds. Not pretty but with a 2-2.5% expense ratio the lower expense of a low cost Vanguard or even a Fidelity fund should recover your sales expenses in about 3 years. Sell them unless waiting a year or so will eliminate the deferred load.

Second with ~20K you don't need anywhere near that number of funds. Frankly two will do Vanguard Total Stock Market and Vanguard total bond fund.

Unfortunately, the American Skandia annuity is serious money, and I don't understand annuities enough to give you intelligent advise. In some ways you advisor was brilliant, he made sure that he got paid first. Some of the sub-funds that it is invested in Pimco Total Funds, William Blair International are fine 5 star funds (although the returns should be better.. probably extra annuity fees.)

My best advice is that being an annuity is like getting in quicksand, if you struggle to get free of them you'll sink faster, if you do nothing you'll still sink. Find a friend with a stick to help you get out. Now this friend could be the people Motley fool, but you'll need to do a lot of research on such issues as the surrender charges, current expenses and options for changing annuity investments, in order to get intelligent advice by others.



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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53054 of 75381
Subject: Re: Evaluation Date: 8/10/2006 8:55 AM
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hedge

Wow. That was some great advice, IMO.

<<<My thoughts on your portfolio is to liquidate the whole thing and start over.>>>

Well, there you said it. :-) I agree completely.

<<<Leave the money in the cash or money market section of your IRA account for awhile.>>>

Agree. Once in cash, take your time.

<<<You'll probably want to give some strong consideration to either index funds from Vanguard or index ETFs. You'll also probably want to consider putting 60% or 70% of your funds in a CD ladder spread out over the next 5 years or so.>>>

Yep. I agree completely.

<<<I suspect that they are overwhelmed by the sheer volume of your existing funds and perhaps an unwillingness to come out and tell you to dump it all.>>>

I sure didn't want to say it. But I was hoping that someone else would step up.

Again, a really good post with solid advice.

Lethean




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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53055 of 75381
Subject: Re: Evaluation Date: 8/10/2006 9:06 AM
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Oh and I think your financial advisor sold you the funds which made them the most money!

You think! Gosh, your financial advisor should be taken out and hanged.


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Author: Jim2B Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53056 of 75381
Subject: Re: Evaluation Date: 8/10/2006 9:12 AM
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Lethean,

My thoughts on your portfolio is to liquidate the whole thing and start over.

I don't disagree that you eventually you should liquidate the whole thing and put it under "different management". However, I don't think you should do it immediately/rashly and perhaps you shouldn't do it all at once.

I've been burned in the past about making a sudden decision and executing it immediately without spending time to mull it over. The brute force (and immediate) means of doing things sometimes comes with a cost. Often I can think of better or less expensive ways to get to the end results I desire.

Anyway, I suggest that you first determine what your desired end state is. Then go back and try to figure out how to get there while minimizing transaction friction on the account. You might open an account at one of the major MF houses and ask them for *THEIR* advice on how to transfer funds. You should also speak to the various relevant TMF boards on performing the transfer.

I guess that I'm saying it looks like the transactions costs are very high, and that doing this right to minimize those costs may require patiences as well as a lot of DD.

Jim

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53057 of 75381
Subject: Re: Evaluation Date: 8/10/2006 10:08 AM
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Not pretty but with a 2-2.5% expense ratio the lower expense of a low cost Vanguard or even a Fidelity fund should recover your sales expenses in about 3 years.

Compared to having them under the mattress, maybe, but compared to paying 2.5% a year, you might actually be ahead by paying the surrender fee.

Think of it this way:

In a moment of not paying attention, you agree to enter a fund with a 6% load, declining 1% a year until at the end of 6 years you can get out without a fee.

But you are paying 2.5% a year in "management fees." (Ignoring compounding), at the end of 6 years you will have paid 15% in fees, rather than pay the 6% to get out now, and perhaps get into an index fund at 0.5% per year, or 3% at the end of those same six years. So the difference (again, ignoring compounding) is 15% loss by staying, versus 9% loss by leaving. (This assumes both funds have the same return, obviously, which will probably not be true, but then if you knew which one was going to do better, you wouldn't have this problem in the first place.) It also ignores the "time value of money", as you are taking the 9% hit now, versus stretching out the 2.5% per year hit over 6 years.

Anyway, I don't know how the surrender fees work on annuity products, and so that might be different. It's also worth noting that the "advantage" for leaving in my case above diminishes with time, because each year you are paying 2.5% in fees, but "getting back" 1% in surrender charges, and incuring another 0.5% in "index fund fee", so you're basically getting a 1% per year (remaining) advantage by leaving.



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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53058 of 75381
Subject: Re: Evaluation Date: 8/10/2006 10:09 AM
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Jim

Actually, Hedge wrote the following:

<<<My thoughts on your portfolio is to liquidate the whole thing and start over.>>>

But I agree with him. I wouldn't have the patience to do otherwise. It'd make me sick(er).

I think that the idea of getting a list from the broker of when some of those fees expire (back end loads) is a good one. Try to minimize the damage by using that list. Otherwise, it'd be real irritating to me to study or do any more DD on these outrageous funds.

It'd be a hopeless task to try to decide which funds are less worse than the others, IMO. I wouldn't be holding any of those funds more than one additional year - even to save a back end load. Just get me OUT.

Class M??? 6% load? Who knew about Ms?

Couple of additional thoughts:

1. I wouldn't want to be holding these funds during market turmoil or correction. Comfort and confidence in investments is especially important in that circumstance.

2. Things could get worse, a lot worse. This isn't a bad time to sell, IMO. Markets are about as high as they've ever been.

3. Fees may be costly for selling the funds. But the market itself could take 10% - 20% in pretty short order.

4. It may be worth a shot to complain to the brokers manager. Then put something in writing in the form of a complaint. Nothing done was illegal per se. But, I'm thinking that the brokerage manager may "volunteer" to provide some relief? Maybe waive 1/2 of the back end selling fees? Seems it wouldn't hurt to try.

5. Here's another chart showing Dow, NASDQ, S&P 500 over 7 years. It's not pretty either.

http://finance.aol.com/quotes/the-progressive-corporation/pgr/nys/charts?dr=CUS&compidx1=on&compidx2=on&compidx3=on&symbs=&ag=&index=&te=line&se=default&hs=on&vs=on&sym=PGR&exch=USA&state=1&settings=1&vl1=off&ss1=on&dv1=off&hs1=on&vs1=on&scs=0&daysb4=&fromdate=06%2F30%2F99&todate=06%2F30%2F06&freq=3&timeframe=100

It tells me that most people are probably BE over those 7 years, even if they indexed. And with all those loads and ongoing fees, LAC is probably in better shape than she thinks - all things considered.

Regards ... Lethean












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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53059 of 75381
Subject: Re: Evaluation Date: 8/10/2006 1:11 PM
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A book that is worthwhile reading is "The Bogleheads' Guide to Investing"

http://www.amazon.com/gp/product/0471730335/ref=sr_11_1/103-9784238-7695860?ie=UTF8

Very few professionally managed mutual funds can beat a similar index fund after expenses over the long term and most of the ones that do are probably just randomly lucky. Over the long term you can do just fine with a handful of index funds(both stocks and bonds) where your only big decision will be how to allocate the funds between the funds.

As previously mentioned, be sure you know all the tax and fee consequences of selling any of your current assets. Sometimes even though something is not an ideal choice, it is better to just stick with it because it is too expensive to change.

Greg


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Author: theHedgehog Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53060 of 75381
Subject: Re: Evaluation Date: 8/10/2006 2:39 PM
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Second with ~20K you don't need anywhere near that number of funds. Frankly two will do Vanguard Total Stock Market and Vanguard total bond fund.

Before investing in a bond fund, I'd suggest going over to the Fixed Investment board and having a chat with the guys and gals over there. Bond funds are not attractive in an environment where interest rates are likely to go up if they go anywhere. This is especially true for funds holding longer-term bonds. CDs or Money Market funds or even short- to medium-term bonds are a more appropriate vehicle for the non-equity portion of one's portfolio than bond funds.

Hedge

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53061 of 75381
Subject: Re: Evaluation Date: 8/10/2006 3:03 PM
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>> Bond funds are not attractive in an environment where interest rates are likely to go up if they go anywhere. This is especially true for funds holding longer-term bonds. CDs or Money Market funds or even short- to medium-term bonds are a more appropriate vehicle for the non-equity portion of one's portfolio than bond funds. <<

Indeed. In fact, in my asset allocation I ONLY use short-term bond fund indexes regardless of the interest rate environment. In The Intelligent Asset Allocator, Bill Bernstein shows very convincingly that long-term returns of long-term bond funds are just *barely* better than short-term bond funds, but with several times the volatility. In other words, long term bond funds offer very little additional reward with a LOT more risk, and thus aren't a good bet in a somewhat defensive asset allocation model where seeking an "efficient frontier" is concerned.

#29

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Author: theHedgehog Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53062 of 75381
Subject: Re: Evaluation Date: 8/10/2006 3:12 PM
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Indeed. In fact, in my asset allocation I ONLY use short-term bond fund indexes regardless of the interest rate environment.

#29,
Well, my point was that bond FUNDS are a bad bet, no matter what the maturity, unless you are in a falling rate environment. Right now, you can get CDs out to 5 years for over 5%. IMHO, those are great deals as compared to bond funds. If you buy a bond fund now and rates go up, your principal will go down correspondingly. Not so in a CD. You would have more cash in a bond fund if rates went down, but, realistically, in a 5% environment, that's not too likely to happen. Just my opinion again, but if you have money you want in a bond allocation, either buy CDs or actual bonds, not bond funds.

Disclaimer: be sure you understand, really understand, the early redemption provisions of any CD you purchase.

Hedge

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Author: clifp Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53088 of 75381
Subject: Re: Evaluation Date: 8/11/2006 12:35 AM
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Well, my point was that bond FUNDS are a bad bet, no matter what the maturity, unless you are in a falling rate environment.

A couple of points of clarification. I am not big fan of bond funds either for reasons others have stated. The important point is with <$20,000 in IRA. You really don't need anywhere near the number of funds you have. Mutual funds provide diversification, haveing ten funds doesn't provide ten times the diversification. My portfolio is more than 10x Lethan but contains a fraction of the number of funds.

The money in your IRA invested in Strategic Partner isn't large enough that what you do is going to materially effect your retirement. For simplicity sake selling all Straegic partner funds and sticking it in the couch potato portfolio (i.e. 50% Vanguard Total Stock Market 50% Total Bond fund) may well be sub-optimal, but it can't be worse than it is currently invested. Don't sweat the details on this (which SP funds is good, CD ladder vs Bond fund etc.).

Instead concentrate your energies on fully understanding your options regarding the 180K in the annuity. That amount is large amount that it will affect the quality of your retirement. What to do with the annuity depends on the details of your annuity, which Lethan need to research and communicate. I have confidence that collective wisdom of the fools can help her pick the best options.

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53091 of 75381
Subject: Re: Evaluation Date: 8/11/2006 8:58 AM
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clifp

<<<What to do with the annuity depends on the details of your annuity, which Lethan need to research and communicate.>>>

LACRetiree was the original poster, not me. So I'll not be researching that annuity. :-) Thank goodness.

But I agree with the substance of your post. Mutual funds are a relatively minor matter compared to $$$ in the annuity.

Lethean







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Author: RetiredVermonter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53251 of 75381
Subject: Re: Evaluation Date: 8/20/2006 4:25 PM
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Hedge:

I loved your advice. You emphasize a point I have tried to make over and over:

NEVER... repeat... NEVER entrust all your money to somebody else to invest! Read... learn... study... and get hold of your OWN finances.

When I left the workplace in my late 50's, I had a 401k which I rolled over into an IRA (with Fidelity). I had been dabbling with investing for a few years beforehand, but seriously tackled it after I was unemployed. Thankfully, that was about 1999-2001 and the market did wild things, which enabled me to buy and sell some stocks at very juicy profits.

Remember, within an IRA, you can buy, sell, and even day trade (be very careful with that...) with NO capital gains taxes, though commissions can eat into your profits, too, if you're not careful. Make a million dollars or more, if you can. You'll pay nothing until you take some of it out after you retire and then just pay income taxes, which can be very small, IF you have deductions and live at a lower rate than before (as we do).

Vermonter

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