No. of Recommendations: 0
Greetings, Pam, and welcome. You asked:

I am a new investor. I recently rolled over a traditional I.R.A. from a credit union to a Roth I.R.A in the Pioneer Balanced Fund since I did not have much in it. My financial advisor suggested that I do this because I would earn more interest. Even though I read that no-load accounts are the way to go, the one I invested in is a Class A load account. I knew that there was a 5.75% fee for rolling over the account, but I did not realize who got this fee. I called the Pioneer Company. They explained that they received just .75% The other 5% goes to a company that my financial advisor represents. This will happen every time I make a transaction which means that amount will be taken out when I want to add to the account or take it out when I am older. I planned to keep this account at least 7 years to avoid any penalties of rolling it over into something else.

I am disgusted with myself for doing this since I have read that load funds are not any better managed than no-load funds over all even though my financial advisor tried to convince me that they are.

My question is: should I keep the I.R.A. that I have and roll it into a no-load one when I can even though it will cost me in some penalty fees?I have about $10,000 in the fund. Or, should I let it stay there not adding to it and open up a 2nd I.R.A. in a no-load fund someplace else?

I'm sure your financial advisor is pleased with this arrangement, but you have every reason not to be. These days a 5.75% load is utterly unconscionable. There are plenty of no load balanced funds out there that will beat this poor fund. A quick run of my data base reveals 392 balanced funds, and in terms of 12-month return as of July 31 Pioneer comes in at number 352 at a whopping 2.53%. Note that that return is before the load, so in effect anything deposited lost after inflation. I found 177 balanced funds with no front-end or back-end loads and no redemption fee that beat that abysmal performance.

Like others, I'm puzzled by your concern over a penalty if you choose to move this money. That's something you'll have to check out because there is no back-end load or redemption fee that I see. For now, I would let the money sit while you verify that and decide where else you would like to move it. And for sure, don't add another red cent to that account.

As others have suggested, you may want to take some time to learn a little more about The Motley Fool and investing before you do anything. You have wandered into a forum that believes you, as an individual, can do far better for yourself than most professional money managers. Provided, that is, you take some time to learn a few basic investment concepts and do some self-examination to see where you fit on the risk tolerance scale. Therefore, why not take some time now -- not later -- to be sure about what you want to do. Start first by reading The 13 Steps to Investing Foolishly, which you can access from the main, opening screen to The Motley Fool. They will suggest some important things you should consider. Then I suggest you toddle over to your local library, discount bookstore, or even here in the Fool Mart, and pick up some easily read, easily understood, inexpensive texts that will thoroughly explain how to invest in stocks using some simple systems that will take but an hour per year of your time (if you're slow) yet produce returns that put the majority of professional money managers to shame. I suggest and commend the following to you: "Beating the Dow" by O'Higgins; "The Dividend Investor" by Petty and Knowles; "The Motley Fool Investment Guide" by the Gardner brothers; "One Up on Wall Street" by Lynch; and "What Works on Wall Street" by O'Shaughnessey. All are well worth their low cost and the small investment in time it takes to read them. Get them and read them. You'll be glad you did.

While you're doing all that, also take some time to explore the various nooks and crannies of Fooldom to see what others are doing and what they're discussing. In the process, you'll gain a wealth of knowledge and information that will serve to clarify how you want to approach this very personal issue. Don't be afraid to ask a question anywhere in Fooldom. Folks around here are great about answering questions and clearing up misunderstandings.

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