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Subject:  Re: ROTH IRA -Investment company of america Date:  11/21/1998  2:24 AM
Author:  BillEuclid Number:  6693 of 100405


You are not getting ripped off. You asked a Financial Planner for help and he gave it to you, and the commission is his just pay. You could have chosen a fee-based FA and paid a few thousand dollars for his help, and he would have put you into say Vanguard's no-load index fund. Because you chose a commission-based FA, he gets his few thousand dollars from the 5.75% commission, which is why he won't recommend Vanguard. For instance, if the total amount of your 401k was only $40,000, you only paid $2300 for the advice.

Hopefully it was worth the $2300. If you felt it was, don't complain. If you felt the advice was not worth much, find another FA who is more helpful.

Even better would be to learn to manage your own money so you will not have to pay anyone for advice. I personally would never pay a sales load, because I think I can make decent investment decisions on my own. But many people need to have someone authoritative tell them it is a good idea to invest in an index fund, and of course they have to pay for that hand-holding -- dearly.

If you are fairly sure that the Vanguard Index 500 is a good choice for you, don't go back to that FA.


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