Ask Terry Questions Did my mutual funds cost too much?

Did my mutual funds cost too much?

By Terry Savage on September 30, 2018 | Investments

In March 2013 we invested $30,000 in a mutual fund at our bank. It was the American Balanced Fund (Class A) ABALX open end fund and have reinvested all dividends. Today it is valued at just over $47,000. We have over $160,000 in a separate savings/checking account and would ask you if we should continue with what we have done so far or is there a better investment option at this time that we should consider ?

Terry Says

In my opinion, you shouldn’t buy ANY of those share classes! Instead you should go directly to Fidelity.com or Vanguard.com and buy mutual funds that have NO COMMISSIONS, either up-front or at the end. And they have the absolute lowest fees along the way!

Please read my recent column on costs of mutual fund shares to understand just how costly these fees can be to your ultimate wealth!

And how did I know you paid too much in fees? The tipoff is that you said you purchased them through your BANK! Well, banks don’t sell mutual funds. But investment firms inside banks DO sell funds — and always at very high commissions!

I really wish I could save everyone from being suckered like this. Just buy your mutual funds directly from the fund company– Vanguard, Fidelity, T. Rowe Price, American Century. You pay no commissions and you get the lowest annual management fees.

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