Ask Terry Questions Changing IRA funds.

Changing IRA funds.

By Terry Savage on March 29, 2017 | Investments

I am age 62 and have $100,000, in an IRA of all American Funds (100% stock market) at Ameriprise. I want to lower my risk and transfer the money to Vanguard in a balanced fund. I was considering splitting it between the Wellington and the Wellesley. Can you recommend a balanced fund at Vanguard? Thank you very much. cindy

Terry Says

OK, first things first.  Do you know that you likely paid a significant upfront commission to buy these American funds?   Until last fall, investors paid a 5.75% up-front fee to invest in American Funds.  (They are the third largest fund management company after Fidelity and Vanguard.)  Starting last fall, you can purchase these funds with no up-front charge (and no advice about which ones to choose) if you ROLL YOUR IRA to a brokerage account at either Fidelity or Schwab.   Once there you can choose among lots of funds -- with no upfront costs.   Once there, you can choose much more conservative funds -- with no cost to buy them. They could be other American funds or funds from any major investment company. Since you did your own research about the Vanguard funds of your choice (and Vanguard does have an excellent equity-income fund) you might just want to roll the entire account and choose your own funds, without paying a commission.  Depending on the size of your IRA, there may be a small annual account fee to hold your account at either of these firms.  Ask about that in advance. (It's likely less than the fees you are paying at Ameriprise each year, beyond the up-front commissions.)  And be sure the IRA rollover is handled correctly.  Fidelity and Schwab are experts at this.



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