Mutual funds — the real cost?
My broker wants to have me in Vanguard CRSP 50% Equity/50% Fixed Income because I’m 66 and it’s less risky than what I currently have. I remember, for some reason, you having a strong stance on mutual funds. Would you please remind me what you liked or didn’t like about them? I respect your opinion.
Thank you!
Terry Says
First, I’m a big fan of mutual funds as a way to diversify your investments. But not ALL mutual funds! I want the low-cost ones. And brokers don’t sell low-cost funds. They may sell well-known Fidelity funds, for example, but they choose a “share class” that has high annual management fees, which gives them an ongoing “commission.” And you’ll never know that — unless you ask!
SO, Ask your broker if he/she is recommending the least expensive “A” shares– with no upfront commission and miniscule annual fees (less than half of one percent). Bet the broker says NO!
In that case, call Fidelity or Vanguard and open an account yourself in the fund — the least expensive way! and if it’s an IRA account, they can transfer it directly so you don’t have a withdrawal and taxes to pay.
Yes, it’s worth paying for good advice about de-risking — but you need to know how much you are paying!
PS In the next week or so, go to www.FriendsTalkMoney.org and listen to the podcast we just taped on that very same subject!
