Investement questions regarding my American Funds
Investement questions regarding my American Funds
I am with American Funds and I am seeking some advise about moving away from American Funds to either Vanguard or Fidelity? The bulk of my money with American Funds is with the following class A funds.
American Balanced Fund
American Funds Money Market
Small Cap World Fund
Tax-exempt Fund of California
The Income Fund of America-529
I feel that my money has been stagnate and I have lost money on my 529. Just seeing if it's a better idea for me to leave American and go to Vanguard for index funds? I have been told over and over how American is one of the best funds to be with. I have short and long term goals that I want to achieve and I don't know if I can meet my short term goals with American Funds as people have told me that American Funds are for the long haul.
Any advice on this is appreciated.
American Balanced Fund
American Funds Money Market
Small Cap World Fund
Tax-exempt Fund of California
The Income Fund of America-529
I feel that my money has been stagnate and I have lost money on my 529. Just seeing if it's a better idea for me to leave American and go to Vanguard for index funds? I have been told over and over how American is one of the best funds to be with. I have short and long term goals that I want to achieve and I don't know if I can meet my short term goals with American Funds as people have told me that American Funds are for the long haul.
Any advice on this is appreciated.
Welcome to the forum!
Class A funds have a "load" - a commission you pay your salesperson. That means some of your money does not get invested for you. Vanguard does not sell any funds with a load.
American Funds have high expense ratios. Vanguard funds do not.
There are products on the market that can be judged, at least to some extent, but the price you pay. This is not true for stocks and bonds. There is nothing wrong with American Funds - yes they are good investments. But they cost too much and the extra cost does not benefit you.
Class A funds have a "load" - a commission you pay your salesperson. That means some of your money does not get invested for you. Vanguard does not sell any funds with a load.
American Funds have high expense ratios. Vanguard funds do not.
There are products on the market that can be judged, at least to some extent, but the price you pay. This is not true for stocks and bonds. There is nothing wrong with American Funds - yes they are good investments. But they cost too much and the extra cost does not benefit you.
Link to Asking Portfolio Questions
To answer your question, below is my AF portfolio break down
*American Balanced Fun = 3 year short term goal. Monthly payments go too.
*American Funds Money Market= Emergency Cash
*Small Cap World Fund= $200 and just sitting, not doing anything with it.
*Tax-Exempt Fund= 3 year short term goal.
*Income Fund of America= 529
*Investment Company of America=529
*AMCAP Fund= IRA (no payments being made to this, small amount)
*The Growth Fund= IRA (no payments being made to this, small amount)
*The Income Fund= IRA (no payments being made to this, small amount)
*AMCAP Fund=Roth IRA (no payments being made to this, small amount)
*The Growth Fund= Roth IRA (no payments being made to this, small amount)
The other bulk of my money is in a 401(k) at ING.
I got all this allocation from my financial adviser at American. All I want to know is if I should stay with American or move to Vanguard and get more for my money. I don't feel at times that my FA at American has my best interest and I believe I am getting hit with fees at American even after the load fee's I already paid for.
*American Balanced Fun = 3 year short term goal. Monthly payments go too.
*American Funds Money Market= Emergency Cash
*Small Cap World Fund= $200 and just sitting, not doing anything with it.
*Tax-Exempt Fund= 3 year short term goal.
*Income Fund of America= 529
*Investment Company of America=529
*AMCAP Fund= IRA (no payments being made to this, small amount)
*The Growth Fund= IRA (no payments being made to this, small amount)
*The Income Fund= IRA (no payments being made to this, small amount)
*AMCAP Fund=Roth IRA (no payments being made to this, small amount)
*The Growth Fund= Roth IRA (no payments being made to this, small amount)
The other bulk of my money is in a 401(k) at ING.
I got all this allocation from my financial adviser at American. All I want to know is if I should stay with American or move to Vanguard and get more for my money. I don't feel at times that my FA at American has my best interest and I believe I am getting hit with fees at American even after the load fee's I already paid for.
If you are paying a load, are paying higher expense ratios than you would pay for a just as good or better portfolio elsewhere, and you are paying your advisor a fee, then you have three good reasons to move. Note that if you really are paying your advisor a fee, you should not also be paying a load and/or 12b-1 costs in your funds. Are you sure what your fees are?abovemsl wrote:
I got all this allocation from my financial adviser at American. All I want to know is if I should stay with American or move to Vanguard and get more for my money. I don't feel at times that my FA at American has my best interest and I believe I am getting hit with fees at American even after the load fee's I already paid for.
Above,
Most people on this forum, myself included, prefer Vanguard to other investment options, and will recommend that you make the switch.
You should realize that both Vanguard, American and everybody else are investing into the same universe of US and foreign assets. The way Vanguard beats everybody else is by reducing the overhead to the bare minimum. Some Vanguard funds have expense ratios of 0.07%, that's $7 for $10,000 invested per year. Some of the funds you mentioned have ratios of 0.60%, and some go above 1%. You can, and should, capture that difference, along with the 5.75% sales load on future investments.
Spend some time on the Wiki here, ask around in the forum, read the books, formulate your investment strategy and stick to it.
Most people on this forum, myself included, prefer Vanguard to other investment options, and will recommend that you make the switch.
You should realize that both Vanguard, American and everybody else are investing into the same universe of US and foreign assets. The way Vanguard beats everybody else is by reducing the overhead to the bare minimum. Some Vanguard funds have expense ratios of 0.07%, that's $7 for $10,000 invested per year. Some of the funds you mentioned have ratios of 0.60%, and some go above 1%. You can, and should, capture that difference, along with the 5.75% sales load on future investments.
Spend some time on the Wiki here, ask around in the forum, read the books, formulate your investment strategy and stick to it.
abovemsl,abovemsl wrote:To answer your question, below is my AF portfolio break down
*American Balanced Fun = 3 year short term goal. Monthly payments go too.
*American Funds Money Market= Emergency Cash
*Small Cap World Fund= $200 and just sitting, not doing anything with it.
*Tax-Exempt Fund= 3 year short term goal.
*Income Fund of America= 529
*Investment Company of America=529
*AMCAP Fund= IRA (no payments being made to this, small amount)
*The Growth Fund= IRA (no payments being made to this, small amount)
*The Income Fund= IRA (no payments being made to this, small amount)
*AMCAP Fund=Roth IRA (no payments being made to this, small amount)
*The Growth Fund= Roth IRA (no payments being made to this, small amount)
The other bulk of my money is in a 401(k) at ING.
I got all this allocation from my financial adviser at American. All I want to know is if I should stay with American or move to Vanguard and get more for my money. I don't feel at times that my FA at American has my best interest and I believe I am getting hit with fees at American even after the load fee's I already paid for.
livesoft's question is an important one. Do you know what your allocation to stocks vs bonds is for the short term goal and for the long term goal--don't add in 529. We could figure out your asset allocation if we knew the percentages of your funds, but without percentages, the fund list doesn't provide important information.
One thing I see--you have the balanced fund for a goal of three years. That fund is 64% stock. We recommend no stocks at all for goals of 5 years or less.
Yes, moving to Vanguard is a good move; however, stocks have not done much in the past decade, and most recently volatility has been extreme. Using Vanguard isn't going to solve those problems because short term rates are almost nothing and we can't get what the market does not provide. The benefit of low cost is well documented, but it takes time to see the results. Most here would consider paying a load unthinkable. If nothing else, we like to keep our earnings.
John Bogle“The great irony of investing, then, is not only that you don’t get what you pay for. The reality is quite the opposite: You get precisely what you don’t pay for.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Is this what you are looking for regarding my asset allocation?
American Balanced Fund Asset Mix:
as of July 31, 2011 (updated monthly)
U.S. Equities 61.2%
Non-U.S. Equities 6.5%
U.S. Bonds 25.2%
Non-U.S. Bonds 2.9%
Cash & Equivalents 4.2%
Tax-Exempt Fund Asset Mix:
Asset Mix
as of July 31, 2011 (updated monthly)
U.S. Equities 0.0%
Non-U.S. Equities 0.0%
U.S. Bonds 96.0%
Non-U.S. Bonds 0.0%
Cash & Equivalents 4.0%
Growth Fund Asset Mix:
Asset Mix
as of July 31, 2011 (updated monthly)
U.S. Equities 74.6%
Non-U.S. Equities 19.3%
U.S. Bonds 0.0%
Non-U.S. Bonds 0.0%
Cash & Equivalents 6.1%
AMCAP Fund Asset Mix:
Asset Mix
as of July 31, 2011 (updated monthly)
U.S. Equities 87.5%
Non-U.S. Equities 2.1%
U.S. Bonds 0.0%
Non-U.S. Bonds 0.0%
Cash & Equivalents 10.4%
American Balanced Fund Asset Mix:
as of July 31, 2011 (updated monthly)
U.S. Equities 61.2%
Non-U.S. Equities 6.5%
U.S. Bonds 25.2%
Non-U.S. Bonds 2.9%
Cash & Equivalents 4.2%
Tax-Exempt Fund Asset Mix:
Asset Mix
as of July 31, 2011 (updated monthly)
U.S. Equities 0.0%
Non-U.S. Equities 0.0%
U.S. Bonds 96.0%
Non-U.S. Bonds 0.0%
Cash & Equivalents 4.0%
Growth Fund Asset Mix:
Asset Mix
as of July 31, 2011 (updated monthly)
U.S. Equities 74.6%
Non-U.S. Equities 19.3%
U.S. Bonds 0.0%
Non-U.S. Bonds 0.0%
Cash & Equivalents 6.1%
AMCAP Fund Asset Mix:
Asset Mix
as of July 31, 2011 (updated monthly)
U.S. Equities 87.5%
Non-U.S. Equities 2.1%
U.S. Bonds 0.0%
Non-U.S. Bonds 0.0%
Cash & Equivalents 10.4%
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- Joined: Wed Mar 09, 2011 1:32 am
- Location: San Jose
I moved my American Funds IRA to VG a few mos ago. Since then, I've gradually moved to 3 index funds. I had enough in my IRA MM acct so as to allow me to sell an American Fund and buy an index(s) in a similar ratio of equities/fixed income the same day. Sell low, buy low or the converse. The transfer process was straight forward. I'm glad I did it. I've already lowered my costs from about 1.21% to 0.22.
Motodoc42
Motodoc42