The problem is......that you can data mine anything you want to prove anything you want.

The initial front load looks smaller and smaller over the long term as the money grows.  However, its not just the initial load, its that missing money that never compounded along with the rest.  This is what Bill means when he says your down 5.75% on your balance forever.  Not just the initial contribution, but the running balance!

OK, so maybe you think a particular AF is so fabulous that it will more than make up for the load in out performance, the problem is you, cant buy past performance, only present and future!

Anyways this is all old news and many here are tired of discussing loads.  You will find passionate discussion about active vs passive, but when it comes to loads, the consensus on most of these boards are generally the same.....DONT BUY THEM!

I know, I know, I am sounding like a Diehard!  However, I am not encouraging active over passive or vice versa, but rather, just encouraging not buying loaded funds, no matter how great they seem.  Dont get me wrong, I love AF, for my existing money, but thats it.  A true Diehard, would of moved that money a long time ago due to the outrageously high ER's of AF funds :o)  (thats a joke!)  For my existing money with AF (invested before I had a clue) or someone able to buy load free, I think AF may have a fighting chance, even if the ER's are not as low as an index and not as tax efficient.  I might change my mind as I gain more experience.  That debate rages on.

Ofcourse, I say NO loaded funds, with one caveat.  That she is willing and able to educate herself about investing.  She will need to become familiar with the history of the market, etc, etc, to prevent her from doing really stupid things.  Setting her up at Vanguard may be her best option.  Otherwise, have her give Al a call :o)

I would tread lightly with your young relative.  Help her understand Financial Planning and the importance of saving, but for specific investments just help her understand the options explaining the pros and cons, but let her make the decisions.  She can always fire an advisor whether its the advisors fault or just her lack of understanding.  However, how does she fire you?  I am very careful with my relatives.  None of them really give a hoot about this stuff.  At some point, whatever plan you set them on will not look good, or something else will look better.  They will not undersand the nature of things.  I choose not to be the scapegoat.  Family and Money, a real tough balance!

JMHO, I am still a newbie in the big scope of things here.

I do realize that this is NOT all new to you KCallie and not really what you were asking,  but the fact your considering loaded funds at full load perplexed me so I hope I have been somewhat helpful.  IF not to you, someone else out there.  Nope, probably just preaching to the choir.  I love this AF forum and its been really dead lately, what can I say, I guess I needed something to write about!  Sorry for rambling.

Good Luck to your relative, their lucky to have you.

Brian

 

 

 

 

hurleyhuckster:

The problem is......that you can data mine anything you want to prove anything you want.

No you can't.  You can only fool those who don't understand statistics. People who understand statistics can't be fooled.  

All I did was calculate the numbers to account for the American Funds load because it is not a fair comparison to compare $10k investment in both when you have to pay the AF load.

hurleyhuckster:

The initial front load looks smaller and smaller over the long term as the money grows.  However, its not just the initial load, its that missing money that never compounded along with the rest.  This is what Bill means when he says your down 5.75% on your balance forever.  Not just the initial contribution, but the running balance!

I get that point, but the reality is that at least with VIVAX and Washington Mutual, that "missing" money didn't effect total return.  And it looks like you can invest in the short term bond fund at 2.5% and then switch over to another fund to cut the load.

hurleyhuckster:

 

OK, so maybe you think a particular AF is so fabulous that it will more than make up for the load in out performance, the problem is you, cant buy past performance, only present and future!

True, but if management of a fund is stable, past performance does give you some info to help you decide if the investment is right for you.

hurleyhuckster:

Anyways this is all old news and many here are tired of discussing loads.  You will find passionate discussion about active vs passive, but when it comes to loads, the consensus on most of these boards are generally the same.....DONT BUY THEM!

If I weren't already invested in them and am only paying the 1.5% load, I would be more motivated to look at no-load funds.  The problem for me is that I have already researched these funds and like what I see so I don't have the incentive to try to research other funds at least for myself.  There are only so many hours in the day, you know?

hurleyhuckster:

Ofcourse, I say NO loaded funds, with one caveat.  That she is willing and able to educate herself about investing.  She will need to become familiar with the history of the market, etc, etc, to prevent her from doing really stupid things.  Setting her up at Vanguard may be her best option.  Otherwise, have her give Al a call :o)

Yes, she will need to educate herself, the problem is that she doesn't have the interest in this at this point in her life.  I am trying to help get her started.

I agree with you on some points and not on others, we will just have agree to disagree.

You probably cant tell from my recent string of posts, but I am actually quite fond of American Funds, which is why I keep my stash with them. 

How bout a nice conservative balanced fund to get her started.   Vanguard, Dodge & Cox?

I think low volatility is important, so she does not get spooked.  She can adjust her allocation to more stocks as she develops her risk tolerance. 

Even 2.5% load is too much, its just not necessary.  Besides, having her constantly switching these funds to do the bond fund trick may be more effort than she wants right now.

It can frustrating trying school these young'ns.  You cant tell em crap, and they will get it when they get it, not when we want them to.

So you have the "not enough hours in day" dilemma too huh?

We need to stop posting so much here :o)

If I was only on welfare, then I could play here all day long.

Brian

hurleyhuckster:

How bout a nice conservative balanced fund to get her started.   Vanguard, Dodge & Cox?

I am leaning toward both of those fund families, but I will have to find the time to research them. 

Statistics are manipulated constantly to show the results desired. Few people have the ability to see through this.

I have both of these funds myself, in different accounts, and still like both of them but for different reasons. Debate of outcome aside, for a new investor I would stongly recommend Vanguard because their service is very user friendly. The information on every available aspect of her investment(s) and lots of research material for related subjects will be available to her online if/when she becomes interested. If she ever has a question she can get on the phone and call Vanguard directly and get an actual intelligent human being (rare in this day and age of "automated service" and call centers). Also, being a no load fund she will be able to add to it easily when the time comes, even in small amounts.

I was wondering about RWMFX too -- through TIAA as a possible complement to or substitute for the stock account.  I also hold RWIFX.  The 3 stars for RWMFX gave me pause, but the expense ratio of .37 looks pretty good, even compared to the stock account (.56).  I am doing some minor and gradual rebalancing.  Thoughts?   

jm,

If you can get AF's, without paying the load, with expense ratios like that!

Whats not to like?

Brian

KCallie:  Thank you for your reply. Yes, AWSHX has done well for me over the years. I recently started taking the dividends and cap gains and purchasing other things with the money.  M* keeps chainging on that fund, (Including the stars) but it was large cap value and then a blend and now back to value? The broker is long gone, but the fund remains with me. The expense ratio is .60 last time I checked. Basically a steady eddy.

 

KCallie, perhaps you didn't see my reply to you about AWSHX on the Diehard board. I have pasted it above for you to read.

AWSHX is not very tax efficient in a taxable account and it does carry a load, which is why Vanguard or Fidelity would be a better place for your relative. Had I not had a broker (back in the day) I would have made better use of this money by buying Dodge Cox, Vanguard or Fidelity and not paying a load.

 

LynnC 

LynnC:

AWSHX is not very tax efficient in a taxable account and it does carry a load, which is why Vanguard or Fidelity would be a better place for your relative. Had I not had a broker (back in the day) I would have made better use of this money by buying Dodge Cox, Vanguard or Fidelity and not paying a load.

But what my calculations showed is that if you held AWSHX in a tax-deferred account, you would be no worse off than if you bought VIVAX even with the load.  At least for the last 10 years anyhow.  If it didn't take so long to do the calculations by hand, I would have done them for 20 years.

What's the plan for your relative using the "big picture"? Is this person going to use a broker?  Does he/she want funds scattered all over the place or will they start looking towards retirement now and have a good AA set up?

I wish I would have had a Vanguard plan when I first started investing.  It has taken me quite awhile to round up different IRAs and