AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
Expert: Warren Boroson Date: 4/18/2007 Subject: IRA advice needed
Question Hi Warren, thanks for volunteering your time. We had a financial advisor over the house on the weekend to talk about our IRA. He suggests putting it in this newer Oppenheimer allocation fund. I think it’s a fund comprised of other funds? The class A has a 5.75% front-end load & 1.26% operating expenses. He keeps saying it’s better than leaving the money in CDs & we’ll never see the fees on our statements.
I just talked with a lady at work about this. She says she would never invest in such a fund & that no-load funds are the way to go. She gave me a printout of a Fidelity fund, no load with only .67% operating expenses. Now we’re really confused because the financial advisor still strongly recommends his fund while this lady at work strongly recommends no-load funds. Any advice would be crucial & greatly appreciated, as we need to make up our minds soon.
Answer Dear Greg:
Listen to the lady at work. She's right. Buying a new fund is usually not a good idea. Buying a load fund with high expenses is also not a good idea.
I feel sorry for that fellow selling that Oppenheimer fund, but let him find other people to pay him commissions--not you.
What you should do is learn more about mutual funds. Go to a library and study the publication Morningstar Mutual Funds. (The reference division should have it.) In the thinner of the two publications, you will find a list of recommended mutual funds. And a number referring you to a page in the thicker book that gives lots of details about those recommeded funds. Look for no-load funds whose strategies appeal to you--and whose style (large vs small, growth vs value) are appropriate to you.
My favorite family of funds is Vanguard.
If you are new to investing in mutual funds, you might check into Vanguard Balanced Index, Vanguard Star, a Vanguard life-strategy fund or a Vanguard target-retirement fund.
The Fidelity fund that your friend recommended might also be a good choice. Look it up in Morningstar and see what Morningstar recommends.
And give that lady at work a sincere thank-you for giving you good advice.
