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: 2/21/2006 Subject: thinking of online investing with mutual funds
Question Hello Mr. Boroson,
First, thank you for your service! I'm 53 years old and have had a financial advisor investing my hard earned money for about ten years now. I guess like too many people I just trusted her and I didn't ask questions (simply because I didn't know enough to ask. Anyway, I don't think she ripped me off, but she constantly buys and sells and I know they are all loaded funds and I'm paying her over $1200 a year JUST to move my money around (that could pay for my kid's college books)!
I'm somewhat of a novice, never trading online before; I'm thinking of using Scottrade. I would invest in mainly no-load mutual funds. Around a 55% equities; 30% bonds; 15% cash equivalent. Now, how do you know which are no-load as opposed to loaded? Do you invest a different mix for a retirement 401 or equivalen? Any advice would be greatly appreciated!!!
Answer Dear Glenn:
In my opinion, you are indeed being ripped off.
Your financial adviser must be desperate for money.
You can generally tell that a fund has a sales charge by checking whether there's an initial after the name, like A, B, or C.
A better way: Did you buy it through a stockbroker? Through any intermediary? If so, there is probably a sales charge--definitely with a stockbroker. If you bought shares directly from a fund, it's probably a no-load fund.
My advice for you is: Fire your financial adviser.
Subscribe to a newsletter that regularly provides a model portfolio of mutual funds. Morningstar FundInvestor would be a good choice. It offers three portfolios, of varying risk, and you might go with the one in the middle. The cost of a yearly subscription is around $100, which is well worth it.
The three portfolios have done well enough, but not surpassed portfolios of index funds.
For a fund of index funds, consider Vanguard Balanced Index. That one fund should do better than the combination of load funds that your financial advisor has been foisting on you.
For retirement, you might invest in bonds and high-yielding stocks, putting low-yielding stocks into your personal portfolio. Reason: Taxes on capital gains these days are small.
