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Bull

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  1. All of these points are very good, Tony, and my wife and I have already or previously taken these points into consideration. I have a 403(b) plan through my job with the American Funds, while my wife who is self-employed does not have an employer plan. We both invest through several mutual funds through IRA's and Roth IRA's with different fund companies. We both also have a majority of our assets in Target Retirement Funds. I have a large amount of my funds (outside of my 403(b) plan ) in the T Rowe Price Retirement 2015 fund which invests in various managed funds, while my wife who is 5 years younger invests in the Vanguard Retirement 2020 fund which invests in various index funds. Both seem to be doing well, esp. whenever you compare them against their respective benchmarks. It will be interesting to see who will eventually win out---- passive retirement funds or active retirement funds. To this I say: May the best fund or funds win!!!!!
  2. I am unsure about the different fund companies out there, but from reading the prospectuses from the American Funds, who I have my 403(B) through, on A shares which charge 5.75%, the broker retains 5% of the initial investment whether in a lump sum or through periodic investments, while the broker retains 4% of the initial investment of B shares and 1% of the initial investment of C shares. Of course the B shares and the C shares convert to different shares over a period of time. B shares convert to A shares after 8 years which would resuldt in lower annual fees after the 8 yy timeframe, while C shares do not convert to F shares until after 10 years. It would seem to me that long term investors would be better off in A or B shares, depending on the investment time horizon, while C shares would probably be better for short term investments of 5 to 8 years. I completely agree that no load funds would be the best option, but for us investors who must choose, it would clearly be between either A or B, depending upon the amount invested. For people, such as I who are making bi-weekly contributions through a 403(B), and for those like me who only have A,B, or C to choose from, the choice is much harder to make.For example, if I am making bi-weekly contributions of $40 or $50, if I choose A shares I will be "forced to pay" a load of 5.75% on each purchase I make. If I choose B shares, I will avoid the load, but I will pay higher expenses for 8 years before my shares convert to A shares, and with C shares I will pay higher expenses for 10 years before they convert to cheaper F shares. So which is the lesser of the 3 evils here, as I do not have access to no load or R shares with the American Funds?
  3. I appreciate all of the replies to my original questions concerning share classes within the American Funds with respect to A, B, or C. These are also my only choices as we do not have access to the cheaper F shares or R shares. With my only choices being A, B, or C and since I am only making small investments every 2 weeks, ( less than $50 every pay period), I either have to pay an up front sales charge (5.75%) on each purchase I make, or pay higher expenses through the B shares that my advisor made to me. If I could choose F shares or R shares, I would, but at this point in time I can only choose between the 3 classes mentioned. My only problem is that if I ask 10 people for their recommendations, I will probably receive up to 5-10 opinions about the share classes. I am currently investing in the Balanced Fund, Capital Income Builder Fund, and the Growth Fund of America. All of these funds charge an upfront sales charge of 5.75% on initial investments, while the B shares do not charge an upfront load, but charges an annual expense that is 0.75% higher than A shares. After 8 years the B shares convert to A shares which have lower expenses, and according to my "advisor", there is not more than 10 cents worth of difference over a period of 8 years with small periodic investments that I am currently making. He did tell me that with a single large investment that I would be much better off with A shares, but he also told me that there was not a huge difference in A or B shares with respect to small investments over time. I have heard that for periods of over 7 or 8 years that A shares were the best choice, but since B shares automatically convert to A shares after 8 years, I am still confused over the differences. I have also read in the prospectuses of American funds that advisors receive up to 5% of the original investments of A shares, while they only receive up to 4% of the original investments of B shares, so now I am confused as to why they would recommend B over A, when they could be receiving 5% instead of 4% on my bi-weekly investments. Bull
  4. Oh, yes, there are indeed some investment choices not available to regular investors and that only a salesman can provide... let's see, that would include investments with front end loads, back end loads, M&E charges, riders, 12b-1 fees ... Oh, yes, these are just some of the things available only through salesmen. The time issue? Oh, please. Learning about investing does not require that much time. As we often say here, it's not rocket science. Most folks would do just fine in a target retirement fund. How long does it take to learn about that? The resources issue? Are you kidding? That may have been an issue in the past, but the Internet has changed all of that. Those who need hand holding? These folks can grow up, act like adul_s, and not expect school districts to cater to their laziness, ignorance, or both. I suspect that you are using the laziness/ignorance/lack of interest argument to justify the jobs of salesmen. This won't cut it. The job of a salesman is to sell, not educate. If teachers depend upon salesmen for their investment education, they are in sad, sad shape. Witness the original poster of this thread. Oh, yes, there are indeed some investment choices not available to regular investors and that only a salesman can provide... let's see, that would include investments with front end loads, back end loads, M&E charges, riders, 12b-1 fees ... Oh, yes, these are just some of the things available only through salesmen. The time issue? Oh, please. Learning about investing does not require that much time. As we often say here, it's not rocket science. Most folks would do just fine in a target retirement fund. How long does it take to learn about that? The resources issue? Are you kidding? That may have been an issue in the past, but the Internet has changed all of that. Those who need hand holding? These folks can grow up, act like adul_s, and not expect school districts to cater to their laziness, ignorance, or both. I suspect that you are using the laziness/ignorance/lack of interest argument to justify the jobs of salesmen. This won't cut it. The job of a salesman is to sell, not educate. If teachers depend upon salesmen for their investment education, they are in sad, sad shape. Witness the original poster of this thread.
  5. I have read with great interest all of the horrible fund choices within people's 403(b) plans, and I agree that employers could make wiser choices. I currently work for a non-profit health care organization,and our only fund choice is the American Funds. The American Funds are the 3rd biggest fund group out there and most of their funds have exceded their repective peer returns over the long haul. American Funds are known for their low fees, low volatility, and above average returns. I am, however, confused by the different recommendations I have received concerning our share class choices, which are Class A, Class B, or Class C. To compound my confusion with these choices, my "advisor" recommended Class A shares, as he said that with Class A shares I would have lower overall expenses as well as higher dividends. My advisor's assistant, however, recommended that I purchase Class B shares in the American Funds, so I am actually getting two different recommendations from the same firm. I agree that the Class A shares will have lower ongoing expenses, although with each purchase that I make through bi-weekly deductions, I will pay a sales charge of 5.75%. With the Class B shares that my advisor's assistant made, I will not pay a sales charge on each purchase that I make bi-weekly, but I will have higher annual expenses. Whenever I confronted my advisor on the different recommendations that he made and that his assitant made, he suddenly agreed that I should purchase my bi-weekly contributions via the B shares that his assistant made. In other words, he agreed with his assistant who had recommended B shares over his original recommendation of A shares. My "advisor" told me that since I was making bi-weekly contributions of approx. 4% or 5% of my salary, that I would be better off with B shares. He said that with periodic investments every 2 weeks, I would avoid the initial sales charge of 5.75% on each investment that I will make and have more of my investment working for me. He also told me that even with the higher B class expenses of the American Funds, I will be paying about the average charge on most actively managed mutual funds. My advisor also told me that he had done the "math" with respect to small periodic investments over time and that there is not more than "10 cents" worth of difference with respect to Class A and Class B with small investments over time. Most of the expense calculators on the internet such as sec.gov, only assume a one time investment, say 1K or 10k, and none will allow you calculate the difference of making small bi-weekly contributions such as $25 or $50 every 2 weeks. So who am I to believe? His original recommendation was Class A, but then he concurred with his assistant who recommended Class B to me. Does anyone out there have any calculations to substantiate either class for people contributing less than $50 every 2 weeks? Thank You for any info and/or responses to this question. Bull Durham
  6. This was a very informative article on Target Retirement Funds, which both my wife and I own outside of our 403(B) and/or 401(K) plans. Neither of our employers offers target funds as of yet, but we both own a sizeable amount of our separate IRA's in both Vanguard and T Rowe Price Target funds. From what I have read on these posts and also in other financial reports, both Vanguard and TRP rank very highly in reguards to their target date retirement funds. Vanguard invests in all index funds, while the target retirement funds from TRP invest in mangaged mutual funds. Both have very low costs, with Vangard having the cheapest target date funds, but TRP probably has the best portfolios as their funds have a much higher allocation to stocks, which over time can lead to higher returns, although with a little more risk, as compared to Vanguard's target date funds. I would highly recommend either of these fund families for their target date funds, esp. for younger investors or those that are at least 10 years away from retirement. Bull Durham
  7. I would like to hear opinions about the following managed mutual funds, which either are owned by my wife or myself. My wife and/or myself currently own the following managed mutual funds through Individual Retirement Accounts outside our 403(b) or 401(k) accounts: Fairhome Fund, Delafield Fund, Muhlenkamp Fund, Vanguard Star Fund, Vanguard Retirement 2020 Fund, T Rowe Price Capital Appreciation Fund, and T Rowe Price Retirement 2015 Fund. Thanks for any and all comments on these managed funds outside our 403(b) and/or 401(k). Bull Durham
  8. Tony, Thanks for all of the info on the American Funds. I really like portfolio 2 and portfolio 4 because both have a low amount of overlap, and both have a good amount of foreign stocks without being too excessive. This will give me some ideas which should also improve my current portfolio. I too am concerned about asset bloat at these funds, but for now the American Funds are our only choice, so we will have the make the most with what we have to choose from. Again I welcome any and all comments and Thanks again! Bull
  9. I currently have access to a 403B plan through my current employer, RHA Health Services, but we currently only have the American Funds as options. We can choose from any of the American Funds except for their tax-exempt funds, which of course should not be used for retirement funds anyway. I am not limited to any certain number of funds, but the only catch is that you have to invest at least $25 per month per fund. I currently am investing $37.50 bi-weekly ( every 2 weeks), as we get paid every 2 weeks. I know that this is not a lot of money to some people out there, but at the current time, this is all I can afford to invest due to trying to pay off previous debts, including credit card debts. My wife and I finally got our house paid for, so we do not have a mortgage at this time, but we do have substantial credit card debt of over 20K. Thus, with the Bi-weekly contribution of $37.50, I can only invest in 3 of the American Funds, due to the $25 per month requirement. I am currently splitting my investments in the following funds: Capital Income Builder Fund, Balanced Fund, and Growth Fund of America. Do these funds seem reasonable or would anyone in this forum suggest any other combination(s) with 3 funds to choose from? I feel like that I am getting the international exposure I need through the Capital Income Builder Fund, and I feel that I am also getting exposure to both growth and value stocks, in addition to bonds, through the Balanced Fund and the Growth Fund of America. Any comments or suggestions would be greatly appreciated!!!!! Bull Durham
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