Author Topic: 26 year old. Just now realizing there's other options besides edward jones.  (Read 2721 times)

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
Hey all,

26 years old

assets: 40k cash/in bank

21k roth ira (edward jones)

home equity 80k

assorted in home stuff 5k

Liabilities

11k student loans

750 credit card

Current bills $1800/month (480 goes towards maxing roth)

Current income 25-30k/year

I'm just starting to get into investing as I have a ton of money jsut sitting in accounts that have literally no return. I understand edward jones is less than popular in the investment field but i set it up 4 years ago (my dad was there). The charges are 40 bucks annually and current holdings (shares rounded) are as follows:

aepgx 86

agthx 108

amrmx 105

newfx 30

smcwx 74

I'm looking for advice or references to learn how I should go about investing with about 5k (seems schwab/fidelity has a pretty good following) and if keeping this ira at edward jones is really that bad (40 annually with no other fees seems reasonable). It should be noted that my mortgage is with them as well so I have to keep somewhat of a relationship.

The girlfriend also has a ira with around 1500 or so and gets hit with 40 a year so that's going to go asap.

Just trying to sort out all my money working for me vs some of it.

regards

zach

COEE

  • Pencil Stache
  • ****
  • Posts: 605
run - don't walk - from edward jones.

Oh the horror stories.

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 2901
  • Age: 81
  • Location: The laboratory
  • Typical Ghoul Next Door
Oh you are paying so much more than $40 a year for that EJ account.

Edward Jones is terrible. Just... so so so terrible. They train their reps to smarm their way into your life, then act like it's all "oh buddy, I'm here for you, I'm your friend!" all the while using insanely high fee funds and charging tons of fees (hint: they use the good buddy shtick to fool people into not noticing they have their hand in your wallet, and it's harder to say no to a "friend" than if it was a strictly business relationship - just a terrible business practice and again - THIS IS THEIR BUSINESS MODEL). So yeah, keeping that money there is just a bad move. You'll see your money perform pretty poorly overall compared to someplace like Vanguard since they have high load fees, operating fees, buy/sell fees and they don't want you to do anything without them controlling everything and they'll always ALWAYS have a reason why, and play on the "friendship" and tell you you're too stupid  (but nicely) and use scare tactics if you get too pushy with the questions. They want you ignorant and scared of investing, so they can make money off you.

So.

First, education. Reading and asking questions here and places like Bogleheads is fantastic. Most everyone out there would be doing really well becoming an index investor using a 2-4 fund portfolio that basically manages itself. You don't need 20+ funds, you don't need to have some "expert" buying and selling your funds every other day, you don't need to obsess over the market's ups and downs. It really is simple, as soon as you peel away all the noise and the "experts" like the jerks at EJ telling you it's too scary and complicated and they're your buddy and friend and looking out for you (um, yeah, for a quite ridiculous fee and not that great performing funds that they'll pop in and out of like a demented hokey pokey with your money... all the while charging you for each "shake it all about" they pull).

Read Jim Collins' book or stock series. Solid gold and easy and entertaining.

After that, check out the Bogleheads' Wiki and review how you'd like to invest, write up an investment policy statement and figure out your asset allocation.

Then put in a transfer to move your money over to someplace like Vanguard, Fidelity or Schwab (all great companies that offer decent index funds and no nasty fees). Once the funds move over (and after the EJ reps hit you with transfer fees, closing fees, boo-hoo we're pissed off at you wising up fees...) you'll be free to invest your money as you wish and it will be pretty simple after that.

http://jlcollinsnh.com/stock-series/

https://www.bogleheads.org/wiki/Main_Page

https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit
^covers how to write an IPS, asset allocations, and all that fun stuff!

But most of all, ask questions when you run into things you need help with. But not of the EJ reps... they want your money to stay right where it is, so they're biased. Folks on here or the Bogleheads site are going to give you good information to the best of their ability.


As far as the other stuff... pay off that card if the interest rate is higher than 5%. Stop charging things if you can't pay it off in full. Get an emergency fund in place. Start tracking your spending and income for reals: check out You Need A Budget or Mint or use an Excel or even paper if you're into that, but every penny spent and every penny earned needs to be logged so you can get a better picture of what you're focus should be for debt/income/saving/future stuff. (but most of this is covered in the Collins series).

Good luck!
« Last Edit: July 12, 2018, 08:57:48 PM by Frankies Girl »

jacoavluha

  • Bristles
  • ***
  • Posts: 266
This is easy. You and girlfriend open IRAs at Vanguard and then you call Vanguard and have them complete transfer paperwork. They’ll deal with Edward Jones. Just instruct them to liquidate and transfer cash. In the meantime ready JL Collins stock series

Pay off your student loans and credit card

ysette9

  • Magnum Stache
  • ******
  • Posts: 4402
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
AEPGX- American Funds, known for their high fees. 0.82% expense ratio.

AGTHX- expense ratio 0.64%

AMRMX - 0.6%

NEWFX - 1.04%

SMCWX - 1.07%

As a comparison, my Vanguard account is invested in VTIAX (0.11%) and VTSAX (0.04%). Your funds are crazy expensive and don’t need to be that complicated. Do some reading on the impact of fund fees over time. What seems like a small amount has a really big (compounding) effect which results in less money for you.
https://investor.vanguard.com/investing/how-to-invest/impact-of-costs

https://www.nerdwallet.com/blog/investing/millennial-retirement-fees-one-percent-half-million-savings-impact/


« Last Edit: July 12, 2018, 10:09:10 PM by ysette9 »

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
Thanks for the advice guys. I guess it just felt natural going with what my dad was vested in. I'll be hunting around to refinance the mortgage with another company in the next year but hopefully I can get a plan together for what to go with in the next day and get the IRAs moving. I'm not looking to get super into day trading or micromanaging, just somewhere I can stash cash that would otherwise be stagnent. I'll be getting up at 7 tomorrow to start all this up. Hopefully they dont hit us with transfer fees too hard. Is there a preference between the 3 big ones (vanguard Schwab etc) or are they all similar enough?

It should be mentioned that the student loans are 0% interest until 6 months after I graduate (so interest would start june 2019). The 750 in credit cards will be paid off by the due date (pays off every month automatically). The idea behind the student loans is I'll be churning 3 or so credit cards for around 30000 points (3000$ us/4500$in travel) as I have the means to pay them off whenever but why not take advantage of some cash back promos?
« Last Edit: July 12, 2018, 10:53:27 PM by zoochadookdook »

ILikeDividends

  • Bristles
  • ***
  • Posts: 445
Thanks for the advice guys. I guess it just felt natural going with what my dad was vested in. I'll be hunting around to refinance the mortgage with another company in the next year but hopefully I can get a plan together for what to go with in the next day and get the IRAs moving. I'm not looking to get super into day trading or micromanaging, just somewhere I can stash cash that would otherwise be stagnent. I'll be getting up at 7 tomorrow to start all this up. Hopefully they dont hit us with transfer fees too hard. Is there a preference between the 3 big ones (vanguard Schwab etc) or are they all similar enough?

It should be mentioned that the student loans are 0% interest until 6 months after I graduate (so interest would start june 2019). The 750 in credit cards will be paid off by the due date (pays off every month automatically). The idea behind the student loans is I'll be churning 3 or so credit cards for around 30000 points (3000$ us/4500$in travel) as I have the means to pay them off whenever but why not take advantage of some cash back promos?

I opened my Schwab account almost 40 years ago, and I have since never had any reason to look elsewhere.  That should say volumes all by itself.

I have no experience with Fidelity (or Vanguard) so I can't say those would be bad alternatives either.

Andy R

  • Stubble
  • **
  • Posts: 203
Good replies above.

If you are unsure why 1% management fee is crazy, you should watch the below documentary.
In essence, every year you are paying 1% on your total money not just on your profit. So if the long term return is 9% per year, and inflation is 3% per year, your "real" (inflation adjusted) average long profit return is 6% per year, so a 1% fee is actually 1/6th or 16% of your profits they are taking from you each year. If you build your savings to a million dollars (not so unusual), and your return is $90k for the year and 30k goes to make up for inflation on your total porfolio,, you are losing almost $10,000 of the remaining $60,000 to these parasites. That is serious money!
If you know what compounding is, then you may not realise these costs also compound and work against you, so after more and more years, your profit loses a LOT more than 16% (which is already nuts by the way).

https://www.youtube.com/watch?v=SwkjqGd8NC4
« Last Edit: July 13, 2018, 12:46:00 AM by Andy R »

Mighty-Dollar

  • Bristles
  • ***
  • Posts: 377
The charges are 40 bucks annually and current holdings (shares rounded) are as follows:
aepgx 86
agthx 108
amrmx 105
newfx 30
smcwx 74
The annual charges are NOT just $40. They sold you actively managed mutual funds with 5.75% front end loads (that you might not have even noticed because it got subtracted from your share value) AND HIGH ongoing expense ratios.
Prime example is the Growth Fund of America....
https://www.youtube.com/watch?v=K2FQ98gzeDw
SOLUTION: Get with E Trade or AmeriTrade and invest in a total stock market index fund and a total bond market index fund. How much you invest in one versus the other depends on your age, appetite for risk, etc.
« Last Edit: July 13, 2018, 01:36:59 AM by Mighty-Dollar »

talltexan

  • Handlebar Stache
  • *****
  • Posts: 2303
Disclosure: about 30% of my household net worth is in Edward Jones.

Don't do it. Run away.

While you're young and have very little money is the best time to get away from them. My wife received a pot of money and a fund manager from her grandfather. It's a lot harder to extricate yourself when it's three generations of the family that have been involved. I wised up reading these discussion boards two years ago, and we stopped putting in new money, now all dividends are paid out as cash, but turning the ship around is still going to take a while, because anything we sell will have tax implications.

jacoavluha

  • Bristles
  • ***
  • Posts: 266
My point was that you don’t have to call the EJ agent and listen to them tell you XYZ reason why you shouldn’t leave, you pick a brokerage and they’ll handle most if not all of it.

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
Alright SO

First things first-I'm 2 classes off my Management information systems degree. It's in the school of business at univ so I was required to taking finance, stats, econ, accounting etc. These huge compounding fees aren't lost on me. It's annoying as I know my father (with 200K or so with EJ) won't pay attention to me at all. Nor will my brother or sister with funds as well.

after visiting other sites and forums I've settled on vanguard. It doesn't seem like you can go too poorly with any of them

The only decision I have to make now is to transfer the ira directly or if I should liquidate and then transfer. I'm sure edward jones will hit me with a $95 fee to close/some others anywas but the vanguard rep I spoke with this morning said It may involve less fees if i liquidate first then transfer.

Appreciate all the input!

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 6724
OP pat yourself on the back for figuring this out early. The amount of money you'll save with lower fees over the course of your life is staggering.

jacoavluha

  • Bristles
  • ***
  • Posts: 266
If this is all IRA just liquidate then transfer. No point in holding those expensive funds at another brokerage. No tax implications selling from an iRA

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
If this is all IRA just liquidate then transfer. No point in holding those expensive funds at another brokerage. No tax implications selling from an iRA

yeah looks like i'll have to call EJ to do that. The  vanguard site can draw the direct funds over but can't liquidate then draw. I bet he'll be super happy to hear from me lol

jacoavluha

  • Bristles
  • ***
  • Posts: 266
Usually transfer paperwork will have a section for instructions to the current holder, as in liquidate and transfer cash, transfer in kind, etc.

ysette9

  • Magnum Stache
  • ******
  • Posts: 4402
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
It sounds like you are on a good path! Great decision to go with Vanguard. Nothing against Schwab or Fidelity, but Vanguard was literally the vanguard of the low-cost passive index fund investing scheme. They are what I think of as the financial/investing version of a non-profit, owned by the investors. That means there is never a conflict of interest between maximizing your returns as an investor or maximizing shareholder value because they are one in the same.

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
Usually transfer paperwork will have a section for instructions to the current holder, as in liquidate and transfer cash, transfer in kind, etc.

so instead of reinvesting I have the option to pick a settlement fund; I'm assuming that will liquidate?

jacoavluha

  • Bristles
  • ***
  • Posts: 266
Probably. Though that kinda sounds like a dividend question - reinvest vs pay to settlement fund. I’d call and tell Vanguard you want to liquidate and transfer and see if they can just make it happen

CorpRaider

  • Bristles
  • ***
  • Posts: 379
    • The Corpraider Blog
If this is all IRA just liquidate then transfer. No point in holding those expensive funds at another brokerage. No tax implications selling from an iRA

yeah looks like i'll have to call EJ to do that. The  vanguard site can draw the direct funds over but can't liquidate then draw. I bet he'll be super happy to hear from me lol

Can you roll over in-kind and then sell?  I think EJ charges a pretty large fee for each trade.  Guess it may not apply to mutual funds (but probably does).

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
If this is all IRA just liquidate then transfer. No point in holding those expensive funds at another brokerage. No tax implications selling from an iRA

yeah looks like i'll have to call EJ to do that. The  vanguard site can draw the direct funds over but can't liquidate then draw. I bet he'll be super happy to hear from me lol

Can you roll over in-kind and then sell?  I think EJ charges a pretty large fee for each trade.  Guess it may not apply to mutual funds (but probably does).

I'm calling my EJ "advisor" after work at 4 and asking what the fees would be. I can directly transfer/roll it over but vanguard told me it might be cheaper to liquidate at EJ and then transfer. You're right about the individual fee per fund but as this is a single roth ira I think it's only the $95 closing cost.

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
If this is all IRA just liquidate then transfer. No point in holding those expensive funds at another brokerage. No tax implications selling from an iRA

yeah looks like i'll have to call EJ to do that. The  vanguard site can draw the direct funds over but can't liquidate then draw. I bet he'll be super happy to hear from me lol

Can you roll over in-kind and then sell?  I think EJ charges a pretty large fee for each trade.  Guess it may not apply to mutual funds (but probably does).

I'm calling my EJ "advisor" after work at 4 and asking what the fees would be. I can directly transfer/roll it over but vanguard told me it might be cheaper to liquidate at EJ and then transfer. You're right about the individual fee per fund but as this is a single roth ira I think it's only the $95 closing cost.
My advice is tht I wouldnt call them to alert them to your plan.  They will put in action a stall plan and may even make trades if you had them managing investments.  Just contact Vanguard and do not talk to EJ.  The fees will be the fees they charge and cant be helped. A sunk cost my friend, but worth the lesson.  You absolutely do not want to leave the money in their current funds, even if they have capital gains or were front loaded.  They are costing you each day you have them instead of a better fund (IMHO, see sig.).

Weve heard horror stories about what they do when a customer alerts them to their plan to leave.  You want the receiving broker to harrass them to speed up the transfer, not you.

So here's the deal; I called vanguard and their sell fees on my funds are fairly high (5% on a few). On 20,000 that's 1000 in fees. I'm thinking calling EJ and having them liquidate is well worth the money at that point.

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 2901
  • Age: 81
  • Location: The laboratory
  • Typical Ghoul Next Door
Just be prepared for your adviser to possibly freak out on you. There is one guy that told his rep he was moving over to Vanguard because he didn't want to blindside him as he considered him a friend and thought he'd be understanding and helpful... that "Friend" shut down his access to the accounts, locked the guy out completely, and forced him to go through weeks of trying to get a new rep at EJ to return his calls to allow him access to his own accounts. They won't let the account owners have any access or self management at all; you have to do everything through the assigned rep, so they tend to do everything in their power to make it difficult for you to leave.

You may get hit with tons of fees regardless. EJ may fee the crap out of you on the selling off of the funds you currently hold, the account transfer, the closing of the account, and there's a few other ones they'll make up just to show you how terrible they are about losing customers. It may be worth it to just fill out the paperwork on Vanguard's side but if you think you can stand up to the EJ rep and don't mind doing battle for a bit to force them to sell, then good luck.

And do ask at Vanguard if they can rebate (or pay you back) for the transfer fee or closed account fees that EJ slaps you with. When I moved away from a similar slimy company to Fido, they did rebate the transfer fees as a token of thanks for my business, and I'm pretty sure Vanguard has done similar in the past.
« Last Edit: July 13, 2018, 09:24:19 PM by Frankies Girl »

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
Alright so funds  are all pending sale currently. My rep closed shop at 4.30 so I got another less biased one on the phone. They were pleasant enough; informed me of the 95$ fee and that was that. The vanguard paperwork is done but I'm going to call back and ask if they'd cover that fee. Vanguard would have charged 200 to sell all 5 funds so this worked out a bit better.

ysette9

  • Magnum Stache
  • ******
  • Posts: 4402
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
Good news!

mustachedali

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Oh gosh, I started with Edward Jones as a kid not knowing much about investing, and it was a bad mistake! Held it for years and regret it. So many fees, not a good return on investment for the funds - I'd say quickly transfer so you don't lose out more! I'm very happy with Schwab.

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
Alright so funds have been transferred. Edward jones kept their 95$ closing fee PLUS a $40 Annual fee despite me already paying the AF this year (another call to make tonight).

Now it's just the simple matter of deciding on which vanguard funds to go with, making the buy orders and sitting it through.

ysette9

  • Magnum Stache
  • ******
  • Posts: 4402
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
Wonderful! Congratulations

COEE

  • Pencil Stache
  • ****
  • Posts: 605
Congrats!  Thank your lucky stars that you saw the light while you were still young!

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
Yeah, I'm having a sitdown with my father to explain front loading and annual fund fees as well later this week. Hopefully I can convince him to swap.

I'm debating going 3 fund vs just the target retirement fund (total van stocks/bonds/total international stocks). The target retirement is 90/10 allocation at my age/goals.

Also considering opening a sep (small business owner), as I have the 40,000 sitting on the sideline earning like .0001% at chase. I'd like a easier to liquidate option as well for some of those funds.

talltexan

  • Handlebar Stache
  • *****
  • Posts: 2303
I'm actually wondering if I cannot use a house purchase--coming up in the next few years--as an excuse to extricate more money from the EJ account. "We have a major home purchase coming up, let's sell A, B, C", but then--when the closing is all done--suddenly the money is appearing in taxable investments in other places.

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
I'm actually wondering if I cannot use a house purchase--coming up in the next few years--as an excuse to extricate more money from the EJ account. "We have a major home purchase coming up, let's sell A, B, C", but then--when the closing is all done--suddenly the money is appearing in taxable investments in other places.

The way I did it was just call them after 4.30 (when my financial advisors office is close). I told them to liquidate everything immediately and that was that. No awkward conversations. Flat rate 95$ closure fee.

ysette9

  • Magnum Stache
  • ******
  • Posts: 4402
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
This is your money!! You should not feel guilty or uncomfortable about doing what you want with your own money.

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
This is your money!! You should not feel guilty or uncomfortable about doing what you want with your own money.

I put the buy order in to vanguard yesterday for the retirement target fund as well as the monthly direct deposit by order. I don't feel bad I just wanted to avoid a conversation lol.

August26th

  • 5 O'Clock Shadow
  • *
  • Posts: 56
  • Location: Beautiful Colorado

Good for you! I think the target fund is a great decision for your age and stage of life. Congrats on making some great decisions at an early age.

zoochadookdook

  • Bristles
  • ***
  • Posts: 367
  • Age: 27
I'm deciding on opening a 401k or at least moving cash into a more liquitable higher return account. I have 40k sitting at .0001% in a chase bank account currently. Being self employed I do qualify for  SEP.