Being young and ignorant, my wife and I invested through Ed Jones. That will never happen again. But, we now have a balance with them of $90K broken up between two Roth IRAs, a traditional IRA, two 529 plans, and an after tax account. Pretty much all of it is held with American Funds. We already paid the huge 5.75% loads for A shares. We do own about $5K in individual stocks in the EJ traditional IRA.
American Funds claims that they perform better than index funds, even considering the loads and the expense ratios. A lot of forum comments I have read say that in the past AF just got lucky and didn't loose as much in 2008. However if you take AF hand picked example, they did beat the market.
I'm 99% convinced that its time to move everything out of Ed Jones American Funds and put it in Fidelity. Fidelity even said they would reimburse for EJ closing fees for 3 of our accounts. We were looking at almost $600 in closing fees just to get away.
Here are a few questions.
1. Most of our American Funds mutual funds we own, have an expense ratio that averages out around .80 or so. Part of this are 12b-1 fees that go back to EJ. Is there any reason to keep these funds? From everything I've read and heard I should dump them as fast as possible. On the positive side, they say they'll outperform index funds. On the negative side, the expense ratios are high, and we have to pay Ed Jones $100 a year for IRA fees.
2. Assuming we move things out of Ed Jones, where should the 529 plans roll over to? Our state has 529 index investments that have 0.19% expense ratios and are tax deductible for state taxes. Or are there other benefits to rolling them over to Fidelity?
3. What is the best move for the after tax account? We have no plans in the near future for adding to it or taking from it. Should we put it in our Roth? I will note that we are in the 22% tax bracket and are looking for pre-tax investments, though I don't know if that is relevant for this account. Moving forward with our investments, I'd like to get more dividend paying stocks. My realistic retiring goal would be in my early 50s, but we'll see how that goes. First I need to get things like this straightened out.
Thank You! Any additional recommendations are appreciated!