Author Topic: Roth IRA Edward Jones  (Read 6441 times)

britt234

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Roth IRA Edward Jones
« on: August 07, 2014, 09:18:36 AM »
Hello all! My first post! I'm new to this blog but I have been slowly starting to get involved in the investment world striving to reach early retirement.

Iím a 25 year old female living in DC and I think I made my first big financial mistake. In 2013, I opened up a Roth IRA at my local Edward Jones. I really knew nothing about IRAs except that it is good to start young due to compound interest accumulations. I put the full $5,500 in and told my financial advisor I would be back in late August to give her the full $5500 for 2014. (She has already called to remind me and itís only the first week of August)

As soon as I received my first statement I couldnít understand how I lost around $300 right away until I looked at the initial fees. :( My financial advisor is really helpful because she has also helped me with investing my work pension funds. (she isnít making any money from that)

My question: I donít want the same thing to happen with my $5500 for 2014. I want to go with Vanguard but Iím not sure I have enough knowledge to manage the IRA on my own? I just know itís not good to be paying all these fees! Someone help!

frugalnacho

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Re: Roth IRA Edward Jones
« Reply #1 on: August 07, 2014, 09:27:02 AM »
Just open up a vanguard account, and choose what index fund you want to invest it.  It's so simple a cave man could do it. 

You can deposit your $5500 for 2014 directly into the vaguard.  I believe you should be able to transfer your account balance from EJ to vanguard so it's all in once account.  I think you want to transfer directly to vanguard - Do not take the money out of your account and try to move it yourself, because as soon as you with draw it from your EJ account it's no longer roth money and just regular money, and you won't be able to deposit it into your vanguard account (since the limit is $5500 and you are already depositing that this year).

britt234

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Re: Roth IRA Edward Jones
« Reply #2 on: August 07, 2014, 09:55:18 AM »
Thanks for the reply. Which index fund should I invest it in?

Do you think my advisor's fees are worth the advice she gives me regarding my pension?

frugalnacho

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Re: Roth IRA Edward Jones
« Reply #3 on: August 07, 2014, 10:02:04 AM »
I put mine in VTSAX which is vanguards total stock market index.

$300 out of $5500 is 5.45%.  That's an insane management fee.  Vanguards is 0.05% so it would cost you $2.75/yr if you had $5500 in your account. 

Frankies Girl

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Re: Roth IRA Edward Jones
« Reply #4 on: August 07, 2014, 10:25:24 AM »
I'd not be surprised if the Edward Jones stuff is front loaded funds. Those mostly suck, since they can underperform, but you're paying up front no matter what the performance is, and they'd have to perform REALLY amazingly well to make back a 5%+ fee taken off the top.

And no, your adviser is not helping you - they are profiting off you. They are not your friend, they are in the business to make money for themselves and their company... and they will not act in your best interests.

Sounds like you don't know much about investing. That's nothing to be ashamed about; I was in your shoes just over a year ago. And practically everyone makes mistakes in the beginning. ;)

You definitely need to get a basic understanding on how it works. Check out Jim Collins' stock series:
http://jlcollinsnh.com/stock-series/

Opening accounts is really, really easy. You can call Vanguard, or do it online. Once you open a Roth IRA over there, you can ask them about transferring your Edward Jones account over as well. Usually that involves a few pages of paperwork, email them or mail them in and they'll take care of the rest.

As far as what you should be investing in, that's what you need to figure out your goals and write out and investment policy statement:
http://www.bogleheads.org/wiki/Investment_policy_statement

and from there, decide on an asset allocation (AA):
http://www.bogleheads.org/wiki/Asset_allocation

As young as you are, going into a total stock market index fund (or at least weighting heavily towards that) would be beneficial to you since you've got a long time horizon until traditional retirement. But you could also manage an early retirement doing this as well.

Some good basic index "lazy" portfolio suggestions here:
http://www.bogleheads.org/wiki/Lazy_portfolios

« Last Edit: August 07, 2014, 10:28:31 AM by Frankies Girl »

sandandsun

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Re: Roth IRA Edward Jones
« Reply #5 on: August 07, 2014, 11:10:52 AM »

$300 out of $5500 is 5.45%.  That's an insane management fee.  Vanguards is 0.05% so it would cost you $2.75/yr if you had $5500 in your account.

Agreed... Vanguard actually has a small fee of maybe 30.00 when the Roth account balance is under 10k (if I am remembering that correctly)... but after year one, you'll be above that threshold anyway, so no worries...

frugalnacho

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Re: Roth IRA Edward Jones
« Reply #6 on: August 07, 2014, 11:13:51 AM »

$300 out of $5500 is 5.45%.  That's an insane management fee.  Vanguards is 0.05% so it would cost you $2.75/yr if you had $5500 in your account.

Agreed... Vanguard actually has a small fee of maybe 30.00 when the Roth account balance is under 10k (if I am remembering that correctly)... but after year one, you'll be above that threshold anyway, so no worries...

I do not have a roth ira (only tIRA) with vanguard, but I am almost positive it is a $20/yr fee (applies to tIRA and/or RIRA) and it is waived if you sign up for electronic statements.

Dezrah

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Re: Roth IRA Edward Jones
« Reply #7 on: August 07, 2014, 11:47:02 AM »
To the OP,

I did exactly what you did.  I knew we should start a Roth IRA but didn't know enough about where to do it myself, so I went with someone trusted by extended family.  Our accounts were also hit with high front load fees.  The expense ratios for the fund were also relatively high (about 1.5%).  As a person, the adviser is a really nice guy, but this is business, not personal. 

After I educated myself, I called to transfer my funds from EJ to Vanguard.  Vanguard has a helpline free of charge that helped me set up the account and get all the correct forms to make the transfer easy and painless.  My husband looked at the data and decided he'd prefer to leave his EJ fund where it was since there was no getting that front load fee back anyway, but he put all his future contributions into Vanguard.

My advice, don't beat yourself up too hard about this whatever you decide to do.  You made a good choice with all the information you had.  Going forward you'll be able to make great choices.

sandandsun

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Re: Roth IRA Edward Jones
« Reply #8 on: August 07, 2014, 12:58:40 PM »

$300 out of $5500 is 5.45%.  That's an insane management fee.  Vanguards is 0.05% so it would cost you $2.75/yr if you had $5500 in your account.

Agreed... Vanguard actually has a small fee of maybe 30.00 when the Roth account balance is under 10k (if I am remembering that correctly)... but after year one, you'll be above that threshold anyway, so no worries...

I do not have a roth ira (only tIRA) with vanguard, but I am almost positive it is a $20/yr fee (applies to tIRA and/or RIRA) and it is waived if you sign up for electronic statements.


ok- that might be right- my vanguard Roth has no fee (it has a higher balance) but I helped someone set up a new account this year and they got that small fee with a message that said it was due to (I think) having a balance under 10k...
But that's pretty irrelevant (esp compared to what EJ is charging) - just wanted a newbie to be aware of it :)

britt234

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Re: Roth IRA Edward Jones
« Reply #9 on: August 07, 2014, 01:15:48 PM »
I was actually wrong. It seems they only charged me a $40 annual fee. I'm not sure why i'm missing money so i'm assuming Edward Jones has "hidden type fees." Is anyone aware of these type of fees with Edward Jones?

This was all I could find and it's confusing to me. https://www.edwardjones.com/groups/ejw_content/@ejw/documents/web_content/dweb244753.pdf

LibrarIan

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Re: Roth IRA Edward Jones
« Reply #10 on: August 07, 2014, 01:26:36 PM »
I also have a Roth IRA at Edward Jones that I haven't given much thought to over the years. I'd rather put that money into Vanguard's VTSAX based on many recommendations here. If I pull my money from the Roth IRA and put into the VTSAX will I incur fees/penalties?

Frankies Girl

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Re: Roth IRA Edward Jones
« Reply #11 on: August 07, 2014, 03:52:30 PM »
I was actually wrong. It seems they only charged me a $40 annual fee. I'm not sure why i'm missing money so i'm assuming Edward Jones has "hidden type fees." Is anyone aware of these type of fees with Edward Jones?

This was all I could find and it's confusing to me. https://www.edwardjones.com/groups/ejw_content/@ejw/documents/web_content/dweb244753.pdf

The link is just standard fee schedules for this type of investment company. Nothing unusual there, other than the fact that there's better places to invest that won't fee you to death. To close your account, they'll take another $95 too... but some places will refund the transfer and/or closing fees (I transferred an old account from one place that hit me with a closing and transfer fee, and got back one of those fees from my new company).

The money you're missing right off the top probably has more to do with what fund you're invested in. Again, figure it is probably a front load fee, which means that you pay a "cover charge" to get in the door (that's the front load part). Supposedly, that's because the funds is so awesome, that people will pay more to get into it... but that is really not the case (99% of the time). It's just a way to take more of your money. Check your fund's name (the letters like VTSAX) and look it up. It should tell you in one of the subsections about "fees and distributions" what the front load was/is. It's not hidden, but someone that doesn't have a lot of experience investing won't know to ask about up front fees and crap or where to look; that's one of the fun ways they take advantage of your inexperience.

Vanguard and Fidelity and many other places don't really push front load funds - you put in your money to the funds you like, and you pay the expense ratio, and if the account is below a certain amount, you might have to pay a maintenance fee until it grows above the amount, but in general, all you pay each year is the expense ratio.


frugalnacho

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Re: Roth IRA Edward Jones
« Reply #12 on: August 07, 2014, 07:32:00 PM »
Yea the 0.05% fee for VTSAX requires a minimum of $10,000.   If you have less than $10,000 you will get VTSMX which is the exact same fund but has a 0.17% expense ratio.   Once you cross the $10,000 threshold vanguard will upgrade your shares to the lower expense ratio fund.