JP Morgan Managed Brokerage account

[FlushAndFoolish]

I'm a nose to the grindstone kind of person. I got lucky and my work paid off. I worked while the money accumulated and I ended up with about $400K in my savings account. It sat there, losing value to inflation. The people at Chase said, "Hey, let's put this in an account with 'interest'," and before I knew it, they were signing up for a JP Morgan Managed Brokerage account. I asked, "What's the benefit over ETFs? And the guy gave me some spiel about those trading with the market and their product offering some kind of advantage. I wasn't really sold, but I figured it was better than doing nothing and now, 5 months later, the account is up $10K, which I believe is a bit better than inflation.

I hate to be that person, but what should I do? I'm posting this to get my feet wet and gain some control over my financial situation. If I don't start interacting with the community, I'll just keep doing what I'm doing (see aforementioned grindstone comment).

[NoStacheOhio]

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

They're probably charging you a bunch of unnecessary fees.

Throw it in a taxable account (or peel off chunks into IRAs piecemeal), buy some index funds to fit your desired allocation, and continue not thinking about it.

[Ocinfo]

For a bit of extra motivation, in that same 5 month period the markets were up around 10%. In other words, they likely cost you a few tens of thousands of dollars in unrealized gains. Not to say that past performance is any indication of future performance...


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[FlushAndFoolish]

They're probably charging you a bunch of unnecessary fees.

I figured as much. Thanks for the link and suggestions.

Not to say that past performance is any indication of future performance...

Thanks, I get what you're saying. I knew there was a boom happening and kind of assumed their system attempts to mitigate both losses as well as gains. I assume they trade strategically to earn interest within the margins they outline and anything above that is something they'd pocket. Can't prove it, but I mean, this is a big bank.

[Retire-Canada]

I wasn't really sold, but I figured it was better than doing nothing and now, 5 months later, the account is up $10K, which I believe is a bit better than inflation.

Making $10K on a $400K investment is a 2.5% return over the last 5 months. VTI [total US market] is up over 10% during the same period and that's not including dividends paid out. If you had bought VTI you would now have over $442K. Inflation in the US is around 2%/yr so for 5 months that would be ~0.8%.

[Easye418]

I'm a nose to the grindstone kind of person. I got lucky and my work paid off. I worked while the money accumulated and I ended up with about $400K in my savings account. It sat there, losing value to inflation. The people at Chase said, "Hey, let's put this in an account with 'interest'," and before I knew it, they were signing up for a JP Morgan Managed Brokerage account. I asked, "What's the benefit over ETFs? And the guy gave me some spiel about those trading with the market and their product offering some kind of advantage. I wasn't really sold, but I figured it was better than doing nothing and now, 5 months later, the account is up $10K, which I believe is a bit better than inflation.

I hate to be that person, but what should I do? I'm posting this to get my feet wet and gain some control over my financial situation. If I don't start interacting with the community, I'll just keep doing what I'm doing (see aforementioned grindstone comment).

I was in a managed account, you are probably paying close to 2% in fees for advice from their financial "wizards" to perform worse than the S&P500.  Just move your money to Vanguard and throw it in VTSAX and an admiral bond fund to a certain % based on your age or risk tolerance.

[Frankies Girl]

I was in a managed account, you are probably paying close to 2% in fees for advice from their financial "wizards" to perform worse than the S&P500.  Just move your money to Vanguard and throw it in VTSAX and an admiral bond fund to a certain % based on your age or risk tolerance.

Me too. When I first started, I went with Chase's managed funds and an adviser that was crap  (front loaded funds + 2% management fee on top). Fortunately I had been easing into learning about investing along the same time and figured this out before I lost years in their funds. Closed the account within 6 months (stupidly waited till it "made back" the initial investment - which means I likely lost even more money by leaving it in the crap funds instead of investing it in index funds that were doing WAY better).

You're here, you're asking the right questions, and you're learning. And even a less than stellar investing account is better than none at all, and you're getting good advice (to move it to Vanguard), so you're way ahead of most people out there. :)

[NoStacheOhio]

Thanks, I get what you're saying. I knew there was a boom happening and kind of assumed their system attempts to mitigate both losses as well as gains. I assume they trade strategically to earn interest within the margins they outline and anything above that is something they'd pocket. Can't prove it, but I mean, this is a big bank.

Do you know what funds you're in? There should be a positions tab when you login (or something to that effect). Otherwise, it would be on your monthly statement.

Generally, they take their share off the top, regardless of performance.

[MustacheAndaHalf]

While I agree people should avoid 2% fees, I just want to emphasize that what the OP initially did was worse.  An average set of mutual funds might earn 7% per year, and hideous fees might eat up 2%, and leave your brokerage account earning 5% a year.

That $400k in cash?  Probably not earning 1% a year.  Terrible fees, but in the stock market, still beats being 100% in cash.  For stock investing, I just want to emphasize that a bad decision is probably better than no decision.

But having said that, pick one of Vanguard, Schwab or Fidelity and invest in low-fee index funds (or ETFs) at one of those places.  Might also be worth reading up on passive index investing, so you feel confident in how it works when the market tests your resolve.

[Car Jack]

The market is always changing and it's hard to compare, but I happen to have opened a Schwab account at the same time you opened this account.  I put in exactly 1/10 what you did.  $40,088 to be exact.  My balance as of yesterday's closing was $43,338, all in SCHB which is an ETF that follows VTI exactly (total US stock ETF).  So up $3250.  If I scale that up to your number, you should have made $32,500 on your $400k investment.

Now, if you have a ton of bonds in your portfolio, I can see where it would reduce your gains.  But down to $10k?  I've got to figure you got hit with 5% front end sales loads and all kinds of AUM fees and probably 12b-1 fees.  Get out of there.  There are good places to put your money and JPM is NOT one of them.  You can even get some good bonuses from 3 out of the 4 good guys.  Look at their bonuses and click on them and then do your transfer.

TDAmeritrade
Schwab
Fidelity
Vanguard (no bonuses but they won't smile while they steal your money)

[FlushAndFoolish]

Thanks, everybody. This is the kick in the butt I needed as well as some helpful information. I was under no illusion that what I did–or rather–what I let happen was a solid move. But the reality is because of what was also going on with me at the time, I was likely to just let the money sit there. So... $10K is better than nothing. Going to move this money very soon.