New to investing - EJ questions

[LeftHandPhil]

Short story. I have an Edward Jones account that I opened in 2012 with $25k I got from an inheritance. I didn't know anything about investing, and still don't, but I'm trying to learn.

The money is spread between - INVESTMENT COMPANY OF AMERICA FUND CL A
                                                 CAPITAL INCOME BUILDER CL A
                                                 AMERICAN BALANCED FUND CL A

It's done ok... I think over those 5 years. It's up to about $41k and I haven't touched it since opening it.

First off, are these good, or would it be better to roll this into a Betterment taxable account that I just opened? How do I look for fees and costs that EJ is charging me?

I've been reading a lot on here about EJ being useless and a bad way to go. So it got me wondering if it might be time to move out.

Thanks for any advice. I'm completely green and trying to learn everything I can.

Phil

[TheAnonOne]

Welcome!

The main issue is that you just paid alot more money in fees than you had to. Vanguard made the same gains with basically 0 fees.

What are the expense ratios on that account?

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[bacchi]

You need to look at the prospectus for each fund. The fees should be in the front few pages.

Your Class A funds have a front-end sales charge. That is, the fund removed ~5% before anything was invested. Some of that 5% went to your broker's BMW payment.

In conclusion, transfer it to Vanguard (or Betterment) tonight.

Also, work on your IPS. Make it simple, initially: "I'm comfortable with an 90/10 stock/bond mix." Then buy VSTMX and VBMFX.

[LeftHandPhil]

So out of my 25k they took $1250 right off the top?

.59% expense ratio. for 1st and 3rd. .6% for Capital income. Is that good/bad/average?

What's the easiest way to transfer something like this?

[bacchi]

So out of my 25k they took $1250 right off the top?

That's how Class A funds work.

https://www.americanfunds.com/individual/investments/share-class-information/share-class-pricing.html

.59% expense ratio. for 1st and 3rd. .6% for Capital income. Is that good/bad/average?

That's ok. Vanguard funds are less than .2% generally (VTSMX is .16%).

What's the easiest way to transfer something like this?

Fill out a form with the receiving broker. It'll take probably 1/2 hour and then, a week or three later, you're investing with low cost funds.

[LeftHandPhil]

Cool man I appreciate the feedback.

[Indexer]

So out of my 25k they took $1250 right off the top?

.59% expense ratio. for 1st and 3rd. .6% for Capital income. Is that good/bad/average?

What's the easiest way to transfer something like this?

1. Yes, the A shares take a lot off the top.
2. For an active advisor sold fund .59 is good. Compared to Vanguard it is astronomically overpriced. The 0.16% previously listed for VTSMX is actually the more expensive version of VTSAX which is only 0.05%. You can build a very well diversified portfolio at Vanguard for 0.1%.

3. Call Vanguard. If it needs forms they will tell you. Sometimes you can do this electronically.

[MustacheAndaHalf]

There's 3 big providers of low cost "passive" indexing funds: Vanguard, Fidelity, Schwab.  If you have a strong preference for any of the 3, all of those are good choices.  At Fidelity and Schwab, you need to be more careful because they also offer more expensive funds.

For example, Vanguard Total Stock Market costs 0.05% when you have $10,000 to invest (admiral shares).  That compares to 0.59% and 0.60% you currently pay every year.  I don't know the exact timing of your 2012 purchase, but Total Stock Market has earned about +80% since 2012-06-1 (which would turn $25k into $45k).  Roughly ~85% of active mutual funds fall behind the S&P 500 index over time.  Your odds are better with index investing, and the annual expenses are cheaper.  The problem?  There's no money in advertising it.

If you're investing in taxable, you might look at a tax-exempt fund.  At Fidelity or Schwab, "MUB" is a municipal bond ETF that's popular.  Vanguard has it's own selections that include state specific funds (like for CA, NY).

[Radagast]

Lucky for you, you actually came out OK even after the 5.75% load. American Funds has a strong track record of beating the market (not sure about after loads), so you did about the same as a three fund portfolio or balanced fund with a similar amount of bonds over this time. Those are some funky funds though, every single one of those three has a mixture of US stock, foreign stock, US bonds, foreign bonds, and cash.

Compare to some Vanguard options here:
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=2012&firstMonth=1&endYear=2017&lastMonth=12&endDate=03%2F10%2F2017&initialAmount=25000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&showYield=false&reinvestDividends=true&symbol1=AIVSX&allocation1_1=33&symbol2=CAIBX&allocation2_1=33&symbol3=ABALX&allocation3_1=34&symbol4=VTSAX&allocation4_2=50&symbol5=VGTSX&allocation5_2=25&symbol6=VBTLX&allocation6_2=25&symbol7=VASGX&allocation7_3=100

[Mighty-Dollar]

I have an Edward Jones account

Full service brokerage that will gouge you with either asset management fees or sell you expensive actively managed funds. Switch to Vanguard, E Trade, AmeriTrade, Fidelity, Schwab or Scottrade. Invest in passively managed funds (AKA index funds).