Author Topic: Small IRA Allocation  (Read 931 times)

cj25

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Small IRA Allocation
« on: August 17, 2016, 11:09:21 AM »
I have a small IRA at Primerica that was a rollover from a former employer 401k.  Back in 2005, when it started, it had $4,880 in it.  It currently is at $9,752.  Is this typical?  Should there be more by now?  In 2013 it made up a lot after it was slashed in half in 2007/2008 time frame.  But it doesn't seem to move much now.  I feel like my other 401k grows faster, but maybe because this is a small amount it doesn't?  But I really don't know anything about investing.  It's currently in ClearBridge Aggressive Growth Class A (SHRAX).  Should I be moving this money into a different type of fund or something? 

mskyle

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Re: Small IRA Allocation
« Reply #1 on: August 17, 2016, 11:58:37 AM »
That fund has a pretty high expense ratio (1.12% - a Vanguard Target Date fund, for example, would have a rate around 0.15%, and forum favorite VTSAX has a 0.05% expense ratio) and a front-end load (you pay up front when you buy into it). That's not helping your money grow. Are you paying any other fees?

That's not, like, the WORST return on investment (if you had put that $4880 into VTSMX it would be worth ~$11000 today), but you can do better.

If it was me, I'd roll it over somewhere new (Vanguard or maybe Fidelity) and invest in a simple index fund like VTSMX. I don't know much about Primerica, but if they encouraged you to buy into that fund I don't have a high opinion of them.
« Last Edit: August 17, 2016, 12:01:58 PM by mskyle »

cj25

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Re: Small IRA Allocation
« Reply #2 on: August 17, 2016, 12:07:15 PM »
I have no idea if I am paying anything else.  LOL!  So bad!  I see a $20 Custodian Fee that gets charged every year. 

MustacheAndaHalf

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Re: Small IRA Allocation
« Reply #3 on: August 17, 2016, 12:12:10 PM »
A mutual fund like ClearBridge Aggressive Growth Class A (SHRAX) has high expenses (over 1%) and also doesn't let you control your asset allocation: they have 2% in cash, and 5% in international stocks.  So here's the advantages I see for switching to something like Vanguard S&P 500:
* Avoids 2% cash in a stock mutual fund
* Your expense ratio plunges to about 0.16% now, and 0.05% when you reach $10,000 (Admiral shares)
* Fixed allocation: 100% US, not 93% US (5% international, 2% cash)

Within a tax-deferred account, buys and sells don't result in taxable gains.  So can fill out a form at Vanguard so you rollover that account to Vanguard (cashing out the old fund) and then buy something better.  You could also rollover to Fidelity or Scwab, which have low expense funds.  I prefer Vanguard because it aims to have low expense ratio funds, while other companies have more of a hit and miss mixture of fund offerings.