The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Bryan M on March 01, 2017, 08:47:20 AM
-
In short, I have over $200K in investments with EJ that have been averaging roughly 10% returns for the last 5 years. I have an IRA, two Roths, a 529, and Joint Account.
After looking at the MMM blog and reading some comments, it is becoming clear that I should probably pull from EJ. I don't want to knee-jerk this hence this post. As of now, would it be wise to roll everything to a Vanguard Index to get out of the fees and commissions, educate myself further, and then make more moves?
-
Yes.
Create an IPS first and then roll everything.
-
Thanks. I will start the IPS now.
-
In short, I have over $200K in investments with EJ that have been averaging roughly 10% returns for the last 5 years. I have an IRA, two Roths, a 529, and Joint Account.
After looking at the MMM blog and reading some comments, it is becoming clear that I should probably pull from EJ. I don't want to knee-jerk this hence this post. As of now, would it be wise to roll everything to a Vanguard Index to get out of the fees and commissions, educate myself further, and then make more moves?
As a former EJ customer myself, it would indeed be wise to get out of EJ as soon as possible. Fidelity or Vanguard would be worlds better for your return on investment and tax liability.
Your EJ advisor may put the hard sell on you to keep your account. Ignore him/her to the best of your ability and get out.
-
And please report back any arguments proposed for why should stay with them!
-
I just pulled my IRAs and Roth over from Ed Jones and have no regrets. If you go back and look at your accounts and compare it to a simple mix of Vanguard index funds, you'll be shocked by how much you didn't make due to lack of performance and fees. I was with Ed Jones for about 10 years and was worried about a big debate from my FA, but didn't so much as get a phone call. Just an email saying "ok". That just went to show me that the guy didn't really give much of a sh*t about my accounts after he got his commission. They will ding you one more time for an electronic transfer fee and closing fee, btw. Just made me feel better about my decision.
OneDogGP
-
I just pulled my IRAs and Roth over from Ed Jones and have no regrets. If you go back and look at your accounts and compare it to a simple mix of Vanguard index funds, you'll be shocked by how much you didn't make due to lack of performance and fees. I was with Ed Jones for about 10 years and was worried about a big debate from my FA, but didn't so much as get a phone call. Just an email saying "ok". That just went to show me that the guy didn't really give much of a sh*t about my accounts after he got his commission. They will ding you one more time for an electronic transfer fee and closing fee, btw. Just made me feel better about my decision.
OneDogGP
Someone else can confirm, but I don't think you even need to speak with your EJ advisor to do the transfers. Just talk to Vanguard or whoever you're going with and they'll do the talking for you.
-
Thanks. I will start the IPS now.
Where is a good place to learn how to put an IPS together? I found a worksheet on Morningstar, however I am ignorant of some of the needed information (benchmark selection, non-core investments...).
-
Thanks. I will start the IPS now.
Where is a good place to learn how to put an IPS together? I found a worksheet on Morningstar, however I am ignorant of some of the needed information (benchmark selection, non-core investments...).
Start here: http://jlcollinsnh.com/stock-series/ with either Mr. Collins' book or read through the series on his website to get a firm handle on how to invest and the workings of the stock market. Then head over to Bogleheads site, and read about how to write an investment policy statement (https://www.bogleheads.org/wiki/Investment_policy_statement), and figure out your asset allocation (https://www.bogleheads.org/wiki/Asset_allocation). Do some research on lazy portfolios (https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio) there as well.
-
Thanks. I will start the IPS now.
Where is a good place to learn how to put an IPS together? I found a worksheet on Morningstar, however I am ignorant of some of the needed information (benchmark selection, non-core investments...).
Start here: http://jlcollinsnh.com/stock-series/ with either Mr. Collins' book or read through the series on his website to get a firm handle on how to invest and the workings of the stock market. Then head over to Bogleheads site, and read about how to write an investment policy statement (https://www.bogleheads.org/wiki/Investment_policy_statement), and figure out your asset allocation (https://www.bogleheads.org/wiki/Asset_allocation). Do some research on lazy portfolios (https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio) there as well.
Thanks again. It seems I have a bit to read which I figured. I guess it won't hurt to leave my money where it is until I cover this material. Reading through MMM has lead to the urge to DO SOMETHING NOW, however haste can make waste.
-
You don't have to get it perfect before taking some action. A perfectly reasonable thing to do would be to write down "Everything goes into a Vanguard Target Date fund for now, I'll read some stuff about investing, and re-evaluate later."
-
You could initiate the transfer today, and probably have all the basics figured out by the time it's done. Also, the worst thing that will happen is that it will sit in cash at Vanguard for a little while. Not the end of the world.
-
You might want to weigh some things:
How much does it cost to sell each holding at EJ? At Vanguard?
What is your profit on each fund? When you sell your gains will be taxable. You might want to look that up before selling.
-
You might want to weigh some things:
How much does it cost to sell each holding at EJ? At Vanguard?
What is your profit on each fund? When you sell your gains will be taxable. You might want to look that up before selling.
Showing ignorance here. My funds at EJ are a Traditional and Roth IRA. If I simply transfer those over to IRAs at Vanguard, wouldn't I avoid any taxes?
-
You might want to weigh some things:
How much does it cost to sell each holding at EJ? At Vanguard?
What is your profit on each fund? When you sell your gains will be taxable. You might want to look that up before selling.
Showing ignorance here. My funds at EJ are a Traditional and Roth IRA. If I simply transfer those over to IRAs at Vanguard, wouldn't I avoid any taxes?
If you do a qualified transfer (transfer into the same account type) on the tax-advantaged accounts it isn't a taxable event.
The joint account is a taxable account though. Anything you sell will be subject to capital gains/losses for 2017.
-
You might want to weigh some things:
How much does it cost to sell each holding at EJ? At Vanguard?
What is your profit on each fund? When you sell your gains will be taxable. You might want to look that up before selling.
Showing ignorance here. My funds at EJ are a Traditional and Roth IRA. If I simply transfer those over to IRAs at Vanguard, wouldn't I avoid any taxes?
If you do a qualified transfer (transfer into the same account type) on the tax-advantaged accounts it isn't a taxable event.
The joint account is a taxable account though. Anything you sell will be subject to capital gains/losses for 2017.
No issue. There is only $2K in that account right now. Thanks for your reply.
-
I want to thank all who have responded to this thread. I have learned a ton from the massive amount of reading I have done over the past few days. Today I hope to make my first move in maxing my employer 401K. We have T Rowe Price and fortunately there is an index fund - EQUITY INDEX 500 FUND PREIX.
Gross and Net expense ratios are 0.27% and 0.25% respectively.
-
I want to thank all who have responded to this thread. I have learned a ton from the massive amount of reading I have done over the past few days. Today I hope to make my first move in maxing my employer 401K. We have T Rowe Price and fortunately there is an index fund - EQUITY INDEX 500 FUND PREIX.
Gross and Net expense ratios are 0.27% and 0.25% respectively.
That's good-not-great. If you're eligible to take the deduction, you're better off maxing a traditional IRA with a lower cost fund (i.e. VTSAX in a Vanguard tIRA) BEFORE maxing the 401k. If you are over the MAGI deduction limit, then go for the 401k first.
-
Ah that's right. This is mentioned in the investment order thread.
-
Ah that's right. This is mentioned in the investment order thread.
There's a lot of if-this-then-that kind of gotchas and nuance. If you don't want to bother with it, nobody is going to knock you for simply putting $18k into a 401k index fund and getting on with your life. That's still better than about 90% of the American public.
-
Well, I sent the "break-up" letter to my financial guy today and will begin the process of transferring funds shortly. Fun times.
-
Well, I sent the "break-up" letter to my financial guy today and will begin the process of transferring funds shortly. Fun times.
Excellent! Excellent! Excellent!
Some fun reading to understand your Ed Jones guy and what your accounts were all about:
http://kronstantinople.blogspot.com/p/edward-jones-saga.html
-
Well, I sent the "break-up" letter to my financial guy today and will begin the process of transferring funds shortly. Fun times.
That's awesome! Future you is very happy.
-
I want to thank all who have responded to this thread. I have learned a ton from the massive amount of reading I have done over the past few days. Today I hope to make my first move in maxing my employer 401K. We have T Rowe Price and fortunately there is an index fund - EQUITY INDEX 500 FUND PREIX.
Gross and Net expense ratios are 0.27% and 0.25% respectively.
You definitely want to put money in that 401K if there's an employer match that hinges on you putting money in there. An employer match is free money.
-
My latest EJ statement says this under INVESTMENT ACTIVITY:
-Buy Capital Income Builder Cl A @ 61.47 $100,000 Breakpt; 3.51% Chrg
So it looks like I get a price break for having over $100k eith them, but is that a 3.51% fee I am getting charged on the purchase??
-
My latest EJ statement says this under INVESTMENT ACTIVITY:
-Buy Capital Income Builder Cl A @ 61.47 $100,000 Breakpt; 3.51% Chrg
So it looks like I get a price break for having over $100k eith them, but is that a 3.51% fee I am getting charged on the purchase??
Looks like they might be discounting the front-load?
-
Well, I sent the "break-up" letter to my financial guy today and will begin the process of transferring funds shortly. Fun times.
well done Bryan! You just gave yourself an instant (and compounding) boost to all your future ROI!
Imagine 30 year's, investing $10k every year with 2% inflation. At 9% nominal returns, you end up with $1,964,208.
If you pay 2% in fees, you get $1,347,670. Those 'just 2%' in fees would have cost you $616,000.
-
Good work on the break-up.
Remember, increasing net worth involves two things:
- Savings Rate
- Investment Returns net of taxes and fees.
Use every tax break to your advantage and drive your investing fees as low as possible
-
My latest EJ statement says this under INVESTMENT ACTIVITY:
-Buy Capital Income Builder Cl A @ 61.47 $100,000 Breakpt; 3.51% Chrg
So it looks like I get a price break for having over $100k eith them, but is that a 3.51% fee I am getting charged on the purchase??
Appears to be. I consider that financial rape. With a rusty barbed-wire dildo. Covered in tabasco.
-
So I am paying a Broker
Do you mean that they charge you an asset management fee or "wrap account" fee? If you were paying them 1% per year I would hope that they at least recommended index funds -- not actively managed mutual funds and annuities.
Yes switch to Vanguard or to a deep discount (self-serve) brokerage like E Trade, AmeriTrade or Scottrade.
-
My latest EJ statement says this under INVESTMENT ACTIVITY:
-Buy Capital Income Builder Cl A @ 61.47 $100,000 Breakpt; 3.51% Chrg
So it looks like I get a price break for having over $100k eith them, but is that a 3.51% fee I am getting charged on the purchase??
Appears to be. I consider that financial rape. With a rusty barbed-wire dildo. Covered in tabasco.
These guys are financial parasites. Sociopathic parasites because they know exactly what theyre doing, they are smiling and being all friendly while stealing people's money.
-
So I ran some hard numbers on my Traditional IRA funds with EJ and compared them to the VTSAX and VBTLX funds (see attached). My analysis is not perfect, but it is an eye opener. The expense ratios are not to be overlooked! Me and the Edward Jones Adviser are going to talk today.
-
So I am paying a Broker
Do you mean that they charge you an asset management fee or "wrap account" fee? If you were paying them 1% per year I would hope that they at least recommended index funds -- not actively managed mutual funds and annuities.
Yes switch to Vanguard or to a deep discount (self-serve) brokerage like E Trade, AmeriTrade or Scottrade.
No indexes. All managed funds. See the attachment in my last post.
-
And please report back any arguments proposed for why should stay with them!
Yes, that's always a fun form of 'bingo'!
-
And please report back any arguments proposed for why should stay with them!
Fortunately the broker I work with is a good guy. Here is one thing he said:
"If you are wanting to move your funds to save costs (commission, fees), I understand."
-
If he were a good guy, he wouldn't be screwing you like this...
-
So I ran some hard numbers on my Traditional IRA funds with EJ and compared them to the VTSAX and VBTLX funds (see attached). My analysis is not perfect, but it is an eye opener. The expense ratios are not to be overlooked! Me and the Edward Jones Adviser are going to talk today.
Don't talk, just move your money to Vanguard or another low-cost provider.
-
Backtest your actual EJ portfolio using real past numbers. This will make you super angry and give you more ammo for the meeting coming up.
https://www.portfoliovisualizer.com/backtest-portfolio
-
And please report back any arguments proposed for why should stay with them!
Fortunately the broker I work with is a good guy. Here is one thing he said:
"If you are wanting to move your funds to save costs (commission, fees), I understand."
They're all smiling snake oil salesmen. I had one EJ chap as a tenant. Smoothest SOB I've ever come across. Your EJ chap wants you to feel good after a no-lube screw job. His statement is victim-shaming.
-
Backtest your actual EJ portfolio using real past numbers. This will make you super angry and give you more ammo for the meeting coming up.
https://www.portfoliovisualizer.com/backtest-portfolio
That is a killer tool! Thanks! I assume the final balance accounts for the expense ratios? If so, my EJ T-IRA funds have not done so bad compared to VTSAX and the Vanguard 500 Index as a bench mark. This all in a time from from 2011 (when I opened the EJ account) to now. That said, I do know that commissions have not been accounted for from the lump sump 401K rollovers.
That said I have opened a T-IRA account and Taxable Account at Vanguard.
-
Backtest your actual EJ portfolio using real past numbers. This will make you super angry and give you more ammo for the meeting coming up.
https://www.portfoliovisualizer.com/backtest-portfolio
That is a killer tool! Thanks! I assume the final balance accounts for the expense ratios? If so, my EJ T-IRA funds have not done so bad compared to VTSAX and the Vanguard 500 Index as a bench mark. This all in a time from from 2011 (when I opened the EJ account) to now. That said, I do know that commissions have not been accounted for from the lump sump 401K rollovers.
That said I have opened a T-IRA account and Taxable Account at Vanguard.
No, I'm pretty sure that's without fees.
-
So here is where I am at:
1. T-IRA and Taxable Accounts have been opened at Vanguard.
2. I have stopped all auto-withdrawals from my bank to EJ.
3. No funds have been transferred yet.
I forgot to to mention that all my shares are Class A. Intersting thing, I backtested my EJ T-IRA against VSTAX and the Vanguard 500 index. Over the last 5 years the T-IRA did better than the 500 Index and slightly trailed VSTAX. Over the last 15 years, my T-IRA funds have beaten both indexes by an appreciable amount. While I understand that passed performance does not indicate future performance, it is noteworthy that my personal rate of return has averaged roughly 12% over the passed 5 years after fees.
Since I am no longer sending funds to EJ the only fee I pay is an annual $40 fee on each IRA account. I am now considering whether I should invest into VTSAX and leave the EJ IRAs where they are, but closely monitor them, or still dump everything into indexes. What still bothers me about the American Funds is that performance can change with their management groups. I am still educating myself.
Again, thank you all.
-
I forgot to to mention that all my shares are Class A. Intersting thing, I backtested my EJ T-IRA against VSTAX and the Vanguard 500 index. Over the last 5 years the T-IRA did better than the 500 Index and slightly trailed VSTAX. Over the last 15 years, my T-IRA funds have beaten both indexes by an appreciable amount. While I understand that passed performance does not indicated future performance, it is noteworthy that my personal rate of return has averaged roughly 12% over the passed 5 years after fees.
I'm reasonably sure your backtesting doesn't account for the front-load.
-
I forgot to to mention that all my shares are Class A. Intersting thing, I backtested my EJ T-IRA against VSTAX and the Vanguard 500 index. Over the last 5 years the T-IRA did better than the 500 Index and slightly trailed VSTAX. Over the last 15 years, my T-IRA funds have beaten both indexes by an appreciable amount. While I understand that passed performance does not indicated future performance, it is noteworthy that my personal rate of return has averaged roughly 12% over the passed 5 years after fees.
I'm reasonably sure your backtesting doesn't account for the front-load.
Good point. I took the load (mine was 3.5%) out and the return did drop, but was still ahead of the indexes.
-
So here is where I am at:
1. T-IRA and Taxable Accounts have been opened at Vanguard.
2. I have stopped all auto-withdrawals from my bank to EJ.
3. No funds have been transferred yet.
I forgot to to mention that all my shares are Class A. Intersting thing, I backtested my EJ T-IRA against VSTAX and the Vanguard 500 index. Over the last 5 years the T-IRA did better than the 500 Index and slightly trailed VSTAX. Over the last 15 years, my T-IRA funds have beaten both indexes by an appreciable amount. While I understand that passed performance does not indicate future performance, it is noteworthy that my personal rate of return has averaged roughly 12% over the passed 5 years after fees.
Since I am no longer sending funds to EJ the only fee I pay is an annual $40 fee on each IRA account. I am now considering whether I should invest into VTSAX and leave the EJ IRAs where they are, but closely monitor them, or still dump everything into indexes. What still bothers me about the American Funds is that performance can change with their management groups. I am still educating myself.
Again, thank you all.
If you're happy with the performance at EJ, then stay. You don't need the forum's permission (a bunch of random people on the Internet) to do what you want with your money. A few things to consider:
1.) I find your alleged 15 year performance questionable given the spreadsheet containing the funds you say you own. Are you reconstructing your portfolio over the past 15 years? Or are you just backtesting the funds you are currently in now? If the funds you are in now did really well over the past 10 or fifteen years, but you didn't own them from the beginning, then your advisor is possibly chasing returns. Chances are good you were put in and out of a lot of funds over the years. You would need to account for that and any other sales commissions and fees, as well as any additional investments you provided over the years. To determine your true performance when active management is involved could be a very daunting task.
2.) Supposing you do have superior returns, you have to question whether they are the product of skill or of luck. If the returns are from skill, then you may have found the goose that laid the golden egg. And if they are the product of luck, can you bear the risk of being really unlucky for the next fifteen years. But really, how would you know which it is without waiting at least another fifteen years?
3.) If you truly want convenience, an index fund is a beautiful thing because it is essentially a one-decision investment. You can buy it knowing you will get market returns minus a small nominal fee, and you do not have to ever sell it unless you need a bit of cash. There is no second guessing, or chasing performance, trying to find advisors that actually have alpha, or asking another person to let you have some of your own money.
Best of luck to you. I hope that whatever your strategy ends up being you can sleep soundly at night.
This is a key point. If your portfolio was being actively managed, you were likely involved with many different stocks over the years. The ones you have in your portfolio today have one thing in common: they didn't fail. But, that doesn't mean that you haven't had funds that did fail, you just don't have them anymore. It would be great if you could find an advisor who could pick the funds that would outperform the market over 15 years and simply hold on to them. I doubt that's what has actually happened here. If so, you're probably welcome to go and recreate that portfolio on your own without paying fees for active management.
-
If you're happy with the performance at EJ, then stay. You don't need the forum's permission (a bunch of random people on the Internet) to do what you want with your money. A few things to consider:
1.) I find your alleged 15 year performance questionable given the spreadsheet containing the funds you say you own. Are you reconstructing your portfolio over the past 15 years? Or are you just backtesting the funds you are currently in now? If the funds you are in now did really well over the past 10 or fifteen years, but you didn't own them from the beginning, then your advisor is possibly chasing returns. Chances are good you were put in and out of a lot of funds over the years. You would need to account for that and any other sales commissions and fees, as well as any additional investments you provided over the years. To determine your true performance when active management is involved could be a very daunting task.
2.) Supposing you do have superior returns, you have to question whether they are the product of skill or of luck. If the returns are from skill, then you may have found the goose that laid the golden egg. And if they are the product of luck, can you bear the risk of being really unlucky for the next fifteen years. But really, how would you know which it is without waiting at least another fifteen years?
3.) If you truly want convenience, an index fund is a beautiful thing because it is essentially a one-decision investment. You can buy it knowing you will get market returns minus a small nominal fee, and you do not have to ever sell it unless you need a bit of cash. There is no second guessing, or chasing performance, trying to find advisors that actually have alpha, or asking another person to let you have some of your own money.
Best of luck to you. I hope that whatever your strategy ends up being you can sleep soundly at night.
Thanks. I am not asking permission, I am just trying to get an education. I understand this page has bias towards indexes, and rightfully so based on what I have learned from reading the JL Collins Stock Series, various forums, and published articles.
As for the backtest, I just simply did a 15 year comparison of the funds I am in now to the indexes. I have only had these funds for about 6 years, and it is over this time frame I have gotten the returns I mentioned. Now, you raise a point, I will need to find out if the funds on my spread sheet are the only ones I have been in.
I appreciate your response.
-
If you're happy with the performance at EJ, then stay. You don't need the forum's permission (a bunch of random people on the Internet) to do what you want with your money. A few things to consider:
1.) I find your alleged 15 year performance questionable given the spreadsheet containing the funds you say you own. Are you reconstructing your portfolio over the past 15 years? Or are you just backtesting the funds you are currently in now? If the funds you are in now did really well over the past 10 or fifteen years, but you didn't own them from the beginning, then your advisor is possibly chasing returns. Chances are good you were put in and out of a lot of funds over the years. You would need to account for that and any other sales commissions and fees, as well as any additional investments you provided over the years. To determine your true performance when active management is involved could be a very daunting task.
2.) Supposing you do have superior returns, you have to question whether they are the product of skill or of luck. If the returns are from skill, then you may have found the goose that laid the golden egg. And if they are the product of luck, can you bear the risk of being really unlucky for the next fifteen years. But really, how would you know which it is without waiting at least another fifteen years?
3.) If you truly want convenience, an index fund is a beautiful thing because it is essentially a one-decision investment. You can buy it knowing you will get market returns minus a small nominal fee, and you do not have to ever sell it unless you need a bit of cash. There is no second guessing, or chasing performance, trying to find advisors that actually have alpha, or asking another person to let you have some of your own money.
Best of luck to you. I hope that whatever your strategy ends up being you can sleep soundly at night.
Thanks. I am not asking permission, I am just trying to get an education. I understand this page has bias towards indexes, and rightfully so based on what I have learned from reading the JL Collins Stock Series, various forums, and published articles.
As for the backtest, I just simply did a 15 year comparison of the funds I am in now to the indexes. I have only had these funds for about 6 years, and it is over this time frame I have gotten the returns I mentioned. Now, you raise a point, I will need to find out if the funds on my spread sheet are the only ones I have been in.
I appreciate your response.
If you can, just look at transfers in (this is your total investment amount BEFORE fees) vs. current balance. Then take those deposit numbers and backtest them with VTSAX.
-
And compare after any transfer or closing fees too.
Id say we're not biased toward index any more than historical returns, advised by basic logic, probability and maths, indicate the best way to most likely get to FI.