It is always a good idea to evaluate your investments every so often. I’m no fanatic and I invest for the long term, 5 or more years, but I do examine at few areas: earnings, fees, and the rate of return compared to the market.
Generally I only look at my quarterly statements, so I don’t freak out on days when I’m up or down thousands of dollars.
After a recent examination of my mutual fund portfolio I decided to make a change. I’m not alone; in fact million of Americans have switched mutual fund companies in the last few years. [This is not a recommendation to shift your investments, this is simply my story]
Why I Switched My Mutual Fund Company
1. I hate paying fees. I especially hate paying fees when a service looses money vs. their peers. I was paying yearly maintenance fees and also a hefty sales charge with each dollar invested (front load). As our portfolio grew the fees dropped, but it was still high.
2. Bad Performance vs. S&P 500- The markets have had a tough few years and I realize this. Yet, my old mutual fund family was lagging behind the S&P 500 and its peers. Apparently my managed funds as a whole haven’t had a good run, while index funds fared better.
3. My NonExistent Broker- For the last few years, my wife and have been fortunate to max out our Roth IRAs. Our broker earned commission on our ROTH IRA + Rollover 401K to IRA yet he was nonexistent.
Our broker didn’t call, email, send a newsletter, or follow up to see if we were going to max out again like the past few years. I’m sure he has bigger fish to fry, but a quick email or an ounce of client attention would have gone a long way.
My New Mutual Fund Company
1. I don’t pay yearly fees if I opt in for online statements. My sales fees are now some of the lowest in the industry. Over the lifetime of the investment, this will translate to thousands in cost cutting savings.
2. The majority of my mutual funds are now in index funds that will ensure I keep pace with the market. I won’t beat the market, but then I won’t dip below either. I’m OK with this.
3. Now there isn’t a broker getting fat of my regular investing. I only have myself to blame for improper allocation of funds.
That is why I use tools such as the Morning Star Instant X-Ray to break down my choices. I also plan on paying an fee based independent broker for a portfolio assessment when I hit a predetermined dollar amount.
Have you made any changes to your investments in recent years? Have you examined your mutual fund family to determine if it is still the best fit for you?