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#1: Re: American Funds

Posted on 2006-03-06 23:57:38 by BreadWithSpam

<a href="mailto:neoglassic&#64;peak.org" target="_blank">neoglassic&#64;peak.org</a> writes:

&gt; I have an IRA with American Growth Funds. I'm being charged about 5%
&gt; everytime I put money in the fund. I recently listened to a talk show
&gt; where the host was talking about no load funds. Apparently the fund I
&gt; have is a load fund. I'm open to suggestions aobut what to do.

For one thing, assuming you're happy with that fund, leave
what you've put there there. You were charged 5% load to buy
in, but that 5% is money down the tubes and no use crying
over it now.

The questions are bigger ones now - how does that fund
fit into your big picture - is it appropriate for your
asset allocation strategy, etc.

Next, assuming that it is, and that you need more of that
asset class (large company growth stocks?) - if you
want to stop paying 5% every time you add to it, gind
yourself another fund, a no-load fund, which is similar
enough and meets your needs and start putting new money into
there.

Assuming your IRA is a brokerage account, what you have
access to depends on the broker. If your broker doesn't
provide easy access to decent no-load funds, consider
opening an account at a broker which does, and moving
your assets there.

I think we'll need to know more about your situation
if we're to be able to give you any suggestions better
than &quot;so find a no-load fund&quot;.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- <a href="http://www.expita.com/nomime.html" target="_blank">http://www.expita.com/nomime.html</a>
Are you posting responses that are easy for others to follow?
<a href="http://www.greenend.org.uk/rjk/2000/06/14/quoting" target="_blank">http://www.greenend.org.uk/rjk/2000/06/14/quoting</a>

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#2: Re: American Funds

Posted on 2006-03-07 17:35:36 by Tad Borek

<a href="mailto:neoglassic&#64;peak.org" target="_blank">neoglassic&#64;peak.org</a> wrote:
&gt; Just trying to save up some $$ for retirement. I'm 55 with very little
&gt; saved. 20 year mortgage left with about $150K equity. Very little debt.
&gt; Self employed so have no company retirement to fall back on.

Andy,
This isn't the question you asked but if retirement savings is your main
goal and you feel the need to &quot;catch up&quot;...it's actually much better
that you're self-employed. You have full control over what retirement
plan you set up for your business and there are alternatives that allow
you to sock away a lot more money than just an IRA or even the typical
401k through an employer. Two you might discuss with your accountant:

SEP-IRA - SEP means &quot;simplified employee pension&quot; - the contributions go
to an IRA but it's a specially-coded one that can accept much higher
amounts of money each year. The calculation is a little tricky but the
net effect is that you can contribute up to 20% of your self-employment
income (as defined in the regulations on SEPs) to the IRA each year, up
to a maximum of $44,000 for 2006. Yes, you read that right...$44k pretax
could go into the IRA, for someone earning $220k from self employment
(20% of 220k is 44k).

401k (&quot;solo-k&quot; meaning one for just one person) - try the Fidelity site
for info and I believe they offer these at no fee, which is a great
thing - it used to be an expensive way to save due to administrative
costs. Just as a large employer can set up a 401k plan, a self-employed
person can too. The advantage, as with the SEP, is much higher
contribution limits than a regular IRA. This also would allow you to set
aside as much as $44k per year but the setup and administration is
trickier than with a SEP.

These are just account types really - you then pick investments to buy.
So you could do this through American Funds if you wanted to stay with
them. If your broker helps you set up and administer one of these,
arguably he'd be earning his 5% commission?

-Tad

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