Just Closed out my American Funds Account. What to do?

[Spiffster]

I have had a diversified American Funds account for the last 2.5 years. The account made me NOTHING after sales commissions (i know right.. wtf) and fees. Obviously Im not a big fan of American Funds but the icing on the cake was that I had to pay taxes on 1000 dollars that I (apparently) made last year. Anyway long story short, 66k in, 66k out 2 years later. What can I do to make this money grow at a steady and reliable rate? There has to be a better way than just making fund manager money while I pay taxes and get the shaft...

Should I pay down my house? Invest it again? (if so what types of investments). Go to Vegas and put it on all red? (kidding).

I have no loans other than house. Thanks in advance for constructive advice

[Mr Nice Guy]

Is this retirement money?

[Spiffster]

No, this is eventually buy a vacation home in 10 years money... we have (and are) putting plenty aside for retirement purposes. 401k roth etc...

[disneysteve]

For a taxable account that will be needed in 10 years, I'd probably look to a balanced fund from a low-cost, no-load fund company. Perhaps something like VSCGX. Maybe average 4-5% for the next 10 years. Not bad but not overly risky plus very low expenses.

[Relmiw]

Originally Posted by disneysteve

For a taxable account that will be needed in 10 years, I'd probably look to a balanced fund from a low-cost, no-load fund company. Perhaps something like VSCGX. Maybe average 4-5% for the next 10 years. Not bad but not overly risky plus very low expenses.

Really? I'd figured he should pay down his house.

[Spiffster]

As always, thanks for the advice. I should probably add that my house just got refinanced at 3.75%. But NOT paying that interest by paying down the house will give a better return (3.75%) than the former AF account did in 2 years which was less than 0% after taxes (negative return). 2 years wasted in crap fund fees...

[Petunia 100]

Originally Posted by Spiffster

As always, thanks for the advice. I should probably add that my house just got refinanced at 3.75%. But NOT paying that interest by paying down the house will give a better return (3.75%) than the former AF account did in 2 years which was less than 0% after taxes (negative return). 2 years wasted in crap fund fees...

Yes, it takes some time to recover from paying that load. It takes even longer if the annual ER is high. Chalk this one up to education.

If you haven't already done so, now would be a good time to take a look at your other investments. Are you keeping those costs down as low as you can?

[Relmiw]

Originally Posted by Spiffster

As always, thanks for the advice. I should probably add that my house just got refinanced at 3.75%. But NOT paying that interest by paying down the house will give a better return (3.75%) than the former AF account did in 2 years which was less than 0% after taxes (negative return). 2 years wasted in crap fund fees...

Oh wow, I didn't think it would be that low

[andrewkr80]

I prefer Vanguard but Fidelity is another option. I got my parents out of American funds and they're doing much better off with the lower expenses of vanguard.

[Spiffster]

Originally Posted by andrewkr80

I prefer Vanguard but Fidelity is another option. I got my parents out of American funds and they're doing much better off with the lower expenses of vanguard.

Yes, both of our Roth IRAs are through Vanguard, the performance of those accounts vs our American Funds account was one of the main reasons for closing the crappy AF account. My god their fees are ridiculous and unjustified really!

[Gina23]

I sold all of my AF's last year in favor of the low cost index funds offered at Vanguard (as a poster previously stated). Despite the fact that the market has somewhat rebounded, I'm still doing much better than I was. The fees and loads were killing my portfolio.