Can you change your mutual fund within your Roth IRA?

[Nobulladvisor]

lol. I'm not selling anything.

I used to work on wallstreet for a while. I'm got tired of all their crap. I just want to get the feel on "main street" I'm currently writing a book and I just want to hear from other people besides the wall street crowd.

[GREENBACK]

Seems to be pushing ETF's. Not saying they're bad but they do work differently. Some of the comments made seem a little off base for someone who seems to know a bit about how investing works. Caveat emptor!

[disneysteve]

My suggestion stick with ETFs. no hidden fees. in addition its passive, so you don’t have to worry about the human emotion effecting you performance

How do you figure that ETFs remove the emotion from the process and how is that any different than using index funds? With ETFs, it is harder (though not necessarily impossible) to set up an automatic investing plan. For example, with mutual funds, I can arrange to buy $100/month of the fund on the 15th of the month. Mutual funds can trade in fractional shares so one month I might get 3.265 shares for my $100 and the next month I might get 3.549 shares. ETFs trade, like stocks, in whole shares so you can't just buy $100 worth. When you shift from an automatic plan to a plan that requires the investor to manually initiate the purchase each time, you greatly increase the odds that the person will forget or look at the current market situation and decide to wait for a better price or find some other reason to delay the purchase.

If your argument is to buy individual ETFs instead of a Target Fund, you also have all of the emotion involved in selecting the ETFs to buy and how much to put in each and how and when to rebalance the portfolio, all things that are done automatically for you with a Target Fund.

For the record, I do not personally invest in any Target fund so I'm not defending my own position here. I'm just trying to make sure we are clear on the pros and cons of each type of investment. ETFs have some great features, especially since a few companies started trading them commission-free. They also have tax advantages over mutual funds so I'm not at all opposed to ETFs. I just realize that they aren't the right choice for everyone.

[jpg7n16]

I agree with my grammer mistakes. I'm typing on an Iphone.
Do some research on the Target date funds. Then respond. There are lots of other fees in mutual fund besides the the Expense ratios.

I did do my research, and here's what I found.

From: Mutual Fund Fees and Expenses

Other Expenses
Included in this category are expenses not included in the categories "Management Fees" or "Distribution [and/or Service] (12b-1) Fees." Examples include: shareholder service expenses that are not included in the "Distribution [and/or Service] (12b-1) Fees" category; custodial expenses; legal expenses; accounting expenses; transfer agent expenses; and other administrative expenses.

Check out the prospectus for Fidelity's Freedom funds here: https://www.actionsxchangerepository...23-48%23-33%23

Fund: Fidelity Freedom 2045 Fund

Management fee
None

Distribution and/or Service (12b-1) fees
None

Other expenses
0.00%

Acquired fund fees and expenses
0.79%

Total annual fund operating expensesA
0.79%


The fund will not incur transaction costs, such as commissions, when it buys and sells shares of underlying Fidelity funds (or "turns over" its portfolio), but it could incur transaction costs if it were to buy and sell other types of securities directly. If the fund were to buy and sell other types of securities directly, a higher portfolio turnover rate could indicate higher transaction costs and could result in higher taxes when fund shares are held in a taxable account. Such costs, if incurred, would not be reflected in annual operating expenses or in the example and would affect the fund's performance.

Fidelity Freedom 2045 Fund (FFFGX)
Identifiable Fidelity Funds: 99.93% (commission free)
Other: 0.07%

Also the prospectus for Vanguard's Target date funds here: https://www.actionsxchangerepository...%2352%23-99%23

From: https://personal.vanguard.com/us/fun...t#targetAnchor

"The total annual asset-based fee includes the weighted average of the annualized expense ratios of underlying mutual funds"

As far as your other beef with bid/ask spread, and commissions and the like - they affect mutual funds and ETFs the same. It's not like ETFs get magical bid/ask free trades on their holdings. Bid/ask prices affect every investor - whether they own mutual funds, ETFs, or create their own portfolios. They affect everyone. And so do commissions.

[Nobulladvisor]

Sorry for not being clear. When I was talking about Human Emotions, I was talking in regards to the portfolio manager. Most mutual funds (excluding index funds) are actively managed. Basically, one manager or a team of manager are making decision on a daily basis on which stock or bond to buy or sell. That means someone who bought into an actively manage funds in basically buying into the managers not the underlying stocks. In an ETF or a index fund, the underlying stocks stay the same. There are only changes if the index is adjusted or the stocks in the ETF or index changes.

So when I said “take the human emotion out" I meant. Take the manager out of the picture. The risk that a manager will panic and sell or buy at the wrong times, have a bad gut feeling about a stock, and/or adding additional unnecessary risk to the portfolio so his or her fund will "beat the market" will be eliminated.

[Nobulladvisor]

I did do my research, and here's what I found.

As far as your other beef with bid/ask spread, and commissions and the like - they affect mutual funds and ETFs the same. It's not like ETFs get magical bid/ask free trades on their holdings. Bid/ask prices affect every investor - whether they own mutual funds, ETFs, or create their own portfolios. They affect everyone. And so do commissions.

Call you mutual funds company and ask the the Statement of additional information. You will be suprised. you can add 2-4% on top of what you think you are paying.

[Nobulladvisor]

Seems to be pushing ETF's. Not saying they're bad but they do work differently. Some of the comments made seem a little off base for someone who seems to know a bit about how investing works. Caveat emptor!

I'm a believer the ETFs and index funds are a better alternative to the old traditional active funds.

[GREENBACK]

I'm a believer the ETFs and index funds are a better alternative to the old traditional active funds.

I can only say that the "traditonal" funds have a longer and proven success record. Maybe you're right but I'm not quite sold on the concept yet. Although I do own some index funds I'm not always certain if I wouldn't be better off seeking out something that actually can outperform the market versus just keeping pace with it.

[disneysteve]

I can only say that the "traditonal" funds have a longer and proven success record.

Index funds have been around since the 1970s. It certainly isn't a new concept.

I'm not always certain if I wouldn't be better off seeking out something that actually can outperform the market versus just keeping pace with it.

That's just it. You can't beat the market - at least not consistently over the long term. Ok, I know gambler may still be lurking about and will debate that issue but he is an active stock trader which isn't what we're discussing here. If you think you can beat the market over the long haul with an actively traded mutual fund, you will almost certainly be disappointed.

The Vanguard 500 Index Fund has had an average annual return since 1976 of 10.39%. Show me an actively managed fund with that long of a track record and a better performance history.

[GREENBACK]

Steve, I was referencing the ETF craze that seems to be going around and, again, I'm not knocking them. I'm just saying I'm not sold on them at this point. I have nothing against index funds and wasn't speaking about their track record. I was talking about ETF's vs. traditonal mutual funds. I don't believe ETF's go back further than the late 80's. I'm not contending that I can beat the index but I've often wondered about it

[disneysteve]

I don't believe ETF's go back further than the late 80's.

Actually I think it is early 90s so about 20 years. Really, they aren't all that different than mutual funds at the basic level. To use the Vanguard example, you can buy either the S&P 500 index fund or the S&P 500 ETF. EIther way, you will get virtually identical investments with nearly identical performance. The differences come in how you can buy and sell your shares, the expenses involved and some tax concerns.

Of course, just as the mutual fund universe has exploded to include over 9,000 funds, the same has happened with ETFs and there are now somewhere around 1,000 or so of them. Within that glut of funds are only a handful that most people ever need to concern themselves with. The rest is just noise.