"Need Help Understanding My Mutual Funds in This Situation"

Updated on October 09, 2008
R. asks from Dallas, TX
3 answers

My husband and I currently have Roth IRAs, ESAs, and Coverdell accounts with Edward Jones. We have been with Edfor 7 years, but I am just concerned because I don't understand what makes a mutual fund a good fund. We have LORD ABBETT Affiliated, Bond Debenture, Securities Trust, and Research, all are Class A. For our daughter's college we have American Funds. I found out about Morning Star and saw that our funds are rated Average or Below Average. I asked her about this and she stated that Edward Jones uses a different rating system. She said that the rating is different because morning star ratings are only based on 1 or 5 years; whereas our situation is for 30+ years (when we plan on retiring). When I talk to her, what she says makes sense, but then when I read articles or look at our statements, it makes me VERY nervous. I guess it just makes me nervous because I am trusting her completely and if she is not a good financial planner, I won't know until we retire. Between the 8 funds, we have lost about $10k. Is this normal under the current situation or do we have bad funds? I just need reassurance in trusting our financial advisor or what I should do to put my mind at ease. THANKS!!!

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So What Happened?

Thanks so much for the great advice. I looked at my statement and the American Funds I have are: Capital World Grw & Inc; Growth fund of America, Investment Co of America, and New Perspective. I also forgot that we have two 529-plans with Putnan Accounts: US ALL CAP EQ VAL and US ALL CAP EQ GR OP. So what I did was enter our information into yahoo finance and if I am reading the chart correctly...on our roth accts we gained more than the dow for 2 accounts and lost more than the dow for 3 accts. On the chart it didn't look like it was significantly more or less. For the American funds, it looks like we lost about the same or a little less than the DOW for the accounts. I can't compare the putnam b/c I can't seem to find the symbol for those 2 funds. Does anyone know what the fee is for getting a second opinion with another financial advisor? I just want to make sure I'm interpretting this information correctly.

More Answers



answers from Dallas on

Hi R.,

You said you have lost 10K, which is alot, but what really matters is what PERCENT you have lost. The market itself has been down at least 30%, so if you have lost less than 30%, then you have done better than the market and should pat your advisor on the back.

However, if you have lost more than 30%, you should find another advisor. I would caution you though, not to pull your money out of the market now because then you will really lose it!

Another question is how far away from retirement are you? If you are several years away, then don't worry...you will make your money back. Plus, now that the market is low, it is a wonderful time to be investing b/c you are basically buying shares while they are on sale. Then, as the market goes back up over the next few years, your change in value will grow exponentially.

The main thing to focus on as you near retirement age is to gradually move your money away from the market, so that when you are a couple of years from retirement, you don't risk losing so much value if a situation like this occurs again.

Hope that helps!

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answers from Dallas on

and start reading Money magazine; it's pretty good and not that hard to understand. I have some American funds and they have done very well over the last ten years, but of course you do not say what American Funds you own.

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answers from Dallas on

I am by no means a financial expert but here is what I would do.

1) Seek a second opinion. Have a planner from another office or company review your portfolio and the allocation in relation to your investment time horizon.

2) To get a rough estimate of your portfolio performance figure out your losses over the last twelve months as a percentage and then compare that percentage to the losses over the same time period of the dow jones and S&P 500. It is not a perfect measure but if you are within 5 - 10% and your advisor has a good reason it might not be worth worrying.

1 mom found this helpful
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