By SmartMoney Staff
Question: I have an IRA with my spouse’s employer, and I pay no fees as long as I trade only select funds. But my profits have only been 2 percent in the past 18 months. Should I make a switch or stick with no-fee funds?
– David Hippensteel, Milwaukee
Answer: It’s tempting to think you get what you pay for, feewise. But advisers caution against judging returns after such a short performance period, especially one marked by roller-coaster markets. And though you’re not paying sales commissions, experts say high expense ratios may be nibbling at your gains. Before switching, compare funds’ total costs, says John Goddard, a financial planner in Cambridge, Mass. Moving to one with a sales charge, he says, “may or may not result in higher returns, but it will definitely result in higher costs.”
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With the answer on this. Just because you pay a fee doesn’t mean you are going to get a return on par with the increase in costs. http://www.pennystockherald.com. I think it needs to be based on your end goals. If you can handle the risk why not open yourself up to more options. Plus you are still getting 2 percent with no real costs. Not bad. Maybe start up another that you can take advantage of the increased options with the fees.
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It is difficult to compare funds since the WSJ has discontinued its monthly analysis of funds. Where can find that information now?