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American Express Roth IRAs???

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Posted 27 September 2001 - 10:52 AM

My wife and I started 2 AMEX Roth IRA accounts at the beginning of the year - and we now question whether AMEX is the best source for these IRAs. We currently have AXP innovations, AXP small cap, and AXP growth dimensions funds. Can anyone shed a little light and let us know of the best (or most reasonable) source for IRAs?::confused:

#2 John G

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Posted 27 September 2001 - 06:49 PM

You question can have thousands of answers. Basically you started your Roth on a down year and that got trumped by the WTC terrorism. Most mutual funds are down this year. The exceptions might be some gold and petroleum funds. Even the "value" funds which were doing so well got nailed in the last month. Tech funds are tech wrecks. Telecom are teledisaster. There are over 8,000+ mutual funds and I expect fewer than 500 will be positive at year end.

Advice: live your life and stop worrying about this year. We had a great run of outstanding growth and now everyone is getting whacked. Next year is likely to be much better and the following year positive as well. Good years out number bad years by anywhere from 5:1 to 8:1

Osama bin Laden has no positive contributions for mankind from my viewpoint, although he clearly has made a hash of this month. Capitalism, freedom of religion, freedom of expression, access to education {especially for women who are denied by the Taliban} , open political debate, individual based career choice, private property, elective government, and business enterprise are the underpinnings of our society (I am sure you could add to the list). I vote for our economic system and our values.

Since you are just getting started, just sit tight. Learn some lessons about risk/reward. Build up your knowledge. And... put another chunk of cash into the Roths at the next chance.

I just love the media hysteria of "everyone is selling". Selling to whom? For each seller there is someone else who is a buyer. People who overreact of panic tend to jump out of the market too late and wait to long to buy in. So overall, I would say stick with broad based mutual funds and wait out this storm. Like the weather, economic storms also eventually pass.

#3 John G

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Posted 28 September 2001 - 08:32 PM

I ask permission of the speaker to revise and extend my remarks:

Revisions, see above.

Additions, see below.

You mention three mutual funds related to growth, small cap and innovations. Concerning the choice of specific funds I would make these points.

First, a very good choice for someone getting start is a very broad based index fund because expenses are low (typically less than 0.5%) and you get reasonable diversification. Normally, you would prefer funds with lower expenses all other things being equal. Under 1% per year is good for a stock picking fund, but high for an index fund where the computer works off a list. Some funds, like international stock funds, have much higher expenses, like 1.5% to 2.5% per year.

Second, you should know if these funds are loaded or not loaded. Loaded means sold with a commission either on the front end or back. I prefer NO LOAD funds. As AmEx about what you have.

Third, you may have a lot of overlap with these three funds. If you said energy, telecom and retail funds you would expect little overlap. As AmEx if you fronts have much overlap.

Fourth, often you want to know who makes the stock picks, their tenure with the fund and track record in good and bad years. I am not a bid fan of funds that have existed only a few years, and I watch closely who steers the ship.

My final issue, funds with very large assets (like Magellan) have trouble making changes in their portfolios and size of fund may start to dictate what they can buy.

You may want to read the March issue of Consumer Reports which always has a retirement investment article and some recommendations of strong performing funds.